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Now this is gotta hurt....
Old 10-04-2004, 09:20 AM   #1
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Now this is gotta hurt....

http://www.csmonitor.com/2004/1004/p02s01-usec.html

It sure must suck to think you are going to retire with $140K pension, and maybe end up with only $28K instead....

Something tells me there will be a lot more stories like this in the decades to come.... as coporate america basically walks away from the promises they made to their employees, and once again, the taxpayers are left holding the bag.
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Re: Now this is gotta hurt....
Old 10-04-2004, 09:47 AM   #2
 
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Re: Now this is gotta hurt....

Quote:
Now this is gotta hurt....
What you mean is:
Quote:
Now this has gotta hurt
Unless you're speaking Ebonics
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Re: Now this is gotta hurt....
Old 10-04-2004, 12:33 PM   #3
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Re: Now this is gotta hurt....

Years (many years) ago I worked for USDOL. During an audit an employee asked me about their retirement program. This was before 401(k)s, IRAs and the like. I told him that if he were making decisions based on that retirement promise to examine the program carefully and related what happened to a friend of my Mother's when the promise of retirement was just that and the company folded. The employer made a BIG fuss to my boss.

As great as defined benefit plans are, they are are only promises and in my opinion much riskier than a 401(k) or IRA managed by an employee who educates her/him self.

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Re: Now this is gotta hurt....
Old 10-04-2004, 01:01 PM   #4
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Re: Now this is gotta hurt....

Quote:

As great as defined benefit plans are, they are are only promises and in my opinion much riskier than a 401(k) or IRA managed by an employee who educates her/him self.
If you are referring to examples like the Steel Industry and the Airlines, i.e. companies that must make a profict to survive, then I must agree.

Knowing what I know now, if I could apply it to what I didn't know then, I just would have started my present public sector non-profit career at a younger age. The chances of my DBP going bust are nil, it is so conservatively invested that they administrators actually were able to enhance the benefits a few years ago.

The tradeoff is there is no chance of ever becoming wealthy. My peers doing the same type of work in the private sector can possibly get in position to make the jump to truely large dollars, or even ownership. We can only look forward to steady employment (mostly, we did see peers laid of during the last year, but that is a rarity) at steady wages at the low end of the scale for the work performed and the responsibilities entailed.

In effect Public Sector jobs have negotiated over the decades really excellent benefits (health, leave, etc) to compenstate for lack of competitive pay. The upside I'm finding is at the end of the rainbow that is FIRE we're in pretty good shape, with a decent payout without risk.We're the turtles.
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Re: Now this is gotta hurt....
Old 10-04-2004, 02:12 PM   #5
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Re: Now this is gotta hurt....

My Dad retired from United Airlines in 1980 at the mandatory age 60 for pilots. He took his retirement benefits as a lump sum which he invested in bonds that averaged 13% or more. As he has watched the changes in United, he is so happy that he made that decision.

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Re: Now this is gotta hurt....
Old 10-05-2004, 08:16 AM   #6
 
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Re: Now this is gotta hurt....

The shortest job interview I ever had was with Macy's Department Stores when I was fresh out of college.

Interviewer: "So, we're going to begin the high-pressure portion of your interview."

Me: "Fine. Do you mind if I start?"

Interviewer (startled): "No, not at all."

Me: "I was reading in the WSJ last night that Macy's is reneging on pension plan benefits. How can you assure me that Macy's won't treat me in the same way if I build a career with this company?"

Interviewer (standing): "Thanks for coming in today."
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Re: Now this is gotta hurt....
Old 10-05-2004, 09:47 AM   #7
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Re: Now this is gotta hurt....

I agree with JohnyM that the public sector employee is well positioned in retirement. Public sector retirees can sue their employer if their program changes and have had good results.

Federal employees (CSRS) will be treated just like SS beneficiaries-no venue there. Private sector retirees in defined benefit plans, particularly those highly paid, are at high risk if their employer reneges.

Each of us should counsel the young workers in our family about life's risks and rewards.
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Re: Now this is gotta hurt....
Old 10-05-2004, 09:54 AM   #8
 
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Re: Now this is gotta hurt....

Please be aware that CSRS no longer exists except for those who were already in it in 1986. The program now for federal employees is FERS, and is different.
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Re: Now this is gotta hurt....
Old 10-05-2004, 12:20 PM   #9
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Re: Now this is gotta hurt....

Quote:
As great as defined benefit plans are, they are are only promises and in my opinion much riskier than a 401(k) or IRA managed by an employee who educates her/him self.
Having a defined benefit plan is like having a 401k plan where your only holding is company stock. In both cases, your entire future rests on the company lasting the entire 60 years of a working/retirement cycle.
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Re: Now this is gotta hurt....
Old 10-05-2004, 03:31 PM   #10
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Re: Now this is gotta hurt....

For those who don't know, FERS is the retirement plan available to Federal employees and is similar to a 401(k). CSRS is a defined benefit plan for Federal employees hired before 1986. Those hired before 1986 are in CSRS in whole or part.

I agree with Michael- a defined benifit plan is akin to having all your 401(k) in company stock (shades of ENRON).
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Re: Now this is gotta hurt....
Old 10-05-2004, 10:34 PM   #11
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Re: Now this is gotta hurt....

Quote:

Having a defined benefit plan is like having a 401k plan where your only holding is company stock. *In both cases, your entire future rests on the company lasting the entire 60 years of a working/retirement cycle.
This is true of annuities or life insurance too.
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