No. of Recommendations: 1
"I read about companies supplementing their pension funds through buying annuities.
Seems like a way of increasing costs without asking the contributors."

Some companies bought their retirees an annuity at the retirement point. That ended all future pension obligations - and got them 'off the books'.

My former employer was one that did it. However, they ended the pension plan about 1990 or so when the law changed, which required all pension funds be 'fully contributed each year', and started a 401K. If you had less than (years plus age =55), you got your 'pension money' dumped into your 401K as company stock you couldn't sell till age 55. If you exceeded the '55' you could retain your pension. On the date you retired, they'd buy an immediate annuity for you,not inflation adjusted. The company was off the hook.

I suspect many other companies had similar plans. That way, they didn't have to worry about COLAs and inflation , or bad years of earnings where they still had to pony up bucks for the pension plan no matter what.....for retirees. Or future retirees since most of them were now in the 401K.


t.
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