Oct 13 (Reuters) - Staffing company Kforce Inc
raised its third-quarter outlook amid a rise in temporary
hiring.With companies wary of adding to their permanent headcount
in uncertain times, employers cautious about the economic
recovery are hiring more temporary labor.Kforce, which offers staffing in areas such as technology,
finance and accounting, health and life sciences, said it now
expects third-quarter earnings of 22 cents a share on revenue of
$289 million.The company, which competes with Korn/Ferry International
, Kelly Services and SFN Group , had
previously forecast earnings of 17-19 cents a share on revenue
of $276-$283 million in the quarter.Analysts, on average, were expecting earnings of 18 cents a
share on revenue of $$279.4 million, according to Thomson
Reuters I/B/E/S.Shares of the Tampa, Florida-based company closed at $11.68
on Thursday on Nasdaq.
The research firm, which focuses on financial services,
conducted the survey in March, well before the recent RIM
outage which left large pockets of BlackBerry users around the
world without access to email and other functions.The study found that using mobile devices was increasingly
important to advisers, many of whom service clients with
hand-held devices who have access to online brokerage
services.Nearly half the advisers surveyed said having access to
business applications was an “important” or “very important”
part of their technology strategy for 2011.
Stock market losses began dragging down pension assets a few years ago, but the current near-zero interest rates - intended to spur the American economy - have worsened the problem and created the largest gap in assets and liabilities since the end of World War II. “While low interest rates help people borrow money, they dramatically shoot up the pension obligations of plans,” says Rebecca Davis, an attorney at the Pension Rights Center in Washington.And the problem isn’t unique to the U.S. A new study from consulting giant Mercer says the problem is global in scope. The sustainability of pensions in other countries is also at risk, according to the 2011 Melbourne Mercer Global Pension Index released on Tuesday.That’s the kind of uncertainty prompted American Airlines Captain Rod Carlone to leave the work force last month, much sooner than he had expected. Carlone says he did not want to risk missing out on a lump sum payment if the American Airlines Pensions Inc. Pilot Retirement Benefit Program Fixed Income Plan (the pilot pension plan) was underfunded. After almost 24 years at American, he flew his last flight on September 30 from Dallas to Los Angeles.”I can’t afford at almost 62 a financial setback I could not recover from,” Carlone says. “I live in Las Vegas, and this is one wager I didn’t want to make.”Concerns about the pension have resurfaced in recent months, but the airline says participants shouldn’t worry. “We have a history of meeting our pension obligations,” says Sean Collins, director of financial communications at American Airlines.How bad is the cash crunch for companies? The aggregate deficit of pension plans among S&P 1500 companies climbed by $134 billion in September to $512 billion, according to Mercer. The funded status of the 100 largest corporate pensions dropped by $124 billion during September, according to Milliman, an actuarial and accounting firm. Looking at it another way, the funded ratio of companies in the index slipped to less than 73 percent from almost 80 percent at the end of August.The situation is deteriorating rapidly: The decline in the last quarter was the most significant three-month drop since the start of the financial crisis at the end of 2008, Milliman says.Even more worrisome, pension obligations are expected to grow because companies must meet funding requirements set out in the Pension Protection Act of 2006. “You’re talking about dramatically increasing funding obligations in just a year’s time,” says Lynn Dudley, senior vice president policy of American Benefits Council, a Washington, D.C. trade association. “What businesses do is halt projects, and they halt hiring to save the money because it’s not a choice. They’re going to have to put it into the plan.”Companies typically make up for these shortfalls by borrowing or using cash on hand, and most should be able to pay the minimum necessary. But many sponsors have large pension liabilities, says Alan Glickstein, senior retirement consultant at Towers Watson.For example, the Goodyear Tire & Rubber Co. expects to contribute almost $400 million a year in 2012 and 2013 to improve the funding status of its pensions, according to the company. Since April, new retirees can only get half their pension in a lump sum and the other half as a monthly annuity, because the pension for salaried employees is less than 80 percent funded, which is typical for companies with underfunded pensions.American says an outside analysis of its plan in the first quarter of 2011 “found that all four AMR pensions were more than 80 percent funded.” The company says it has contributed more than half of the $520 million it needs to provide this year to its four plans.”Companies with lots of cash can probably weather the storm,” says Jonathan Barry, a partner in Mercer’s Retirement Risk and Finance business. But not every employer has a lot of cash, he says, including nonprofits.More companies may decide to freeze pensions, say experts. When that happens, workers don’t get to accrue additional benefits beyond what they’ve already earned. Companies typically add a 401(k) plan, but that leaves the retirement saving and investing to employees rather than the pros.IDENTIFYING TROUBLEHow do you know if your pension is in trouble? Companies must notify workers if a plan falls below 80 percent funding. Plans with a funding level below 60 percent are forced to freeze and to provide only an annuity.Companies obviously don’t like to slip below the 80 percent threshold, says Mike Dulaney, consulting actuary, retirement and investor services at Principal Financial Group. Employees “are going to get their pensions, but they may lose some flexibility in terms of the pension payments they receive,” Dulaney adds. “They don’t want to give notice to workers about the restrictions,” he says. “It might cause panic among participants.”But they shouldn’t, says Davis of the Pension Rights Center. Even in the worst-case scenario such as when a company files for bankruptcy, workers receive most if not all of their benefits from the Pension Benefit Guaranty Corp., which insures private pensions and pays benefits when companies can’t.Currently, a 65-year-old would receive a maximum of $54,000 a year in pension benefits from the PBGC, if that is what they would have received from their company.Davis recommends that workers stay on top of a plan’s funding status by reading the fund’s annual report, typically sent by mail. Plans must provide additional notices when benefits are restricted because of pension underfunding.Historically, most people eligible for a lump sum take it rather than choose a lifetime annuity. But that’s not necessarily the best choice. New rules allow smaller lump sums, and since January, the Standard & Poor’s 500 stock index dropped 4 percent. — good reminders that managing your own money isn’t easy.Consider your age, life expectancy, company health and other investments before making the choice about whether to take an annuity or lump sum. Most importantly, don’t be tempted to spend that money now if you’re going to need it for retirement. Another consideration, if your company freezes the plan you might want to save more in a 401(k) or IRA.
* Growth languishes at low levels* Fears that government could raid c.bank funds* To remain heavily dependent on foreign aidBy Suleiman Al-KhalidiAMMAN, Oct 12 (Reuters) - Jordan’s former central bank
chief, ousted by the government last month after security
personnel surrounded the bank to stop him entering, says he
fears for the country’s economic stability as rising government
spending pushes state finances deeper into the red.”Am I conceited because I speak my view and don’t agree with
government policies that will create problems in the future?”
Faris Abdul Hamid Sharaf told reporters, responding to public
criticism of him by Prime Minister Marouf al-Bakhit.Just several years ago, Jordan was viewed by many
businessmen as an economic success story; under reforms guided
by the International Monetary Fund, it became one of the Middle
East’s most open economies.Now, political unrest across the Arab world has pushed
Jordan into a big increase in government spending on salaries,
food and energy subsidies and its social safety network, in an
effort to head off domestic protests by placating the country’s
poor. Millions of dollars of state money have been channelled to
tribal areas that provide the backbone of support for the
Hashemite royal family regime.This has prompted the government to increase state spending
this year by over 700 million dinars from its original plan to
6.95 billion dinars ($9.8 billion) through two supplementary
annexes to the 2011 budget.That makes the government’s budget deficit target this year,
5.5 percent of gross domestic product, look much too optimistic;
economists and bankers think the deficit will be nearly 7
percent. Public debt was already rising before the additional
spending — at the end of August it stood at 12 billion dinars
or 57 percent of GDP. Including debt incurred by the national
electric power company and guaranteed by the government, it is
already above a legal limit set by Jordan of 60 percent,
according to the finance ministry.”The government is saying the deficit is a small price to
pay in return for maintaining social peace and security. They
are pursuing a policy of political convenience and appeasement.
But they are just postponing problems at a higher cost,” said
Jawad Anani, a leading economist and former deputy prime
minister.Earlier this year, Jordan’s economy was officially expected
to grow around 3 percent in 2011, much slower than the average 7
percent seen over the last decade during a boom fed by high aid
levels and capital inflows and investments.But even 3 percent may not be attainable, officials now
concede privately, as the kingdom is still struggling to recover
from the global downturn of 2008-2009, which cut remittances
from Jordanian expatriates in the Gulf.Another blow to state finances is a record energy bill that
is expected to top $4.5 billion after the disruption of Egyptian
gas supplies to Jordan due to sabotage of the pipeline in the
Sinai region. This prompted the kingdom to switch to more
expensive diesel fuel to generate electricity.”The government cannot touch or change 90 percent of the
expenditure allocations in the budget. Economic conditions are
not comforting,” an exasperated Finance Minister Mohammad Abu
Hammour told Reuters.TENSIONSThese tensions spilled over last month in the government’s
sacking from the central bank of the 41-year-old Sharaf, a
U.S.-educated banker who is the son of Abdul Hamid Sharaf, a
former liberal prime minister who tried to modernise the
country’s tribe-based political structure before his death in
1980.Sharaf said he did not know why he was ousted, suggesting it
might be because he had “fought corruption within the banking
sector and stood up against the entry of criminal elements”.But disagreements over economic policy appeared at least
partly responsible. Sharaf, known as a fierce advocate of fiscal
discipline, had repeatedly warned that wasteful subsidies were
distorting the economy and hindering IMF-guided reforms.Sharaf also had forthright views on the need to rationalise
Jordan’s secret army expenditure. This made him enemies in a
bloated military patronage system.Prime Minister Bakhit, a conservative former general, said
publicly that Sharaf’s free-market views ran contrary to the
populist agenda of a government which claims to defend ordinary
Jordanians from the abuses of the business elite. The current
government came to power in February, during the Arab Spring
unrest in the region, after King Abdullah sacked an unpopular
pro-business prime minister.Regardless of the specific issues at stake, the government’s
action against the central bank governor, who was only ten
months into a five-year tenure, raised questions about the
predictability of economic policy-making.”It sends a very, very bad signal. This was a political
mistake of huge dimensions. This is a very worrying
development,” said one senior Western diplomat, who requested
anonymity.Sharaf, who described his dismissal as illegal, was replaced
by a long-time veteran of the bank, Mohammad Said Shaheen, a
deputy governor. He is expected to focus on the central bank’s
traditional role of defending the dinar currency, which is
pegged to the U.S. dollar.INDEPENDENCEIn March this year, Sharaf stood up to the government when
it sought to overdraw its account at the central bank to pay
civil servants’ salaries. He wrote to Bakhit and the finance
ministry saying they had three days to come up with the funds, a
rare move in a country where influential politicians are rarely
challenged over spending.”If you overdraw it’s a form of printing money. I am not
going to let the government find an illegal window of
financing,” he said.Now some economists and businessmen fear that with Sharaf
out of the way, the government could seek to finance its budget
deficit by raiding funds at the central bank.”If the central bank succumbs to pressure to give advances
to the government to alleviate pressure on the budget by taking
on more public debt, the bank could become a government puppet,”
said Anani.Prominent commercial banker Mufleh Aqel said, “The
independence of the central bank must be maintained under all
circumstances so that it does not fall under the government’s
influence — especially at a time of expanding social programmes
that appease rather than solve fundamental problems facing the
economy.”Jordan’s key role in protecting geopolitical stability in
the Middle East makes it one of the highest per capita
recipients of foreign aid in the world, according to figures
from USAID, the U.S. aid agency. In the past, foreign aid has
sometimes financed almost half the country’s budget deficit;
Anani and others credit a $1.4 billion cash injection by Saudi
Arabia this year for keeping the economy afloat.Last year Jordan issued its first sovereign Eurobond on the
international market, raising $750 million. Abu Hammour said the
price of those bonds had now dropped about 10 percent in
secondary market trading, though he attributed this to pressure
on bond prices across the region in the wake of the Arab Spring,
and did not rule out Jordan returning to international debt
markets next year.Weak global markets may make it hard for Jordan to issue
another international bond, however. In that case, the
government will have to continue relying heavily on foreign aid
in the coming year. But the fiscal pressures on Jordan mean the
aid may not be enough to support solid economic growth;
economists worry large government debt issues to local banks to
fund the deficit will crowd out credit to the private sector.”Jordan has to resort to more stringent fiscal policies and
ask people to tighten their belts. Otherwise we might become
