Sprint-Nextel Freezing Pension Plan

Pension benefits will not be offered to any employees hired after the merger.

That's the third big plan this month. This could end up being the worst year ever for defined benefit plans.

Alcoa closing its plan to new members

Alcoa announced that beginning March 1 it will close its pension plan to new entrants. IBM started by closing its plan to new members last year and followed this up by freezing its plan altogether. I would say the probability of Alcoa likewise freezing its plan in the next couple of years is high. This is shaping up to be a bad year for defined benefit plans.

Medicare a mess out of the gate

The Medicare prescription drug plan is two weeks old, and the going has been rocky especially for the nation's sickest and poorest elderly and disabled. The general consensus is the government has botched the start-up of the program. If it could go wrong, it probably has. No one seems to have definitive answers to questions. Patients are being turned away or overcharged at pharmacies. At least 20 states have stepped in to say they will cover the drug costs of low-income people who have been turned away because of federal foul-ups. On Friday, the intervention of the states led the federal government to tell insurers they must provide a 30-day supply of any drug that a beneficiary was previously taking. The government also stressed that poor people may not be charged more than $5 for a covered drug.

Sources: The Washington Post and The New York Times

IBM Freezing Pension Plan

IBM is freezing its defined benefit (pension) plan effective 12/31/2007 to save money. (It had previously closed the plan to new participants.)

Sources: NYT and AJC

Statistical Notes:
1. In 1979 around 62% of active workers were covered by DB plans. Today, around 18% of active workers are covered.
2. From 1986 to 2004, over 100,000 single-employer plans with about 7.5 million participants were terminated.

More Changes in HR Outsourcing Landscape?

A group of private equity firms including Texas Pacific Group, Bain Capital and Blackstone Group is reportedly looking to buy Affiliated Computer Services (ACS) for about $8 billion.

Hang on, it's going to be a bumpy 2006 in the outsourcing industry.