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Bloomberg
26 minutes ago
- Bloomberg
Kodak Hinges on Pensions to Save It From Renewed Trouble
Welcome to The Brink. I'm Dorothy Ma, a reporter in New York, where I look at Kodak's reliance on its pension plan to save it from another restructuring. We also look at Argentina's failed Treasury auction and have one question with WhiteHawk Capital Partners. Follow this link to subscribe. Send us feedback and tips at debtnews@ Eastman Kodak said earlier this week there were doubts about its ability to operate as a going concern, sending its shares tumbling 20% on Tuesday and triggering flashbacks to its 2012 bankruptcy.
Yahoo
29 minutes ago
- Yahoo
As Kodak Terminates Its Pension Plans, What Top Companies Still Offer This Retirement Perk?
We all know that Eastman Kodak (KODK) is in trouble. The iconic photography brand filed for bankruptcy protection in 2012, and has spent the last 13 years shedding businesses and performing a series of financial contortion acts to keep things up and running. Kodak's latest victim: its 97-year-old pension plan. More News from Barchart Apple CEO Tim Cook Says the Technology They're Developing Will Be 'One of the Most Profound Technologies of Our Lifetime' Dear Tilray Stock Fans, Mark Your Calendars for September 21 Why SoundHound Could Be the Next AI Stock to Rocket Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! The company's desperately trying to shore up $477 million worth of debt. To wipe the slate clean, Kodak has decided to terminate its pension plan over the coming months. The reversion will generate $500 million in cash after the company sells off investment assets, which should be enough to ensure Kodak stays afloat. But what about the pension scheme's 35,000 employees? This is where it gets a bit complicated. Existing plan participants will have to choose between settling through an annuity or taking a lump sum on their balance. At this stage, retirees aren't going to see a change in the value of benefits they'd been promised. In the meantime, Kodak's still trying to work out what kind of pension it'll introduce for new and current employees moving forward. Regardless of the type of scheme Kodak comes up with, this move is undeniably another nail in the coffin for the traditional pension plan. To explain why, let's pump the brakes and talk about what pension plans are. We'll also cover what companies are still offering pensions, and why Kodak's move to terminate its plan matters to all retirement savers. What Are Pension Plans? A pension plan is a popular retirement benefit. After you enroll in a pension plan, you or your employer starts contributing money into an investment fund that grows over time. This ensures you've still got a regular source of income after you stop working. There are loads of different retirement products available on the market to help retirement savers plan for the future. But when people talk about pensions, they're normally referring to a 'defined benefit plan.' Defined Benefit Plans A defined benefit plan sees an employer invest in a retirement fund on your behalf. You're then guaranteed a fixed annual income after you stop working. It also generally includes survivor benefits so your loved ones continue to receive payments after you die. That fixed income rate has always been a hugely attractive option for workers. So, big corporations have been using defined benefit plans as an easy recruitment tool for decades. Why are they great for workers? It doesn't matter how much money you set aside throughout the course of your working life. You can relax knowing exactly how much money you will get from your pension when you retire. Your benefits will usually be paid in one lump sum, either in cash or in annuities. Best of all, your employer shoulders all the risk by putting money aside and guaranteeing a set income regardless of how the pension pot performs. Unfortunately for workers, these plans are increasingly disappearing from the corporate world. U.S. Bureau of Labor statistics indicate only about 15% of private-sector employees now have a traditional pension plan. Few companies are now willing to take on the heavy and long-term financial risks associated with defined benefit plans. Pension liabilities also go hand-in-hand with regulatory requirements and appear on corporate financial statements — which then go on to impact the company's valuation. As a result, a lot of U.S. companies have turned to 'defined contribution' pension plans as a more sustainable alternative. Defined Contribution Plans A defined contribution plan is a pension product where both you and your employer contribute defined amounts to your future retirement fund. Your income after retirement is then based on the accumulated value of your contributions and the investment performance of your fund. That means your retirement income isn't fixed. As a result, you'll face higher risk levels with a defined contribution plan than with a traditional defined benefit plan. The most popular type of defined contribution plan is a 401k. A 401k enables you to make pre-tax contributions, which will lower your taxable income over your working life. Some employers also vow to match your contributions, which offers a higher rate of retirement income for the future. Alternative defined contribution plans include: 403b plans (popular choice for public schools and universities) 457b plans (popular choice for state and local government) Some employers also offer profit-sharing plans. These plans see your employer make discretionary fund contributions that are linked to company profits. What Companies Still Offer Pension Plans? Defined contribution plans are still a smart way for workers to save for the future, and they're certainly better than nothing. But if you're on the hunt for greater certainty and less risk, a traditional pension plan is still the best option. Fortunately, defined benefit plans haven't gone the way of the dodo just yet. There are still some major global companies operating in the US that offer traditional pension plans. This includes: Pfizer (PFE) Merck & Company (MRK) John Deere (DE) Prudential (PRU) Ford (F) Mayo Clinic AT&T (T) Charles Schwab (SCHW) Other big names like JPMorgan Chase (JPM) and Boeing (BA) offer defined benefit plans that are still running but are closed to new employees. This list is by no means exhaustive. But it should give you an idea of just how many big employers are still offering defined benefit plans. Traditional pension plans are no longer the norm, but they're out there. Why the Kodak News Matters for Retirement Savers Don't work over at Kodak? Chances are you're not too worried about the dismantling of Kodak's ancient pension scheme. However, you might want to pay more attention. There's a very real chance this will affect all of us in the long term. It goes without saying that big corporations are going to be watching Kodak's move with great interest. If Kodak does successfully manage to cash out and repay their debts without totally ruining the lives of its 35,000 plan participants, it creates a blueprint for other companies shouldering costly and overfunded traditional pension plans. As a result, that list of big corporations still offering defined benefit schemes may start to shrink in 2026. And a shift away from traditional pensions ultimately means higher levels of risk and a shrinking source of guaranteed income for large swathes of U.S. retirement savers. Translation: keep your ears to the ground and make sure you understand exactly what your existing pension arrangements look like. There could be change on the horizon, and you've got to be aware of the retirement options available to you. On the date of publication, Nash Riggins did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. 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Yahoo
30 minutes ago
- Yahoo
I Asked ChatGPT About Tariffs — And Here's Who It Said Is Impacted Most
You can't scroll through your phone without seeing the word tariffs. It appears in every other headline. Everyone from TV pundits to social media stars are duking it out over whether they're good for the country and for consumers' wallets. At this point, you're sort of embarrassed to admit that you don't know what a tariff is, how it works or who it's going to really hit. Find Out: Read Next: Instead of asking your one know-it-all friend, who will give you an unnecessarily complex explanation, there's another route you can take: ChatGPT. While you don't want to use ChatGPT as the end-all, be-all of your investigation, it can provide a baseline of information that will help guide you in deeper research. To get a foundation into tariffs, your friendly neighborhood GOBankingRates writer (that would be me) asked ChatGPT to explain tariffs to me in very rudimentary terms — along with who should expect to be impacted the most. A Definition in a Nutshell ChatGPT's basic definition of a tariff is very simple, which is exactly what I wanted: 'A tariff is a kind of tax a government puts on products that come from other countries. It makes those foreign products more expensive so that people might buy stuff from their own country instead.' Just to double-check this information before moving on, I visited the Tax Foundation website. Its definition aligns with what ChatGPT gave me: 'Tariffs are taxes imposed by one country on goods imported from another country.' The Tax Foundation website concurred with ChatGPT's definition but offered greater specifics about the function of tariffs in trade: 'Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters.' Learn More: Tariffs in Action To give me an idea of how tariffs work in practice, ChatGPT gave me a real-world example — one that feels like it could come to a news broadcast near you sooner than you'd think. So, the U.S. imports steel from China, let's say for $100 per ton. Without tariffs, U.S. businesses buy Chinese steel at that set price. Pretty easy, right? Now, here's a wrinkle in that situation (or should we say, a dent in the steel): The U.S. government puts a 25% tariff on that Chinese steel. At $100 plus a $25 tariff, that same steel now costs $125 per ton. If the same American businesses balk at the new expense, they might go to U.S.-made steel that costs $110 — because it's now cheaper than imported steel. Why Are Tariffs Imposed? Ostensibly, tariffs are imposed to protect local businesses. As ChatGPT put it, 'tariffs make imported goods more expensive, so local products seem cheaper in comparison.' It gives me another real-world scenario: 'If cheap clothes from another country flood the market, local clothing companies might go out of business. A tariff helps them compete.' Needless to say, if tariffs can help local businesses keep their doors open, that's good news for employees. And when I asked ChatGPT why tariffs are imposed, it did mention that, when local companies are protected, they might be more likely to keep or hire more workers. ChatGPT offered another scenario, which is that tariffs can be implemented as a means to influence, or even outright punish, other governments. It returned to the theme of tensions between the U.S. and China to offer another example. 'The U.S. imposed tariffs on Chinese goods during trade tensions to pressure China on trade practices,' it wrote. What's the Controversy? Even if you haven't fully understood what tariffs are, you're still likely aware that they can be controversial. Some pundits tout their ability to make American businesses more competitive, while others say that they're only passing higher costs of popular goods onto consumers. ChatGPT shared that tariffs also have the potential to limit the choice that everyday shoppers enjoy. 'If tariffs make foreign products too expensive, stores might stop selling them,' it wrote. 'So you have fewer brands or types of products to choose from.' Another concern involves trade wars. According to ChatGPT, sometimes countries respond to tariffs with retaliatory tariffs of their own, which can make a wider range of products more expensive for all consumers while putting the hurt to businesses that rely on overseas sales. Who Gets Impacted the Most? Tariffs impact a broad swath of people and organizations, some more positively than others. Of course, domestic producers face less competition from cheaper imports, while consumers find their options limited and more expensive. Importers and retailers also take it on the chin, according to ChatGPT, since they have to pay more for goods or even switch suppliers. There's also the possibility that they can lose out on business if customers don't want to pay higher prices. With their products becoming more expensive, exporters could potentially lose sales because their products become too expensive — however, other countries have the option to retaliate with their own tariffs. To explain, ChatGPT offered the following example: 'After U.S. tariffs on Chinese goods, China imposed tariffs on U.S. soybeans — hurting U.S. farmers.' There isn't really one type of person who will be hit hardest by tariffs — and some of the impact depends on what other countries do. More From GOBankingRates 5 Ways Trump Signing the GENIUS Act Could Impact Retirees4 Affordable Car Brands You Won't Regret Buying in 2025 This article originally appeared on I Asked ChatGPT About Tariffs — And Here's Who It Said Is Impacted Most Solve the daily Crossword
