DB or DC plan

[Big_Hitter]

^ hey, it's difficult being a visionary sometimes...(did you read the fox article?)

[FIREd]

Quote:

Originally Posted by Big_Hitter ^ not if enough people start demanding it I think we are about to be in a situation where private sector employers will be competing for talent (and, the only way to fund retirement benefits quickly to attract such talent is through a DB plan)

Based on the history of broken DB plan promises in the private sector, I really don't see how anyone could fall for that one again. Gimme the money up front, thank you very much.

[mickeyd]

Tough choice~ w/o guarantees that they are equal in value. I happen to have both and can appreciate both. The income streams are nice to see when the roll in each month and the rollover IRA is nice to have and be able to manage as I see fit.

Yea, I want it all.

[Big_Hitter]

Fired - based on the fox article, I'm not the only one with that opinion - only time will tell

what will help will be a wave of talent taking early retirement under the ACA exchanges and a wave those destitute with lack of DB income

I read somewhere recently that the probability of one living in poverty is 8 times higher without DB income (not just SS)

[Midpack]

Quote:

Originally Posted by Big_Hitter ^ hey, it's difficult being a visionary sometimes...(did you read the fox article?)

If you're talking to me (use quote function), it didn't do anything for me.

Quote:

In 2011, the last year studied, defined-benefit plans had median returns of 2.74%, while 401(k)s and other defined-contribution plans lost 0.22%. It was the widest margin since the mid-1990s, the company said. If you leave a large company, you might want to leave your money in the 401(k) plan instead of rolling it into an individual retirement account, suggests Dave Suchsland, a senior consulting actuary with Towers Watson.

Huh? And I did much better than 2.74% in 2011 including my lump sum...

[Texas Proud]

Quote:

Originally Posted by Big_Hitter ^ I think the plan formula would be 1% final pay times YOS less 1% PIA times YOS so you would only subtract out 30% of PIA in your example or $300; then you would get $950 a month.

I do not know.... and have no way of checking.... I do remember the example showing what looked like full SS... but that was maybe 20 years ago....

They also closed it down soon after I was in it.... maybe in it two years...

[Big_Hitter]

is this how one uses the quote function?

Quote:

Originally Posted by Midpack If you're talking to me (use quote function), it didn't do anything for me. "Don't rule out the return of pensions. The bottom line of the Towers Watson research is this, in Suchsland's words: "For a plan sponsor to provide a certain level of benefit, it is cheaper to finance through the defined-benefit plan." Even though traditional pensions present more accounting challenges(because they are carried on company balance sheets), Suchsland says he believes some employers who switched to defined-contribution plans in the past few decades may switch back because of pension efficiencies and "workforce issues."

[Big_Hitter]

Quote:

Originally Posted by Texas Proud I do not know.... and have no way of checking.... I do remember the example showing what looked like full SS... but that was maybe 20 years ago.... They also closed it down soon after I was in it.... maybe in it two years...

understood - i'm pretty sure that 1% fap * yos minus 100% PIA doesn't satisfy the IRS anti-backloading rules

[Chuckanut]

If I knew the DB plan would be well funded and managed for the benefit of the retirees with no chance of the "excess" funds being raided to fund other things for the corporation, and not dependent on the corporation surviving beyond my retirement, and had some type of cost of living adjustment (whole or partial), and my contribution a reasonable part of my salary (say no more than 8%), I would go for it.

Other than that, just give me the money (preferably a generous amount) and let me invest it tax differed if not tax exempt for whenever I choose to retire.

[mpeirce]

I'm thankful I had DC plans available since I would have never qualified for a DB plan. Too much job hopping.

[travelover]

I'd like to have a DB plan from an independent third party - i.e. not tied to one employer. Unlike SS, it would have my name on the account and it would be mine all mine!

[Mulligan]

I have a nice pension that is drawn from a trust fund that cannot be raided. 14.5 % mandatory contribution with 14.5% matched from employer. It is a very nice sound system with 2% annual cola. I don't trust myself to be a successful investor, so I am thankful for my pension. I deposit money monthly into the market and consider it gone, and never plan to touch it. I am afraid it I had a DC plan with sizable monies in it and no pension, I would go crazy staring at the daily gains and losses.

[pb4uski]

Quote:

Originally Posted by travelover I'd like to have a DB plan from an independent third party - i.e. not tied to one employer. Unlike SS, it would have my name on the account and it would be mine all mine!

Sounds like an annuity to me.

[JoeWras]

Quote:

Originally Posted by FIREd I'd pick the DB plan, but only if it was COLA'd and from the Federal Government.

Bingo.

After watching what my Megacorp #1 did to their DB plan, I concur. They stripped it bare. It was never COLAd. You had to work there forever, etc. I was in the midst of all those changes and even though I worked there for over 10 years, my benefit will be ridiculous (less than $100/mo if I start at 65), which I why I say I don't have a pension, because in 15 years, I don't even know what that will buy.

Because of that bad experience, I'm in the DC camp. At least I have some control.

But I have to admit, from what I see here, some of the Federal DB plans are really tempting. If I were used to those numbers, and could work somewhere where they were a reality and a promise not to be messed with, I'd be all for it.

[traineeinvestor]

DC everytime. I trust the markets and myself to look after my money far more than I will ever trust any employer (including government) to stand by promises made today in forty years time.

[Big_Hitter]

Has anyone on this forum actually retired without a DB plan and without an inheritance?

[JoeWras]

Quote:

Originally Posted by Big_Hitter Has anyone on this forum actually retired without a DB plan and without an inheritance?

I'm pretty sure you'll get some affirmatives.

But you have a good point. I'm FI and should be REing. But I'm in OMY syndrome partly because of that uncertainty. And partly because of no health insurance (that frequently comes along with DBs).

[Big_Hitter]

Quote:

Originally Posted by JoeWras I'm pretty sure you'll get some affirmatives. But you have a good point. I'm FI and should be REing. But I'm in OMY syndrome partly because of that uncertainty. And partly because of no health insurance (that frequently comes along with DBs).

There may be a few. I'm betting docs or lawyers who have been putting away the 415c limit for years. Next year you should be able to get good medical coverage on the exchanges at a moderate cost.

[Katsmeow]

Don't most places that have a DB also have some form of DC?

DH had a traditional DB plan, no COLA. When he retired he took it as a lump sum in a roll over instead of taking a pension. However, in addition, he had a DC and his employer matched 6% of his contributions.

By the time he retired megacorp had stopped the DB for newer employees. They had only a DC but the employer made a larger contribution than they made for DH.

I thought we had the best of both worlds with DH's plan. He had the DB but he had the option to take it as a pension or as a lump sum. I do think the ideal is to be able to split it and take some as pension and some as lump sum, but he didn't have that option. And then, in addition, he had the DC with the contributions by megacorp.

I worked in a field where DCs reign and where the employee typically makes an annual contribution that varies each year but is made regardless of whether the employee contributes.

[Calico]

I have a very safe, secure, and generous DB with a private employer. I would take it again in a heartbeat. However, I may be in the minority in that I will shortly reach 25 years with this employer - no job hopping for me. Even though the pension is non cola, between the pension, social security, and my savings I will be fine.

I thank goodness every single day for the pension, and realize how lucky I am. These plans are a thing of the past.