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On 2/21/2003 3:51:52 PM RowUnderDCA wrote:
I've been wondering this:
What does 'freezing' mean?
How is it different from terminating?
How would freezing save U money?
Would freezing affect current retirees?
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In basic terms:
Freezing means that all of your credited pension years of service accrued, you maintain. At that point, the pension credits will stop accruing (freeze).
Terminating a pension means that all your pension credited years basically go away, and the fund is turned over to the PBGC, who then pay out the pension amounts according to THEIR scale and your age upon retiring. Not in all cases, but for the pilots, the PBGC guarantee scale is much much lower than what they would have received if the pension credits were allowed to continue
OR frozen in some cases.
Frozen pensions, like the agents in 991, save a company money because the company's pension liability decreases through time. The company still contributes but eventually with a lower liability. For the employee, however, their future retirement sums are dependent on other sources, for exp. 401K. Hopefully, the market does well as the RISK is shifted from the employer to the employee for retirement. And how you invest, and in what, over time, is the key.
Freezing pensions would NOT effect current retirees, as their credit years have already been accrued.