Employee Benefits Require Attention

Article excerpt

It's no quirk in management-labor relations that the core issue in the strike against the ``baby Bells'' was health insurance. Industry's efforts to shift some of the costs back to employees is but one indication that dramatic changes are taking place in company-provided benefits.

If you were hired several years ago, you probably spent a few minutes with a personnel officer going over the benefits package. Details about pensions, employee stock ownership plans, health and life insurance and the like got lost in the background noise.

You signed some forms, carried away some pamphlets. You've found little occasion since to check up on these valuable supplements to your wages.

If you are not paying attention, your management is. So is your union. Congress and the Internal Revenue Service are doing more than paying attention - they're changing the rules.

The crisis in health care may be the most visible benefits problem for employees and employers. Efforts to control costs are not working. The price for providing insurance to employees and retirees is reaching peaks that many employers find intolerable. In a change of attitude, some corporate executives now are advocating national health insurance.

Until other issues are resolved, you as an employee may find that your choice is either to share in the cost - or risk that your employer may opt to provide no health insurance in the benefits package.

In the pension area, changes in plans are so profound that the Wall Street weekly, Barron's, calls it a ``seismic shift.'' Instead of ``defined benefits'' plans, with the employer paying the bill and setting the amount of the pension pay-out, companies are switching to ``defined contributions'' plans in which you contribute to the funding and have a voice in the investment policy. You therefore share in the risk.

Wall Street is worried, says Barron's, because funds in defined contributions plans tend to flow to investment contracts administered by insurance companies, rather than to Wall Street's money managers.

Changes in tax treatment of pension funds are making them more costly and more difficult to administer - and cooling management's generosity.

The IRS has tightened as well its regulations on other employee ``fringe'' benefits, including some that you may have assumed would not be taxed as income. …

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