Thursday, May 7, 2009

Wells Fargo to Freeze Pension, Sign of Disaster Capitalism?

Wells Fargo took $25 billion in TARP funds and through Wachovia received $1.5 billion in AIG counter party payments. After that taxpayer funded $26.5 billion injection, Wells Fargo announced a pension freeze. The Charlotte Observer reported:

Wells Fargo & Co. is freezing its cash-balance pension plan for all employees in a move to cut costs, a bank spokeswoman confirmed this week.

Employers have been increasingly scaling back traditional pension plans, and in some cases 401(k) plans, to cut costs.

Disaster capitalism provides the opportunity to shed employee benefits. Look for health insurance to land in the employees lap. The WSJ reported:

Nearly half of the 428 employers polled said they plan to shift more health costs to employees in 2010.

Should Congress and the White House tax the health insurance benefit, while leaving individual deductability, expect most employers to dump the benefit to employees.