In what ways are pensions bad for corporations?
Answers:
Defined benefit pensions are required by the federal governement to be funded by corporations. Corporations need to set aside $$ from their quarterly earnings to fund their pensions. A pension is a future liability or obligation. If corporations did not have this obligation, their net income or earnings per share( EPS) would be increased making the investment in their stock more attractive to shareholders.
They are an expense to the company. The company has to put aside money to pay the pensions. Any money put aside for that purpose can not then be used for any other corporate expenses. On the plus side, it is a benefit that will attract and retain good employees.
They cost money.
Because they are for life of retiree and /or spouse and people are living longer. A 401K only pays out what you pay in and you could outlive your savings.Corporations also don't like unplanned expenses,it hurts profits.
Usually when you hire an employee he or she is supposed to do something and the company is supposed to make money.
You hire someone to answer the phones.
You hire someone to sell your products.
And so on.
Pensions are employees with salaries but they don't do anything.
In my humble opinion pensions will ruin the Auto Industry in the United States of America and in a few decades all the auto companies will move to Canada and Mexico.
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