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Taking on the Benefits Burden

With the problem of human-capital cost hikes reaching critical proportions, CFO devotes an entire issue to health care, retirement plans, IT/outsourcing, and perks.

Joseph McCafferty, CFO Magazine
February 22, 2005

burden ON retirees?

Please think about this: A purchase or obligation that you regret in hindsight is not automatically an option to abandon when you have to cut costs or improve the value to shareholders or improve executive bonuses. It is fashionable just now to spotlight the cost of retiree benefits as a “burden on active employees.” As well, it could be said that the accrued cost of deferred obligation for active employees (FAS 106) is being placed “on the backs of retired employees.” Or it could be said that the total cost of executive bonuses rises in direct proportion to “optimizing the balance sheet” and breaking up vested benefits plans for retired employees. Open and honest dialogue with current and future employees can result in any total compensation agreement. As long as human assets are thought of as cost centers, we will expect to reduce the cost to zero. It would be refreshing if we compared our change in officer compensation since about 1993 when the accounting rules changed, and see whether the whole "loss" is due to our retired employees. Some agreements are made in good faith and are accepted in good faith. Isn't there an ethical point to concluding them the same way?

Posted by Jean Bell | February 24, 2006 12:04 am

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