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Old 03-07-2014, 09:02 AM   #21
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Notice that Boeing gave employees a raise. That goes back to public employees arguments that employees with no pensions tend to make more money than people with pensions (public employees specifically).
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Old 03-07-2014, 01:45 PM   #22
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Or are you saying the way the headline is worded fuels fires? I can see that. On the radio today I heard them say they are 'ending' pensions, which I think people hear as having them pulled from them, rather than 'existing frozen in place', with a new system going forward (as mentioned by youbet in post #2).
Yes, I'm talking about the headlines. They never seem to miss a chance to push "us versus them" division with every chance they get.
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Old 03-07-2014, 02:25 PM   #23
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Notice that Boeing gave employees a raise. That goes back to public employees arguments that employees with no pensions tend to make more money than people with pensions (public employees specifically).
As one expecting to ER in the next year or two I've run many simulations with Boeing's pension calculator and compared the annual increase in pension with the value of an equivalent annuity. In short for retirement around age 55 the annual increment in the pension is worth about 20-25% of my base salary. So, while the 9% bump Boeing is giving employees in 2016 is indeed "better than a kick in the pants" as another poster put, it's still a heck of a lot worse than many of us had been getting.

FWIW this is little surprise to anyone at Boeing. We'd known this was in the wind for some time. The only real question was the exact date of the freeze. As it stands with Boeing removing a big incentive after January 1, 2016 I'll bet a whole lot of Boeing folks ER right around then. If one of their occasional "early exit" plans is offered around then (essentially a voluntary layoff with severance) then I just about guarantee it.
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Old 03-07-2014, 11:10 PM   #24
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includes CEO

I just saw a article on cnbc.com it even includes the CEO. I missed the N above!
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Old 03-08-2014, 08:24 AM   #25
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Bummer. The " Cradle to Grave" programs offered by mega corps are all but gone now. If you have a pension, feel blessed as these things are out dated and too costly.
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Old 03-08-2014, 08:56 AM   #26
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Bummer. The " Cradle to Grave" programs offered by mega corps are all but gone now. If you have a pension, feel blessed as these things are out dated and too costly.
I say 'good riddance' to DB pensions. As I've mentioned many times, these are promises made today by people who won't be there tomorrow to keep them. Not a prudent thing to base your retirement on. And worse, many people seem to depend on these and then never learn the basics of investing and planning for their own future. It leaves hem very vulnerable.

Much better, IMO, to have things set up more like a defined contribution pension. It could be good to offer some kind of government regulated annuity system once you have retired, which could help people pool their 'longevity risk'. But the annuity payments should be allowed to float to reflect the reality of the funding of the system, not a promise that maybe cannot be kept. With conservative management, the payments ought to be reasonably predictable.

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Old 03-08-2014, 09:08 AM   #27
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I just saw a article on cnbc.com it even includes the CEO.
Time to shed one small tear for the CEO... whose pension will be frozen at $3.6M/yr (coincidentally just about 100x where mine will be frozen).
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Old 03-08-2014, 10:46 AM   #28
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Wife and I are Boeing engineers (speea represented). The writing's on the wall for our pension to be frozen in 2016 also. I'm 49 and wife is 50 and plan on retiring at 55. Due to the change, i've been crunching numbers (my spread sheets smokn!). I will have 14 years vesting and wife will have 25 vesting by 2016. A freeze in 2016 will reduce our combined monthly payout by 700/month.

I've learned by crunching the numbers, the pension (non cola'd) becomes less and less important to our finances as i get older due to inflation (meaning when we age to 85). The 401k looks amazing when you project it out to age 85 at an average 5% annual growth. Social security also plays a significant roll in propping up that third leg of the financial bench (hate using the word stool).

So summarizing my post, the frozen pension will have minimal impact to us.
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Old 03-08-2014, 10:53 AM   #29
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Time to shed one small tear for the CEO... whose pension will be frozen at $3.6M/yr (coincidentally just about 100x where mine will be frozen).
A man has gotta eat.
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Old 03-08-2014, 04:23 PM   #30
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Yes, I'm talking about the headlines. They never seem to miss a chance to push "us versus them" division with every chance they get.
That isn't really true. Most people who are interested in Boeing pay are Boeing workers and retirees, as well as other is areas where Boeing payrolls are important. And most of these people understand very well the details involved.
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Old 03-08-2014, 05:38 PM   #31
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Wife and I are Boeing engineers (speea represented). The writing's on the wall for our pension to be frozen in 2016 also. I'm 49 and wife is 50 and plan on retiring at 55. Due to the change, i've been crunching numbers (my spread sheets smokn!). I will have 14 years vesting and wife will have 25 vesting by 2016. A freeze in 2016 will reduce our combined monthly payout by 700/month.

I've learned by crunching the numbers, the pension (non cola'd) becomes less and less important to our finances as i get older due to inflation (meaning when we age to 85). The 401k looks amazing when you project it out to age 85 at an average 5% annual growth. Social security also plays a significant roll in propping up that third leg of the financial bench (hate using the word stool).

So summarizing my post, the frozen pension will have minimal impact to us.
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Old 03-08-2014, 06:07 PM   #32
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Notice that Boeing gave employees a raise. That goes back to public employees arguments that employees with no pensions tend to make more money than people with pensions (public employees specifically).
Of course, that argument is specious.
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Old 03-08-2014, 06:23 PM   #33
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I say 'good riddance' to DB pensions. As I've mentioned many times, these are promises made today by people who won't be there tomorrow to keep them. Not a prudent thing to base your retirement on. And worse, many people seem to depend on these and then never learn the basics of investing and planning for their own future. It leaves hem very vulnerable.

Much better, IMO, to have things set up more like a defined contribution pension. It could be good to offer some kind of government regulated annuity system once you have retired, which could help people pool their 'longevity risk'. But the annuity payments should be allowed to float to reflect the reality of the funding of the system, not a promise that maybe cannot be kept. With conservative management, the payments ought to be reasonably predictable.

-ERD50
ERD50, you always forget to mention the very bright politician who will soon figure out a way for the government to "borrow" the funds put in to this wonderful regulated annuity.
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Old 03-08-2014, 08:07 PM   #34
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The govt already "borrows" govt workers civil service 401 money in one particular fund...the "G" fund on occasion. Even though the money does not belong to the govt...it belongs to the workers that deposited into that fund...the govt does it anyway. I believe the last time they got into our 401 wallet was during the latest govt shutdown. I am now a retired govt worker and when I reach 59 1/2...my 401 money will meet Mr. Bogle at Vanguard.

I think that since Wall St and Congress sleep with each other, (bailouts, lobby money, etc), the conclusion about the govt getting into regulated private money makes sense. Even "The Fed" is not The Fed.
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Old 03-08-2014, 08:10 PM   #35
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Defined benefit pensions had a bad rap recently and there were certainly abuses. But there were also problems with funding that there didn't have to be. You can make an actuarially sound estimate of what is required to fund a defined benefit pension and if you actually make the suggested contributions the system works fine. If the pension funds are invested appropriately then there's plenty of money available when needed to pay benefits. The two problems that arose were that first this is a lot of money and all the sharks came out to get a piece of it. Sometimes pension boards were swayed by flashy arguments and many inappropriate investments were made, and lots of money spent on fees. Second, if the investments did well for a time, instead of seeing that as normal fluctuations, many sponsors of the plans took the opportunity to raid the plan for the "excess" dollars. Meaning that underfunded plans became the norm as "overfunded" ones were terminated by irresponsible, but often well paid, raiders. Exposing one of the critical flaws in such plans: the promises are only as good as the people and institutions making them, because the participants have little if any direct control.
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Old 03-08-2014, 08:57 PM   #36
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that arose were that first this is a lot of money and all the sharks came out to get a piece of it. Sometimes pension boards were swayed by flashy arguments and many inappropriate investments were made, and lots of money spent on fees. Second, if the investments did well for a time, instead of seeing that as normal fluctuations, many sponsors of the plans took the opportunity to raid the plan for the "excess" dollars. Meaning that underfunded plans became the norm as "overfunded" ones were terminated by irresponsible, but often well paid, raiders. Exposing one of the critical flaws in such plans: the promises are only as good as the people and institutions making them, because the participants have little if any direct control.

The book Pension Heist documents how this stuff was done.

Direct control by participants is the only cure for this kind of immoral greed.
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Old 03-08-2014, 11:47 PM   #37
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Did you mean: Retirement Heist How Companies Plunder and Profit from the Nest Eggs of American Workers By Schultz, Ellen ?

I'm off to the library to get a copy. Sounds interesting.
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Old 03-09-2014, 12:50 AM   #38
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Did you mean: Retirement Heist How Companies Plunder and Profit from the Nest Eggs of American Workers By Schultz, Ellen ?

I'm off to the library to get a copy. Sounds interesting.
The title should be "Retirement Heist How Companies and Governments Plunder and Profit from the Nest Eggs of American Workers." Governments have recently gone where private employers dare not tread in terms of screwing retirees.
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Old 03-09-2014, 08:37 AM   #39
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Did you mean: Retirement Heist How Companies Plunder and Profit from the Nest Eggs of American Workers By Schultz, Ellen ?

I'm off to the library to get a copy. Sounds interesting.

Yes. Sorry for the error.
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Old 03-09-2014, 10:10 AM   #40
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Did you mean: Retirement Heist How Companies Plunder and Profit from the Nest Eggs of American Workers By Schultz, Ellen ?

I'm off to the library to get a copy. Sounds interesting.
That book has been discussed here before. From the responses, the book seems to frame things in such a way to rile up the masses. I'd suggest you keep plenty of grains of salt handy as you read.

The question I kept asking was - were any of the private pensioners left with less than PBGC guarantees? I think the answer is "no", unless they go back in time before the PBGC was in effect.

IIRC, there were cases where companies froze the current pensions, and spent any over-funding of those pensions (within PBGC guidelines), and the pensioners received the full amount of the pensions they had earned to that date. I think that's a little different from what the title suggests (heist and plunder).

If a company was actually going into BK, then of course they are going to spend any over-funding of a pension system. The PBGC would probably require that before taking it over, it only makes sense - the goal would be to avoid BK and a takeover. You would not leave money on the table, and the 'over-funded' amount technically is not the pensioner's money, it is the company's money, per the rules.

That said, I'll argue that if we are going to have DB pensions, they should be at least 100% funded, based on an assumed return of only keeping up with inflation. If the funding grows faster due to real returns on the investment, the company would not need to contribute as much that year. That would be a much safer way to play it, but I don't get to make the rules.

And even the existing rules are far beyond the (practically non-existent) controls on municipal pensions. youbet makes an excellent point, that 'governments' should have been included in the title - in some cases, the 'heist and plunder' could be an accurate assessment of what has happened in that arena.

-ERD50
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