Boston — Unlike social security, most US firms have not kept their pension benefits up with inflation. Now some company officials think they have a new source of cash to tie future retiree benefits to rising prices: the workers.
So far, at least four major companies have begun to ask employees to contribute to their own protection of pension income against the bite of inflation. In return, workers get a guaranteed annual cost-of-living increase in benefits when they retire.
* At Sun Company (formerly Sun Oil), for instance, an ''inflation beating'' plan announced recently (and still needing IRS approval) gives employees the option to contribute 50 percent of the cost of increasing their individual pension annuities by 3 percent annually. The company adds the other 50 percent.
An additional 1, 2, or 3 percent increase (giving a total of 6 percent per year) will eventually be offered, but without company matching.
One way that employees can pay for their share is to elect to have their future pension benefits reduced slightly, and the money invested in the inflation-hedge program.
In return, employees are guaranteed an increase in pension annuity of 3 to 6 percent for the first 15 years of retirement, at which point it would level off, says the plan's designer Everett T. Allen. Mr. Allen is vice-president for Towers, Perrin, Forster, and Crosby, one of the largest employee-benefits consulting firms in the United States.
* Sun Company's plan differs from one to start up in 1983 at Xerox, which opted for a mandatory contribution. Employee pensions will receive an automatic annual increase of 3.25 percent, beginning one year after retirement and continuing for life. Workers must contribute 1.5 percent of their pay each year, which is deducted from a cash-deferred element of the company's profit-sharing plan.
* Beginning in January of this year, employees at Heinz have been presented a program that: (1) automatically adjusts pension benefits up 3 percent for every year that the government's consumer price index (CPI) rises more than 6 percent; (2) offers workers an option to contribute to an additional ''escalator annuity'' program with the company matching half; and (3) gives workers an option to accept reduced benefits for the first few years of retirement in exchange for a fixed annual increase of 3 percent for life.
Employee reaction has been favorable so far. According to Frank Balint, manager of employee benefits, ''Our biggest problem has been communicating it to the employees. It's a very complex program, but I think we've made some progress . . . .''
''We've had a number of inquiries from other companies about our plan,'' he adds.
* At Inco Corporation, a plan in effect since July of this year is nearly identical to the second part of the Heinz program, except that Inco pays the full cost of the supplement after the age of 80.
Until recently, most corporations have attempted to redress inflation effects on pensions with sometimes-infrequent hikes in benefits, usually 3 to 5 percent. But the burden on company budgets has led to the interest in worker-contributed, guaranteed ''annuity escalators.''
Even with the plans, however, the 3 to 5 percent increases are far below the CPI. But most experts believe that retirees feel the pinch of inflation less than workers since they have decreased costs for home mortgages, transportation to jobs, recreation, clothing, personal care, and other expenses.
Mr. Allen of Towers Perrin explains, ''We don't know whether inflation will increase 10 percent, 15 percent, or 2 percent. We know that 3 percent may be viewed as not enough. However, the CPI pretty strongly overstates the true loss of purchasing power for the retiree.''
Also, social security, which composes at least half of many a retiree's income, is fully linked to the ''overstated'' CPI. Consequently, purchasing power may increase during retirement.
According to a September 1981 Towers-Perrin study, if the CPI rises 9 percent , an individual's private pension need only grow by 3 percent, since the actual cost-of-living increase is nearer 7 percent.
Mr. Allen is preparing similar plans for several other major companies. All strongly resist indexation to the CPI, even in part (like the Heinz program). ''That is up front almost one of the first decisions that all my clients have made. There is such lack of comfort with the CPI as a true inflation measure. The CPI is so volatile.''
However, the volatility of the CPI may be reduced if the Bureau of Labor Statistics (BLS), which computes the index, has its way.
On Oct. 27 the BLS announced that, starting in 1983, it would dramatically change the way it calculates the controversial housing component, which constitutes more than one-fifth of the index.
Instead of attempting to compute the purchasing and financing costs of the 6 percent of the population who buy a home each year, a rental cost equivalent will be substituted, protecting the index from the wide swings in housing mortgage rates.
According to BLS studies, the CPI change would have been 1 to 2 percent smaller in the last ten years under the revised index. Potentially, this change could lighten the burden of the social-security system, but the future is unclear, according to most experts.
''It's a step in the right direction, but this change is not enough,'' remarks Barnet N. Berin, director of professional standards for William M. Mercer Inc., a management consulting firm.
Ideally, BLS will calculate an ''oldster's'' inflation index, a concept supported by the President's Commision on Pension Policy and many specialists in the field. The business-think tank Committee for Economic Development in a recent study recommends ''that as soon as feasible, benefit payments should be tied to a price index that more accurately reflects consumption patterns of older Americans.''
But, as of now, either the CPI or company estimates must do.
Steve Zaleznik, legislative counsel for the American Association of Retired Persons, constantly receives calls and letters from current and potential retirees trying to recoup inflationary costs. He can only tell them, ''There are just no simple answers.''
But, Mr. Berin sees a positive trend. ''The (corporate pension) system is responding, adjusting to the current situation. Companies are starting to emphasize improvement in pension benefits. But, ultimately, the problem isn't the pension programs, it's inflation.''