Nov 11 (Reuters) – The 2001 collapse of Enron may look like
small potatoes by post-2008 standards of corporate malfeasance
and disaster. But it was pretty ugly at the time — and nothing
was more painful to watch than the hit employees took when they
lost their jobs and their retirement savings all in one blow.
At the end of 2000, 62 percent of assets in Enron’s 401(k)
were held in the company’s own stock; when Enron went into a
free fall the following year, it froze the plan assets and
soon-to-be-jobless workers watched helplessly as their savings
Randal Charlton has had a long, colorful career with plenty of ups and downs. In his 71 years, he’s done everything from tending dairy cows for a Saudi sheik to starting a jazz club in Florida. And as a lifelong entrepreneur, he has bought and sold 14 different companies.
Charlton’s last venture was a Detroit-based biotech company called Asterand, which he co-founded and then merged in 2006 with a U.K.-based competitor. He was 67 years old after the deal closed – a time when many would hang up their spikes and take it easy.
Rick Lopatin has been looking for work for three years. The 56-year-old is the former chief financial officer of a middle-market pharmaceutical company in the Chicago area; ever since a merger and his subsequent job loss in 2008, he’s been job-hunting and networking intensively, and he’s landed several interim CFO engagements – including one at a medical devices company on Long Island.
That company offered to make the job permanent, but Lopatin turned it down. He figured the position might have lasted just a few years, and it would have required relocating from the Chicago suburbs, where Lopatin’s wife has a secure managerial position at one of Chicago’s largest hospital systems — a job she’s held for 15 years. “We just couldn’t afford to put that income at risk,” Lopatin explains.
The premium for Part B – which funds doctor and other outpatient services – will be $99.90 in 2012, up just 3 percent compared with this year. And the Medicare Part B deductible will be $140, a decrease of $22 from 2011.
The winner is . . . private employers, but not by much. A new national poll on retirement sentiment by Sun Life Financial Inc. finds worker confidence in the future value of employer-provided benefits plunged 32 percent in the past year. Meanwhile, confidence in the government’s ability to provide Social Security and Medicare benefits fell 22 percent.
The use of these funds, which invest in a mix of assets with the aim of reducing equity exposure as participants approach retirement, has accelerated sharply in recent years, due in large measure to the growth of auto-enrollment options in workplace plans.
The federal government threw in the towel on creating a public option for long-term care coverage last week, and that would seem to be definitive for now.
In defeat, Health and Human Services (HHS) Secretary Kathleen Sebelius was doing the right thing in admitting the concept’s flaws and cutting the government’s losses of the proposal, which was a lesser-known component of the new health reform law. It was an attempt to expand the number of Americans with long-term care coverage by providing a basic, inexpensive LTC option deployed mainly through the workplace as an opt-out choice in benefit plans.
“Starving the beast” is a favorite conservative strategy for forcing cuts in federal spending. The idea is to deprive the government of revenue in order to force spending cuts – and resistance to new taxes is a central feature of the current Super Committee deliberations in Washington.
Advocates for older Americans are watching closely to see how the committee’s work might lead to retirement benefit cuts via a higher Social Security retirement age, smaller cost-of-living adjustments or higher Medicare eligibility ages. Meanwhile, a separate starve-the-beast exercise goes mostly unnoticed: a big squeeze on the administrative budget of the Social Security Administration (SSA).
After two years without an inflation adjustment, the Social Security Administration is expected to announce a 2012 cost-of-living adjustment (COLA) of more than 3 percent next week. That would be a sizable raise in this economy, and very welcome news to seniors hit hard by rising costs, slumping home equity and very low returns on fixed-income investments.
But the good COLA news will come with a nasty kicker. Many seniors will see a substantial part of the COLA consumed by a higher premium for Medicare Part B (doctor visits and outpatient services), which usually is deducted from Social Security payments. The situation sheds light on the complex interaction of Social Security COLAs and Medicare premiums — and it underscores the critical importance of the Super Committee deficit deliberations on possible cuts to future COLAs.
NEW YORK (Reuters) – If you’re a senior on Medicare – or if you help out aging parents with their money matters – it’s time to get ready to shop. The annual enrollment period for Medicare prescription drug and Advantage managed care plans is about to begin, and it’s one of the best opportunities of the year for seniors to save money.
The new healthcare reform law is reshaping certain parts of the Medicare marketplace, for the most part in ways that benefit seniors. Although the law gradually reduced subsidies to Medicare Advantage – a change that critics derided as “slashing” Medicare – the Advantage and prescription drug markets are doing just fine. The number of plan offerings for 2012 are stable and average prices are steady or falling slightly.