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Old 07-25-2012, 03:06 PM   #41
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So, Yes, while I shouldn't care because it doesn't affect me directly with a loss of pension monies, any time 18 Trillion dollars is up for grabs, the ripple effect is enough to think about.
I think you are right to be concerned, even if you are not directly affected. The ripple effect can be very real (geez, I hope I used the right effect/affect there - I try). Like-wise, I'm concerned about the public pension funding, even though I don;t have one. The ripple effect could be significant to me.

But I don't think it's realistic to say $18B is 'up for grabs'. That may be the total obligations over many, many years, and the majority of it is funded.

I guess I'm really curious as to how much is really at risk.

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Old 07-25-2012, 03:31 PM   #42
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I bet more people in the US will suffer from type-2 diabetes than pension failure over the next couple of decades.
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Old 07-25-2012, 03:58 PM   #43
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Think there's a hint I've been posting too much...
Will try to get down to one line comments.
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Old 07-25-2012, 05:42 PM   #44
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So you are basically a busybody?
I think this gets back to that "What will I do all day?" thread
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Old 07-25-2012, 08:36 PM   #45
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no 'hard working employees who have given their lives to the company' had their pensions cut (with the possible exception of some 'high earners')
I don't see how you can believe this. Maybe you are saying, for people who had already put in a full career and retired with a modest pension, the PBGC has maintained those pensions. I worked at companies where the pension plans were cut and all employees who weren't already retired did indeed have their pension cut and the formulas to calculate their partial payout were so skewed I still don't understand why it wasn't criminal. I know hundreds of people who had pension benefits cut or eliminated entirely. This was widespread and very common.
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Old 07-25-2012, 08:44 PM   #46
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I have read so much lately about the move by GM to transfer the entire salaried retirement program to Prudential that I am confused. On top of that, I don't really care anymore. In 2008 they eliminated our health care benefits and now they move our retirement plan over to Prudential. I'm not saying it's all bad, but it leaves a sour taste in my mouth. I think the PBGT is not involved in this transfer and the only guarantee we have is the "full faith and credit" of Prudential. Isn't that the term they use? I'm not saying that is bad as Prudantial is probably as solvent as the United States Government. A lot of companies will go under before Prudential and to tell the truth, I have more faith in Prudential than GM. Can you tell that I am bitter? Not bitter, just pissed.
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Old 07-25-2012, 08:48 PM   #47
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no 'hard working employees who have given their lives to the company' had their pensions cut (with the possible exception of some 'high earners')
I don't see how you can believe this. Maybe you are saying, for people who had already put in a full career and retired with a modest pension, the PBGC has maintained those pensions. ...
Yes, that is what I'm saying. The topic of the OP was the ability of the PBGC to remain solvent to cover any failing private pensions, and they have done that (up to the 'high earner' limits).


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I worked at companies where the pension plans were cut and all employees who weren't already retired did indeed have their pension cut and the formulas to calculate their partial payout were so skewed I still don't understand why it wasn't criminal. I know hundreds of people who had pension benefits cut or eliminated entirely. This was widespread and very common.
Can you provide a reference? I'm not aware of (which does not mean it didn't happen), any pension changes since the PBGC was enacted that cut the benefits that were already earned. I know that changes were made (it happened to me), that lowered the rate that future benefits were earned. So, if you were 20 years into a 30 year career, you earned 10 years under the new, lower formula. So your pension was less than if no changes were made. But they didn't retroactively change the first 20 years. That's what I'm saying.

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Old 07-26-2012, 06:26 AM   #48
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........ In 2008 they eliminated our health care benefits..........
Johnnie, did they eliminate all health care for retirees, or just move Medicare eligible retirees off their plan and onto Medicare?
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Old 07-26-2012, 08:52 AM   #49
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... and now they move our retirement plan over to Prudential. I'm not saying it's all bad, but it leaves a sour taste in my mouth. I think the PBGT is not involved in this transfer and the only guarantee we have is the "full faith and credit" of Prudential. ...

Yes. I'm not sure if this is exactly what happened with your plan, but it does seem that a company can terminate its future responsibility by purchasing an annuity for you. Of course, annuity companies also have some protections, whether these are better than the PBGC I don't know, but I'd assume roughly equivalent.

There may be one advantage to a company that sells annuities - I think they also sell life insurance, so every life insurance policy ought to provide some hedge against every annuity they sell. Seems to me that is a near perfect hedge against inflation and longevity, and they collect the premiums on both sides.

FAQs - Insured Plans & Benefits at Pension Benefit Guaranty Corp

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Q: How can an employer terminate a pension plan?

A: There are two ways an employer can terminate its pension plan.

Standard Termination

The employer can end the plan in a standard termination but only after showing PBGC that the plan has enough money to pay all benefits owed to participants. Your plan must either:

purchase an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or,

if your plan allows, issue a lump-sum payment that covers your entire benefit. Before purchasing your annuity, your plan administrator must give you an advance notice that identifies the insurance company (or companies) that your employer may select to provide the annuity. PBGC's guarantee ends when your employer purchases your annuity or gives you the lump-sum payment.
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Old 07-26-2012, 09:45 AM   #50
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Johnnie, did they eliminate all health care for retirees, or just move Medicare eligible retirees off their plan and onto Medicare?
When I joined the ranks as a retiree, we still enjoyed company provided health care with BCBS and we paid a modest monthly premium. That coverage included dental and vision and prescription drugs. As time went on, those monthly premiums went up and included copays and deductibles. When I reached 65 the coverage changed from total BCBS to Medicare and the supplemental policy provided by BCBS. The premium for the supplemental policy came out of our pension checks. Still included dental and vision and these benefits reduced over time and then in 2008 all supplemental benefits were eliminated and replaced by a monthly benefit of $300 added onto my pension. At presentations provided to all salaried retirees across the country, I take it that the $300/month was across the board and equal to all salaried retirees. The thinking was you should be able to buy a decent HI policy for $3600 per year. Maybe not a bad deal but a far cry from "free" health care for life as we were all led to believe in the beginning.
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Old 07-26-2012, 10:31 AM   #51
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Of course, annuity companies also have some protections, whether these are better than the PBGC I don't know, but I'd assume roughly equivalent.
Like my old grandpappy used to say "When you assume things, you make an ass out of u and me.

When dealing with the hard earned dollars of the working man and woman I don't think anybody should assume anything. Assumptions makes for interesting discussions, but in real-life, it's good to know for certain.
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Old 07-26-2012, 10:40 AM   #52
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Yes. I'm not sure if this is exactly what happened with your plan, but it does seem that a company can terminate its future responsibility by purchasing an annuity for you. Of course, annuity companies also have some protections, whether these are better than the PBGC I don't know, but I'd assume roughly equivalent.

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That would be my assumption as well.
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Old 07-26-2012, 10:41 AM   #53
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Like my old grandpappy used to say "When you assume things, you make an ass out of u and me.

When dealing with the hard earned dollars of the working man and woman I don't think anybody should assume anything. Assumptions makes for interesting discussions, but in real-life, it's good to know for certain.
If you have an alternative to this assumption, I'm all ears.

We really can't know for certain just how capable the PBGC is of covering future pension defaults. There are many variables, most would require a really, really good crystal ball. Same is true of the annuity providers.

There is no certainty if I have the money in my own account either - inflation, market returns, life expectancy, etc. And that account would have FDIC, SPIA or maybe no insurance at all. It's all assumptions, isn't it?

Even SS future certainty is being questioned. IMO, Federal/Military pensions are probably the most rock-solid, but if SS fails significantly, I think we may even see some push-back on those?

Certainty? What is this 'certainty' you speak of?

-ERD50
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Old 07-26-2012, 10:49 AM   #54
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Certainty? What is this 'certainty' you speak of?

-ERD50
My understanding is that different states may or may not have ways of protecting people who buy life insurance, annuities, etc. from companies that later fail. I think somebody who gets an annuity should understand what protection there may have for their annuity. That would make for a better decsions.

I don't think one needs 100% certainty to make good decisions. That would not be realistic. As my old grandpappy used to say "Never let the perfect become the enemy of the good."
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Old 07-26-2012, 10:56 AM   #55
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My understanding is that different states may or may not have ways of protecting people who buy life insurance, annuities, etc. from companies that later fail. I think somebody who gets an annuity should understand what protection there may have for their annuity. That would make for a better decsions. ...
OK, I agree with that. But in the real world, I'm not sure if the average person (or even the far above average person) can get a real handle on just how effective those protections are.

I think it would be very tough to estimate the relative safety of an annuity provider versus a pension backed by the PBGC. But yes, they should at least attempt to understand the basic protections that are in effect.

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Old 07-26-2012, 01:07 PM   #56
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......Maybe not a bad deal but a far cry from "free" health care for life as we were all led to believe in the beginning.
I guess I'm a glass half full kinda guy. If you listed the generous benefits we retirees from Megamotors have enjoyed over the years, most posters here would be shocked.
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Old 07-26-2012, 01:19 PM   #57
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I guess I'm a glass half full kinda guy.
+1

If I worried about the pensions failing, losing retiree health benefits, market downturns and the US Treasury defaulting on my bonds then I would never have ER'ed.

Like Sue J we ER'ed in 2010 and big increases in HI is far more likely to happen for us than my private pension fund going under and PBGC not being to meet its obligations.
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Old 07-26-2012, 03:21 PM   #58
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I guess I'm a glass half full kinda guy. If you listed the generous benefits we retirees from Megamotors have enjoyed over the years, most posters here would be shocked.
I agree and I had a great 34 years with the company. I can truthfully say that I was never treated unfairly. It's when after the fact that the company comes to you and says "I know we told you this but we've found out that we can no longer afford what we promised so we're going to take a mulligan. Here's what we're going to do now". It's just a bitter pill to swallow.
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Old 07-26-2012, 03:23 PM   #59
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So why the hell do you care?
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So you are basically a busybody?
Brewer,

Why don't you say what is really on your mind?
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Old 07-26-2012, 04:41 PM   #60
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I agree and I had a great 34 years with the company. I can truthfully say that I was never treated unfairly. It's when after the fact that the company comes to you and says "I know we told you this but we've found out that we can no longer afford what we promised so we're going to take a mulligan. Here's what we're going to do now". It's just a bitter pill to swallow.
What to do? Take some responsibility for yourself. Build a time machine and go back and redo your life decisions for the past 34 years. See how simple it is.
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