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Re: The pension system destruction continues
Old 01-06-2006, 03:47 PM   #21
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Re: The pension system destruction continues

Quote:
Originally Posted by bbuzzard
This is why I am opposed to DB plans. I would never, ever work at a company with a DB plan. I knew this when I entered the workforce in 1983. Why would a trust some faceless corporation to give me my money back in 40 years, when I could control it myself? Any job that had a DB plan was an automatic deal breaker for me. I am more than happy with my DC plans I have had at my several jobs.
True, but even DC plans have their problems in the form of crappy mutual funds. Many companies with whom I've dealt selected their 401(k) plan providers on the basis of cost to them, rather than the quality of funds offered through the plan. If you're going to pull a DB plan, at least replace it with something that offers a good ROI.
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Re: The pension system destruction continues
Old 01-06-2006, 03:49 PM   #22
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Re: The pension system destruction continues

I have this question for those of you that are angered by the end of DB plans. First, I agree 100% that no one should loose any accrued DB plan assets when a plan is terminated. Additionally, let me note that the emplyees who have these plans terminated are getting mush less relative to what they would have gotten if the plans had stayed intact until they retired.

However, just as no one assumes their salary is fixed for life, why would you assume your DB plan is fixed for life? Your employer is free to renegoitiate your compensation package at any time, just as you are. I would not have it any other way. Your DB plan is part of your compensation package.

Employers hire the cheapest help that can do the job at the required level of skill, just as employees find the highest paying empoyer for their skill set. Should employers get upset when an employee leaves for a higher paying job? Should we outlaw job mobility becuase it is not fair to employers? If your job skills justify a DB plan, it will be continued to be offered. If not, it won't be. My take is that few jobs are worthy enough to justify the cost of a DB plan. The one exception is government employees, because the bills will be paid by the unborn so society does not care about the cost

I do not mean this to sound harsh, I would be pissed if my DB plan was terminated, but I would also be pissed if I got a 30% paycut. I just do not want to make either illegal, or claim they are unethical.
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Re: The pension system destruction continues
Old 01-06-2006, 04:03 PM   #23
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Re: The pension system destruction continues

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Originally Posted by WhodaThunkit
I have no dog in this fight!*

But the thing about compounding is part of the problem.* When* a DB plan terminates, there is no more compounding.* Say your benefit is worth $10,000 per year in the year the plan terminates.* If you are 65 that year, you get the $10,000 per year.* OK.* If you are a younger person who is say 45 the year the the plan terminatres, and your benefit is $10K, you retire 20 years later at 65, but you still get $10,000 per year, with no adjustment for inflation.* So the middle-age guy (BTW -- I'm past middle age on the downhill side) really gets the shaft.* His 401K has grown only 20 years, and his DB is valued in 20-year-old currency.* You have a runt pension, and a runt 401K.
I do not have a dog in this hunt either.. but it seems my dog is growling for some reason...


Here is where your thinking goes awry... your example is that the person has earned an annuity of $10,000 per year.. but that is WHEN HE REACHES 65... not in today dollars... the plan has an amount of funds that when compounded over the next X years it will be able to pay the annuity when you retire... *yes, your do not get any more than the amount calculated today, but that is a change in compensatiion. *You get to choose if you want to stay or go.. *It could just as easily been that they say, we will keep your pension plan as is... but your salary will be dropped by $20,000 per year.. * do you 'lose' money? *NO, you lose future earnings. *You make a decision if your salary is good enough for you or not..
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Re: The pension system destruction continues
Old 01-06-2006, 04:10 PM   #24
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Re: The pension system destruction continues

Quote:
Originally Posted by Jay_Gatsby
True, but even DC plans have their problems in the form of crappy mutual funds. Many companies with whom I've dealt selected their 401(k) plan providers on the basis of cost to them, rather than the quality of funds offered through the plan. If you're going to pull a DB plan, at least replace it with something that offers a good ROI.
Unfortuntely true. However, it could be worse. My wife is stuck with a Mutual of America 403(b). By the time we retire, they will have made almost as much off her investments as we have.

I ran the number assuming she worked from 26 to 67, contributing 20% of her pay to the 403(b) at 10% return and 2% fees (This is worst case, as she will not actually work this long, but others might). Over this period, she would make $3.2M in returns, while MoA would make $1.5M in fees. I asked my wife daily to find a new job so we can roll her money over to an IRA. Unfortunately (for this purpose) she like her job, company and coworkers. I think these people (MoA and ilk) are pond scum.

P.S. Note that the ratio of MoA take to the investors take does not vary with salary or savings rate, but only with RoR and their fees. In other words, they will always get 40%-50% of what you get under most conditions. Any they never area at a risk to lose principal like you are.
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Re: The pension system destruction continues
Old 01-06-2006, 04:16 PM   #25
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Re: The pension system destruction continues

Quote:
Originally Posted by bbuzzard
I asked my wife daily to find a new job so we can roll her money over to an IRA. Unfortunately (for this purpose) she like her job, company and coworkers. I think these people (MoA and ilk) are pond scum.
Can she negotiate to quit and then get rehired after you roll over the 403b.
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Re: The pension system destruction continues
Old 01-06-2006, 04:43 PM   #26
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Re: The pension system destruction continues

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Originally Posted by Chris24
Pensions are part of a compensation package. Defered income for future income. Workers ARE getting screwed. By managements inefficiencys, and goverments lack of goverenance. Managments make sure they do very well no matter what the outcome is from their decisions or companies. Politicians benifit from industries deep pockets. Don't blame the workers for the loss of pensions.
Nothing personal Chris24. I just picked your post for a reply because you covered so many areas, management, government and politicians. I've said this before and it still rings true. DBPs ARE a promise not a guarantee (unless you have an employment contract). The promise holds true as long as it makes sense to keep the promise. As a former employer and a former employee, I've seen both sides. DBP make a great deal of sense, until things change. Healthcare costs don't just go up they skyrocket. Competitive pressures demand adjustments. Previously fat margins erode. DBP go the way of gifts, benes, promises, entitlements, etc,.

Brutal bottom line...You are responsible for you and yours. Corporations are responsible to their shareholders. Thats the way it is.



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Re: The pension system destruction continues
Old 01-06-2006, 05:18 PM   #27
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Re: The pension system destruction continues

Hi Who,

I don't believe this is the B school party line. This is the way it always was. The bottom line decades ago (in the case of IBM and some others) landed in favor of the employee AND the shareholder. Not so today.

Reality bites.
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Re: The pension system destruction continues
Old 01-06-2006, 05:24 PM   #28
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Re: The pension system destruction continues

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Originally Posted by Texas Proud

Steve... *I am saying this is a nice way, ie. I am not being personal... *but I call 'bullsh**' on this post.. *now, I can be wrong, but the fact you gave do not add up.. *YOUR pension payments will be coming from the save pool that would be available to the others... they could not have lost everything unless you had lost everything... and if the company was viable, they could not take away earned pension benefits anyhow... then can stop you earning anything new, but they can not take away what is already earned..
Call it what you wish, the facts still remain.

My former company spun off a division of the company and a whole new company was created from it. *The new corporation has no ties to the parent company. *The empoyees that were spun off from the mother company were not able to take their pension benefits with them. *Employees were not allowed to retire from the mother company during the transision. *


The mother company had a DBP; the new company does not. *

Employees of the new company (former employees of the mother company) no longer have a DBP since they are no longer employed by the mother company. *
Only those employees who actually retired before the new company was formed are able to take their pension. I was lucky to have bailed before this happend. *

And that is the rest of the story...
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Re: The pension system destruction continues
Old 01-06-2006, 07:02 PM   #29
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Re: The pension system destruction continues

New paradigm: Be an owner...

Corollary: Mobile, agile, hostile...

Thanks Bear and UM!!
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Re: The pension system destruction continues
Old 01-06-2006, 07:47 PM   #30
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Re: The pension system destruction continues

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Originally Posted by newguy88
Some here are missing my point.

I was givin NO CHOICE in 1978!

I was TOLD I must contibute to the state teachers annuity pension fund!

They have taken out 5% of my teaching salary for almost 30 years.

And NOPE I cannot take out the pension in one lump sum.

I never expected to get rich as a teacher however I expect to have the compensation that was promised and REQUIRED by the state of New Jersey.

Oops again politicians both republican and dems have stolen the money from our system to pay other DEBT!!!
As one who has nothing coming from anybody, I feel for you buddy, really I do.

Ha
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Re: The pension system destruction continues
Old 01-06-2006, 07:51 PM   #31
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Re: The pension system destruction continues

Just goes to show that companies can't overpay their employees forever.
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Re: The pension system destruction continues
Old 01-06-2006, 08:03 PM   #32
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Re: The pension system destruction continues

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Originally Posted by WhodaThunkit
Yes, this is the current B-school line, for now.* Wasn't always that way.* Just a few years ago, the line was about stakeholders -- employees, shareholders, community, and customers -- balancing their interests, not just optimizing stock price.* Whether a person accepts this change as good depends, I suppose, on whether the person thinks that there is more to a good life and a decent civilization than money.
Life is a lot more than money. Its just that I can' t understand out of all the expedient promises that are modified by people and corporations every day, everywhere- why we get upset about somebody not getting quite the gravy train that he was (perhaps unwisely) hoping for?

Ha
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Re: The pension system destruction continues
Old 01-06-2006, 08:30 PM   #33
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Re: The pension system destruction continues

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Originally Posted by . . . Yrs to Go
Just goes to show that companies can't overpay their employees forever.
except for management.
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Re: The pension system destruction continues
Old 01-06-2006, 08:52 PM   #34
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Re: The pension system destruction continues

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Corporations are responsible to their shareholders.
Should they also be responsible for the community, the environment, and the people (who work for them)?
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Re: The pension system destruction continues
Old 01-06-2006, 08:57 PM   #35
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Re: The pension system destruction continues

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Should they also be responsible for the community, the environment, and the people (who work for them)?
Law and regulations see to that. And as to community, what community? Dallas, where the home office is? Or Bangladesh, where there is a plant?

IMO, better stick to taking care of the shareholders. Management, and employees in genreal will see to themselves.

Ha
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Re: The pension system destruction continues
Old 01-06-2006, 09:12 PM   #36
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Re: The pension system destruction continues

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Originally Posted by HaHa
And as to community, what community? Dallas, where the home office is? Or Bangladesh, where there is a plant?
Ha
The communities in which the employees work and live.
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Re: The pension system destruction continues
Old 01-07-2006, 05:42 AM   #37
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Re: The pension system destruction continues

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Originally Posted by WhodaThunkit
And therefore there is nothing more to a good life and a decent civilization than money?
Certainly there is. However its not up to the employer to provide it. Its up to you.
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Re: The pension system destruction continues
Old 01-07-2006, 06:02 AM   #38
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Re: The pension system destruction continues




Employees of the new company (former employees of the mother company) no longer have a DBP since they are no longer employed by the mother company. *
Only those employees who actually retired before the new company was formed are able to take their pension. I was lucky to have bailed before this happend. *


ERISA requires that benefits which are vested are nonforfeitable. New contributions may not be made at new company, but those already made, if vested, can be taken when "retirement age" as defined under the plan is reached.
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Re: The pension system destruction continues
Old 01-07-2006, 08:34 AM   #39
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Re: The pension system destruction continues

If corporate responsibility is truly for the interests of shareholder, why do management give themselves exorbitant compensation package and pension? Yes, it's "every man for themselves" - I tend to forget. To improve the bottom line, management would get rid of employees and forefit pension obligations but give them a big raise for cost cutting while proclaiming that they are doing it for the interest of the shareholders.
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Re: The pension system destruction continues
Old 01-07-2006, 08:37 AM   #40
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Re: The pension system destruction continues

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Originally Posted by BUM
Certainly there is. However its not up to the employer to provide it. Its up to you.
Bingo. And it's not up to the government, either. It's up to you.
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