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Employers
Pension plan costs soaring, study finds

US firms with traditional pensions are facing a growing problem: soaring costs, according to a 2003 study by Towers Perrin, the management consulting firm.

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Released last month, the study found that the average defined benefit pension plan developed a sizable unfunded liability by the end of 2002, dropping to 77 percent funded from 120 percent three years before.

In compiling information for the report, Towers Perrin examined the annual financial statements of more than 300 top companies with pension plans and found that funding levels had dropped dramatically since the late 1990s, when strong stock market gains helped many companies boost funding levels for traditional defined benefit plans. Of the firms polled, 81 were in the Fortune 100, Towers Perrin said.

''At the end of 1999, the financial position of plans was more positive, with deferred gains of $770 million,'' said John Nevers, senior actuary at Towers Perrin's Boston office. ''By 2002, we were seeing substantial losses. Those losses not only ate up all the deferred gains but also built up $1.4 billion in deferred costs.'' The term, deferred, is used because year-to-year gains and losses are not immediately reported by companies, but are reflected in later financial statements.

A defined benefit pension or retirement plan has a formula that determines the exact amount each worker can expect to receive monthly after he or she retires. The plan is usually company-sponsored, but it also can be sponsored by employees or by both a company and its employees. Retiree payments distributed through such plans are determined by salary history and length of employment. The employer is responsible for any investments in the plan.

To rectify pension shortfalls, some US companies will have to set aside more of their profits for workers' pension accounts. In all, close to 44 million employees and retirees are covered by such private plans. The cost of bailing out the plans could be staggering. Last year UBS Warburg noted that General Motors' plan was short $22.2 billion or slightly more than 80 percent of the automaker's overall market value, according to a report on the online financial education site, Investopedia.com. ''Four dollars of the first $5 that General Motors earns per share each year stands to get eaten up by pension obligations,'' the site said.

Said Steven Kerstein, managing director of Towers Perrin's global retirement consulting practice: ''These days, companies sponsoring pension plans are unquestionably in a challenging financial environment. . .Pension costs are once again a major area of interest to companies, and they have become a more critical item for company executives to address in their financial decision-making process,'' said Kerstein. ''Rising pension costs over the last two years are now having a significant impact on corporate income statements.''

According to Towers Perrin, companies' pension costs rose from 2.3 percent of operating earnings in 2001 to 22 percent in 2002. The consultancy reported that since March, stock market gains have provided some short-term relief and a lift to plan values. But pension plan liabilities have continued to increase because of the drop in market interest rates. ''The bottom line is that companies have lost more ground this year in terms of their funded status, and the cost crunch isn't going away anytime soon,'' Kerstein said.

Layoffs
Even employed should prepare for job search

The economy is improving, but layoffs haven't ended.

Workers who understand that lesson know the importance of being prepared, according to a survey of 613 adult workers who were asked how prepared they were for the possibility of a layoff. Of those polled, 39 percent said they could immediately begin to conduct a job search if they lost their jobs suddenly. Forty-one percent said they were somewhat ready. Nine percent said they were somewhat unprepared, and 11 percent were not prepared at all.

''Many workers have learned firsthand that layoffs can come suddenly and without warning,'' said Liz Hughes, vice president of OfficeTeam, a national staffing company. ''Employees cannot control the job market, but they can take proactive steps to get organized for their next research.''

Hughes stressed that advanced planning is the key to success. She suggests that while employed, employees should update their resumes periodically. Each time it is updated, ask yourself, ''Does my resume show my strengths, is it compelling enough to grab the attention of a hiring manager, and is it error-free?''

Employees should also review their reference lists. Update the list with the names of people who would be willing to serve as a reference. Make sure there at least three names on the list. Call each person to make sure he or she is still willing to serve as a reference. If a significant amount of time has passed since the employee has last spoken to the reference, it might be time to remove an old name and replace it with a new one.

According to Hughes, employees should begin establishing a network of colleagues in their professional fields long before the threat of a pink slip. ''It's much easier to ask for help when you keep in touch with your contacts,'' she said. ''If you've dropped out of sight from professional organizations, volunteer groups, and social circles, make an effort to reconnect.''

Lastly, employees should reevaluate their skills and whether their current skills in demand. Review job listings to determine whether the requirements have changed. Check with contacts. If new certifications are needed, invest time after work or on weekends acquiring new skills.

Healthcare
Site brings nurses, institutions together

Hoping to tap into the growing market for entry-level registered nurses, CampusCareerCenter.com, a Cambridge Internet company, has launched a new site called CampusRN.com. What makes this site different from others? Matt Casey, cofounder of CampusCareer Center.com, says he's developed relationships with leading hospitals, nursing schools, and healthcare associations who are seeking to boost their nursing and healthcare staffs. The recruiting site's clients include Massachusetts General Hospital, Tufts Medical Center, Partners HealthCare, On-Site Medical Staffing, Christian Hospital, Catholic Health Care and Tenet Health Care.

CampusRN.com will focus on entry level nurses and nursing students. The site aims to help hospitals find talent before the nurses graduate. Students are encouraged to use the site to research employers, compare compensation and salaries, and research career options.

Security
Many believe firms are becoming lax

American companies have become complacent about security.

Those are the findings of a 2003 survey of 200 corporate security directors and 600 US residents. The report revealed that 70 percent of the security professionals said the companies they work for are not doing anything to prepare for another terrorist attack.

At the same time, 96 percent feel the threat of terrorism is still serious and 62 percent believe the US-Iraq war increases the possibility that the US will be attacked. The survey was conducted by Guardsmark, a New York security firm.

-DIANE E. LEWIS

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