Tuesday, August 27, 2019
Required Changes for a Company with Organizational Problems Coursework
Required Changes for a Company with Organizational Problems - Coursework Example Pensions became an important issue for European workers, who were becoming some of the biggest losers in the three-year stock-market downturn. Falling share prices combined with longer retirements left many company pension plans far short of the amounts expected to be necessary, over the long term. The result was: wholesale shifts in the retirement plans companies were offering their employees, and in the way, workers must plan for old age. The poverty of many pensioners today was a real crisis, of an unprecedented nature.The issue was most pressing in the U.K., where company-funded pension plans, often tied to salaries, made up a bigger portion of retirement income than elsewhere in Europe and where companies had traditionally put about three-quarters of their pension funds in the stock market.Ã Ã Ã The schemes guaranteed members a pension income based on the number of years of service and the salary when the worker left the company. Companies said these plans had now become too expensive to maintain. Faced in many cases with huge deficits, they had a stark choice: either shore up the fund with hefty payments that could cut into profits - and hurt their share price - or cut back on pension benefits. Hence, these pension schemes were replaced with less-costly plans in which companies contributed money but did not guarantee a level of benefit. Actuaries said that many companies that closed their pension plans to newcomers, ended up closing them to existing members also, a few years later. From the companiesÃ¢â¬â¢ perspective: many schemes have seen their funds shrink as a result of the stock market falls. In such cases, firms faced the possibility of having to make up any shortfall between the assets of the final salary scheme and the benefits promised to members. Companies were unwilling to contribute further funds into pension schemes.