Fannie Mae Revises Retirement Benefits
For employees of District-based Fannie Mae, retirement is looking less secure.
The company informed its workforce Thursday that it is capping the amount of money it will pay toward the premiums of retirees and their dependents for those who retire after Dec. 31. If premiums continue to rise sharply, inflation could saddle workers with a much larger share of future costs.
The announcement was another blow to morale shaken by job cuts, a sunken stock price, mounting losses from defaults and foreclosures, and years of hard work spent cleaning up after a multibillion-dollar accounting scandal.
Scaling back retiree benefits--as well as those of active employees--has been a trend in corporate America. Still, Fannie Mae's announcement came as a bit of a shock because the government-sponsored firm was long known as a financially cushy place to work.
In addition to overhauling retiree health benefits, Fannie Mae told employees it will stop enrolling new employees in its pension plan, freeze pension benefits for those whose age and years of employment total less than 45, boost its support for a 401(k) plan, and stop contributing to an employee stock ownership plan.
The changes "will help ensure that our employee benefits program is market competitive, cost effective, and aligned with the needs of our employees,? company spokesman Brian Faith said in a written statement.
--David S. Hilzenrath
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Posted by: Skroodle | December 9, 2007 5:19 PM
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