PBS FRONTLINE - "The Retirement Gamble" 4/23

[timo2]

Quote:

Originally Posted by pb4uski You've been watching too many movies.

That might be better if I did (I only watch about 4 movies a year)....instead I get my news from the internet , from articles like this Business Is Shaking Pension-Fund Piggy Bank : Use of Excess Cash Is Windfall for Firms, Source of Concern for Employees - Los Angeles Times

even though it's old. The internet does accidentally preserve stuff because people just don't clean out their old pages.

[pb4uski]

It so old as to be irrelevant. My adult son was hardly a glimmer in my eye when this article was published.

Some of that stuff did happen long ago when some pension plans were overfunded.

[timo2]

Quote:

Originally Posted by pb4uski It so old as to be irrelevant. My adult son was hardly a glimmer in my eye when this article was published. Some of that stuff did happen long ago when some pension plans were overfunded.

I have not done an academic type study on this, but it seems to me that, over time, the vulture attacks on just a few companies would have caused other firms to either underfund their pension plans, or just stop them entirely? Especially after the 401k came into being in 1980. Why bother with the pensions, especially if it could potentially be a liability, when you can provide a 401k instead. IMHO.

My first fulltime megacorp job was in 1980, and we had a company stock fund that was a nascent 401k, and it expanded from there.

[pb4uski]

Quote:

Originally Posted by timo2 I have not done an academic type study on this, but it seems to me that, over time, the vulture attacks on just a few companies would have caused other firms to either underfund their pension plans, or just stop them entirely? Especially after the 401k came into being in 1980. Why bother with the pensions, especially if it could potentially be a liability, when you can provide a 401k instead. IMHO. My first fulltime megacorp job was in 1980, and we had a company stock fund that was a nascent 401k, and it expanded from there.

IIRC while there is some discretion in pension plan funding, there are minimum funding requirements. IIRC most companies funding is a blend of tax motivation and what is needed from an actuarial perspective. I don't think takeover issues were a big factor in funding decisions. The overfundings that occurred in the 80s were principally due to better than expected investment results than aggressive contributions IIRC.

You're right that from a company perspective that DC plans are easier and less risky, since the contributions are more predictable since they do not depend on investment results that can be volatile.