Interesting book

[Chuckanut]

I heard about this book on NPR earlier this week. They were interviewing the author. The book title is "Retirement Heist". It is about pensions.

 

[GregLee]

Here is some info:

As companies have been moving away from traditional pension plans, they have been shifting employees to new retirement plans, such as 401(k)s, that transfer the cost — and the risk — to workers.
'Retirement Heist': How Firms Trimmed Pensions : NPR

 

[Chuckanut]

Here is a link to the broadcast

https://www.npr.org/2011/09/29/140344871/retirement-heist-how-firms-trimmed-pensions

 

[Helen]

Schultz cites this example of one well-known company whose pension fund has dropped significantly since the early 1990s. General Electric announced it was closing its pension plan to be more competitive. She says the company's financial filings show that GE has not put a cent into its pension plans since the mid-1980s. Over the years, GE, like most large companies, used assets in the plans to pay for other things.

Sounds just like Social Security proceeds going into the general slush fund. We are a rare group to have a shot at retirement, let alone early retirement. The odds are stacked against most employees from just about every angle.

Not only have corporations rid themselves of pension plans, they have diminished the amount of matching contributions to the 401ks and reduced their own costs by passing the costs to the employees via high expense ratios.

 

[traineeinvestor]

Given the widespread history of defined benefit schemes being underfunded and "restructured" to the detriment of participants, I really have to wonder why people still persist in claiming that they are less risky than defined contribution type schemes held through personal accounts? I'd much rather take market risk through a diversified portfolio (possibly including annuities) than place my post retirement financial well being in the hands of a single company.

And this is before getting started on the other fundamental problems with defined benefit schemes.

 

[thefinancebuff]

Worker themselves indicated that they prefer a higher salary with a defined contribution plan to a lower salary with a defined benefit plan. Companies responded to market forces by cutting pension but raising or maintaining salary. If they didn't cut pension, salary would be a lot lower.

 

[meierlde]

Worker themselves indicated that they prefer a higher salary with a defined contribution plan to a lower salary with a defined benefit plan. Companies responded to market forces by cutting pension but raising or maintaining salary. If they didn't cut pension, salary would be a lot lower.

The bigger cause is that the old days of 25+ years in one job are ending. People will change jobs often, the old defined benefit pension rewarded longevity, particularly plans with a final average pay formula. (Which is why it could not transfer between employeers). Defined contribution plans at least stay with the person. The various analyists do not seem to add the mobility factor into the equation.

 

[Hamlet]

+1

Given the widespread history of defined benefit schemes being underfunded and "restructured" to the detriment of participants, I really have to wonder why people still persist in claiming that they are less risky than defined contribution type schemes held through personal accounts? I'd much rather take market risk through a diversified portfolio (possibly including annuities) than place my post retirement financial well being in the hands of a single company.

And this is before getting started on the other fundamental problems with defined benefit schemes.