More on Termination of Retirement Benefits

Updating my post the other day concerning the ramifications, under ERISA and otherwise, of retiree medical benefits and attempts to terminate them, a recent post in BenefitsBlog documents why, for those of us still working today, it may well be a non-issue. Citing a report from Watson Wyatt, BenefitsBlog notes that future retirees will be bearing most and perhaps all of the costs of their medical benefits. The Watson Wyatt report notes, of particular salience:

The trend away from employer-provided retiree health benefits will continue as a result of rising health care costs, growing retiree populations, uncertain business profitability and federal regulations that provide only limited opportunities for funding retiree medical benefits.

The benefits provided to future retirees will be significantly less generous than those current retirees receive today, as employers are cutting back, capping or completely eliminating their retiree health benefits programs. Eight out of 10 employers that still offered retiree medical benefits in 1999 had reduced their retiree medical expense per active employee from the level reported for 1993, according to Watson Wyatt research.

Future retirees will shoulder substantially more — if not all — of the costs of their health care in retirement. Watson Wyatt estimates that the level of employer financial support will drop to less than 10 percent of total retiree medical expense by the year 2031, under plan provisions already adopted by many employers.

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