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Old 05-10-2013, 07:49 AM   #21
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But fully funding a plan does change it's effectiveness in attracting and retaining employees. Employees may be attracted to a company with a DB plan, but if that plan is weakly funded they will tend to discount it. This is similar to bonus plans that provide conditional compensation. Companies with plans that pay regularly and consistently find that employees view the bonus as part of compensation when evaluating job offers. Companies that offer a bonus that pays irregularly or pays based on conditions outside of an employee's control find that employees don't consider the bonus, or discount it heavily, when evaluating job offers.
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Old 05-10-2013, 08:03 AM   #22
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Originally Posted by growing_older View Post
But fully funding a plan does change it's effectiveness in attracting and retaining employees. Employees may be attracted to a company with a DB plan, but if that plan is weakly funded they will tend to discount it. This is similar to bonus plans that provide conditional compensation. Companies with plans that pay regularly and consistently find that employees view the bonus as part of compensation when evaluating job offers. Companies that offer a bonus that pays irregularly or pays based on conditions outside of an employee's control find that employees don't consider the bonus, or discount it heavily, when evaluating job offers.
+1 good point
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Old 05-10-2013, 09:15 AM   #23
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Well in theory sovereigns states can't go bankrupt either, but in reality they do default, hosing creditors in the process just as effectively as any bankruptcy court. A lesson that large depositors in Cyprus learned very recently.
Do you mean nations I most definitely agree... they can default, but you had said BK for the states...


The difference to me is that there are rules in a BK... when it comes to a sovereign defaulting, they get to make up the rules...
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Old 05-10-2013, 09:24 AM   #24
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But fully funding a plan does change it's effectiveness in attracting and retaining employees. Employees may be attracted to a company with a DB plan, but if that plan is weakly funded they will tend to discount it. This is similar to bonus plans that provide conditional compensation. Companies with plans that pay regularly and consistently find that employees view the bonus as part of compensation when evaluating job offers. Companies that offer a bonus that pays irregularly or pays based on conditions outside of an employee's control find that employees don't consider the bonus, or discount it heavily, when evaluating job offers.
That makes sense logically, but I would bet that no more than 5% of prospective employees would even think to look at the funding level of the companies pension plan. Most people dont even know how much money is in their 401k or what funds they are invested in.
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Old 05-10-2013, 09:29 AM   #25
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Being able to attract the best (highest potential) prospective employees is an excellent reason to have an adequately funded plan. In that same line, being able to attract the best (lowest) lending rates and the most committed (long term) investors are just as important. The same reasoning applies to public pensions.
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Old 05-10-2013, 10:08 AM   #26
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But fully funding a plan does change it's effectiveness in attracting and retaining employees. Employees may be attracted to a company with a DB plan, but if that plan is weakly funded they will tend to discount it. This is similar to bonus plans that provide conditional compensation. Companies with plans that pay regularly and consistently find that employees view the bonus as part of compensation when evaluating job offers. Companies that offer a bonus that pays irregularly or pays based on conditions outside of an employee's control find that employees don't consider the bonus, or discount it heavily, when evaluating job offers.
+1. I've stayed 27 years at a private company and will get around a 55-60% pension at age 55 - for which I never contributed a nickel. My DW will get 60% of that when I'm gone. Plus same health benefit plan as now til Medicare. I think the plan is over 90% funded.

I'd say the average tenure in my department (IT) is 20 years. And probably close to half of us (of 200) are within 5-10 years of retirement.

Honestly, when I was a 23-yr old kid and started at my job, I didn't look at the pension. But after a few years in, and even moreso all these years later, many of us HAVE looked at the value of our pension and other benefits when considering other jobs. And most have stayed.

In my case, I'm looking forward to ER in 5 years, and a rock-solid private employer with a great free pension is a large part of the reason why.
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