Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: The pension system destruction continues
Old 01-09-2006, 09:47 PM   #101
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: The pension system destruction continues

Lazarus,

I doubt that current public sector teachers will lose their pensions.* They are highly unionized and they work for the government.* It is possible, however, that some sort of new retirement structure may eventually be negotiated for new hires.* Teachers also have 403b's which are almost identical to 401k's.* And, of course, IRA's.

It's too bad teachers don't have a more portable pension arrangement.* So many are totally burned out and itching to do something else after 25 or 30 years.* Yet, they must clinch their teeth and go through the motions another few years to maximize their pension.* Same thing happens within the private sector.

Portable pensions for everyone gets my vote!
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: The pension system destruction continues
Old 01-09-2006, 10:40 PM   #102
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 2,083
Re: The pension system destruction continues

When I join my former employer 20 years ago, I wasn't looking for a pension plan just a great salary which I got as an IT professional. I was happy to find out that they had a profit sharing plan and 13 years later started a pension plan. When I got laid off I received a nice check for $39k from my profit sharing plan. At 65, I will get a small noncola pension of $12k a year. Even though inflation will eat up about 1/3 by the time I start collecting, it still will be nice pocket money.

MJ
__________________

__________________
I look to the present moment because that's where I live my life.
MJ is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 07:35 AM   #103
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: The pension system destruction continues

Quote:
Originally Posted by youbet
Portable pensions for everyone gets my vote!
Portable pensions = 401k's
__________________
justin is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 08:30 AM   #104
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: The pension system destruction continues

Quote:
Originally Posted by justin
Portable pensions = 401k's
In addition to 401K's, cash balance DBP pensions are also portable.*
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 10:45 AM   #105
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,267
Re: The pension system destruction continues

Quote:
Originally Posted by SteveR
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...
Wow, many pages of comments I have not read...

Steve... from what you say, the people still have a retirement benefit in their 'old' company.. they can not just decide to not pay you what you have earned... ie. you had 20 years at your old company which gave you a 40% benefit... they can not say, well, you now work for the NEW company and we owe you NOTHING... and this is what is sounds like you are saying.. they get nothing from either company.
__________________
Texas Proud is online now   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 11:05 AM   #106
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,267
Re: The pension system destruction continues

Quote:
Originally Posted by newguy88
Bottom line

If a company can get the worker to work for no pension GREAT for the share holders.

If they should be able to CHANGE THE RULES for workers who have put in 20 25 30 35+ years of service, well my friends the government will let them get away with it and sorry to say the person is efed!
PERIOD!

You do not change the rules during the game.

Again my situation is one where I WAS TOLD AND REQUIRED TO JOIN IN the teacher pension annuity fund when I started my teaching carrer in the mid 1970s!

And today the rules are gonna change BECAUSE darn BAD AWFUL politicians elected by the dumb masses stole funds from a system that was WORKING!!!

America quite frankly STINKS! And CHINA will be the BIG DOG sooner than later, while we all try to stay alive working at mcDonalds at 80+ years of age!*
Newguy.. I understand you positon completely.. your were promised something and now they are saying we are changing the rules aftet the fact (that is what I am reading)... but, here in Houston there was a problem in that the old mayor decided to up the percent per year to appease the workers... so he did not have to come up with the money. Well, somebody finally calculated the result of this increase and found it would bankrupt the city in the future!!! So, they 'rolled back' the increase. Now, employees were upset, but the percent was way to high and only there for a couple of years... they went back to the 'standard' 2.2% per year x high salary etc...

Was this renigging on a promise? Yes. Was it the right thing to do? Yes. You should only promise something you can afford.
__________________
Texas Proud is online now   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 11:29 AM   #107
Dryer sheet aficionado
 
Join Date: Aug 2004
Posts: 43
Re: The pension system destruction continues

I have been following this thread with interest. I do not have a DBP or a DCP. DW has a government DBP (teacher).

My question is this:

Are DBP benefits contractual "promises"? From what I read, the answer is no.
__________________
region2 is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 11:38 AM   #108
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,267
Re: The pension system destruction continues

Quote:
Originally Posted by region2
I have been following this thread with interest. I do not have a DBP or a DCP. DW has a government DBP (teacher).

My question is this:

Are DBP benefits contractual "promises"? From what I read, the answer is no.
Actually they are.. what some people are complaining about is that they are hired by a company. The company says we will give you a pension of say 1% of your 'final' salary for every year you work.... so, you say, OK, if I work 30 years I get 30% of my final salary...

NOW, after 20 years they say... we do not want to continue this benefit.. what we want to do is .... (whatever they now do).. take it or leave... you now scream, BUT, you PROMISED that if I worked 30 years I would get 30%... BUT YOU HAVE NOT WORKED 30 YEARS... you have only worked 20 years and they will pay you your 20% you have earned, they just do not want to pay you any MORE than what you have earned. Is this a broken promise... YES and NO... Yes, in that YOU were planning on that 30% if you kept working.. and now you have to scramble to replace that 10% 'you were promised'.... NO in that you have only worked 20 years... the company can change thier mind just like you can change yours... YOU do not have to work there anymore.. you are now a 'new' employee at the old company..

Now, in the above example... what is they had laid you off after 20 years... do you think you should earn any MORE than the 20% It is what they PROMISED..
__________________
Texas Proud is online now   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 11:44 AM   #109
Thinks s/he gets paid by the post
SteveR's Avatar
 
Join Date: Jul 2005
Posts: 2,803
Re: The pension system destruction continues

Quote:
Originally Posted by Texas Proud
Wow, many pages of comments I have not read...

Steve... from what you say, the people still have a retirement benefit in their 'old' company.. they can not just decide to not pay you what you have earned... ie. you had 20 years at your old company which gave you a 40% benefit... they can not say, well, you now work for the NEW company and we owe you NOTHING...* and this is what is sounds like you are saying.. they get nothing from either company.
Texas Proud,

This is the very reason there is a class action suit against the "mother" company. *They failed to honor the original "contract" to provide pension and medical benefits to their former employees by spinning them off into a whole new public company. *I have not seen the actual court docuement but the judge in the case has ruled it is a valid case and will go to trial. *It seems that the employees affected were long term employees who were near but not yet eligible for retirement (less than 50 and 20 years of service). *It seems that the mother company would not transfer the balance of their company paid pension to the daughter company. *The daughter company has no pension program so the spun off employees no longer have a pension available to them. *This is the information I have obtained from the media and former employees. *I guess we will have to wait and see what happens at the trial.
__________________
Work? I don't have time to work....I'm retired.
SteveR is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 12:09 PM   #110
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: The pension system destruction continues

Quote:
Originally Posted by justin
Portable pensions = 401k's
No. This is not equivalent at all.

A pension guarantees future payment for service rendered today. The benefitee does not choose how and when to invest money. The benefitee does not take on risk of stock/bond fluctuations. The benefitee has to spend no time educating themselves about investments, worrying about fees, etc.

While you and I may prefer to invest our own money, I think it is naive to believe that every worker has the right temperment and training to wisely invest their money for retirement. Nor does it seem efficient to require every worker to become an expert on investments.

Pensions were a good idea that worked well for this country and the economy for over 60 years. They didn't stop working for the American worker. They are still a good idea. Executives in the 80's and 90's simply robbed the funds for short-term corporate gains and large bonuses for themselves. The robbery was done legally, but they did have to lobby regulating agencies to change acceptable standards. Now, it would cost them to put replacement funds back in the kitty, so they prefer to get out entirely.

But Americans are not saving. Social security and medicare are almost certainly going to be diminished. And pensions are disappearing. I don't understand why anyone thinks these are good things. When the crises from the above trends comes, what do you think is going to happen? I don't believe for a minute that I will be spared from the pain simply because I have saved and planned for my retirement. I believe our government will find any pockets of money that exist, pass laws to tax it, and take it to fight the problems. That's what a politician who wants to get re-elected would do. If social security, medicare and the pension system are not fixed, those who have saved and invested will pay.
__________________
sgeeeee is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 12:38 PM   #111
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: The pension system destruction continues

Quote:
If social security, medicare and the pension system are not fixed, those who have saved and invested will pay. [/quoue]
Those who have not will also have to pay in the form of increased tax. In other words, everyone has to pay.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 01:14 PM   #112
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,267
Re: The pension system destruction continues

Quote:
Originally Posted by SteveR
Texas Proud,

This is the very reason there is a class action suit against the "mother" company. *They failed to honor the original "contract" to provide pension and medical benefits to their former employees by spinning them off into a whole new public company. *I have not seen the actual court docuement but the judge in the case has ruled it is a valid case and will go to trial. *It seems that the employees affected were long term employees who were near but not yet eligible for retirement (less than 50 and 20 years of service). *It seems that the mother company would not transfer the balance of their company paid pension to the daughter company. *The daughter company has no pension program so the spun off employees no longer have a pension available to them. *This is the information I have obtained from the media and former employees. *I guess we will have to wait and see what happens at the trial.
SteveR... wow... I have not heard something like this before... but, I would say the mother company does not have any way to prevent paying as ERISA is there to protect the employees on something like this... I would love to hear how things are.... can you say what the company's name is so we can read up on it??

Now, if it was like what happend to me... I worked for a bank that was closed... The FDIC is able to break all contracts... we would not get any more pension, severence etc. based on the old company. (now, the old bank had closed the pension twice in the last few years but paid us our accrued amount, not much, but something).. We were sold to a new bank and the new bank said our first day of hire was the day they bought us...
__________________
Texas Proud is online now   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 01:36 PM   #113
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,087
Re: The pension system destruction continues

Quote:
Originally Posted by Texas Proud
Now, if it was like what happend to me... I worked for a bank that was closed... The FDIC is able to break all contracts... we would not get any more pension, severence etc. based on the old company. (now, the old bank had closed the pension twice in the last few years but paid us our accrued amount, not much, but something).. We were sold to a new bank and the new bank said our first day of hire was the day they bought us...
I'm guessing this wasn't a recent event, since only a handful of Texas banks have been taken over by the FDIC in the past 10 years. That compares to dozens that bit the dust in the early 90's.

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 02:06 PM   #114
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 927
Re: The pension system destruction continues

I work for the company in question. Not because I planned on it, but because my former employer was bought.

Accordingly, I do not have a significant pension coming to me. But my colleages, many of whom have worked here for decades, have been looking forward to retiring in relative comfort. They are surprised and disheartened to learn that they'll have much, much less than planned upon.

They WILL have the opportunity to contribute more to their 401(k)s in the coming years. The question is, "with what?" While I moved from one tech company to the other over the years, increasing my salary as I went, these people stayed in place and accepted promises of a pension in lieu of the significant raises they could have gotten in the open market.

The result -- many of them make HALF!!!!! as much as I do in salary. At my level they traded upwards of $80K per year, cash-in-hand, for the safety of the pension plan.

Once the plan is frozen they'll get to put 8% of salary into a 401(k). But their 8% is one hell of a lot less than my 8%. (And because they've made so much less for so long they do NOT have the fancy cars, the houses, the vacations, etc.)

In the meantime, the company has been able to pay competent, professional, and loyal employees far less than the going rate, for many, many years, in exchange for a promise they are now reneging on. Those who argue that the company has to do it in order to survive aren't factoring in the untold millions in benefits already reaped by paying sub-standard wages.

As someone else put it, I have no dog in this fight. But a lot of good people do, and it's a shame.

__________________
Caroline is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 02:12 PM   #115
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: The pension system destruction continues

Quote:
Originally Posted by ((^+^)) SG
A pension guarantees future payment for service rendered today. The benefitee does not choose how and when to invest money. The benefitee does not take on risk of stock/bond fluctuations. The benefitee has to spend no time educating themselves about investments, worrying about fees, etc.

While you and I may prefer to invest our own money, I think it is naive to believe that every worker has the right temperment and training to wisely invest their money for retirement. Nor does it seem efficient to require every worker to become an expert on investments.
It all boils down to corporate responsibility. If plan sponsors provided reasonable 401k plans with decent plan options and some guidance on what to invest in, the 401k would be superior to the defined benefit plan. You work your 20-30 years wherever you want, you retire, roll your 401k into an IRA and buy an annuity if you want - stream of benefits forever.

401k plans should have the "dumb" option or "default" option of Target Retirement type funds or balanced Lifestrategy type funds that are essentially idiotproof, with the guidance of an idiotproof glossy color brochure explaining the plan options. Sure, the more sophisticated plan options would be available, but if the plan participant can't/won't decide on the more sophisticated options, then dump them into the default fund choice(s).

Have a 401k administrator or outside source come in for "portfolio guidance" once a year to do a checkup on your plan participants' selections. It wouldn't cost much on a per-employee basis, and would probably be cheaper than administering a DBP.

DBP's are still at risk of stock market fluctuations. Market crashes - plans can go broke. Then the PBGC takes over, after slashing benefits for some or all.

To suggest that some people don't have the "right temperment and training" to make their own decisions over their investments and financial affairs is patronizing and elitist. Part of the continued dumbing down of America and removing the "personal" element of "personal responsibility". We let people buy the cars they want to, the houses they want to, and enter into the loans and credit contracts they want to, for better or for worse. People are responsible for filing their own taxes. Can't they be responsible for picking their own fund(s) from a short list of funds?

I don't think your efficiency argument carries much weight either. How hard is it for plan participants? Give them easy options - target retirement type funds - with instructions to pick the default fund based on their age unless the plan participant has particular knowledge of investments and is willing to risk their money. Pass a new law to shield employers from liability for giving this advice to all employees.

Maybe I'm naive and I place too much faith in the ability of people to make informed decisions.
__________________
justin is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 03:07 PM   #116
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: The pension system destruction continues

Quote:
Originally Posted by justin
It all boils down to corporate responsibility.* If plan sponsors provided reasonable 401k plans with decent plan options and some guidance on what to invest in, the 401k would be superior to the defined benefit plan.*
Look to the sky, Justin. Do you see any flying pork?

Quote:
. . .
To suggest that some people don't have the "right temperment and training" to make their own decisions over their investments and financial affairs is patronizing and elitist. . . .
No. This is something that has been determined in many studies over many decades. If I said most people don't have the temperment and training to fish, would you consider that elitist?

Now, you can argue that people can be trained to have the temperment and training to invest for long-term returns and stability. If I had said that people were incapable of learning, that might have been elitist. But I didn't. And my argument about efficiency is based on the fact that it would take a considerable amount of energy to train all of the people who do not currently have the temperment, training (and probably even the inclination) to develop investment skills. It would require corporations to hire HR departments that knew their @ss from a hole in the ground which would require additional money. It would require that all workers go through the training. Compute the cost of every worker in every industry spending several hours per year learning about investments.

Quote:
I don't think your efficiency argument carries much weight either. How hard is it for plan participants? Give them easy options - target retirement type funds - with instructions to pick the default fund based on their age unless the plan participant has particular knowledge of investments and is willing to risk their money. Pass a new law to shield employers from liability for giving this advice to all employees.
* Now you are proposing a prescription that involves new government laws and regulations, revision of existing 401(k) plans to match the new laws and regulations as well as massive training. Doesn't this begin to strike you as expensive and inefficient. You propose all of this to avoid corporate responsibility relative to pension planning.

Quote:
Maybe I'm naive and I place too much faith in the ability of people to make informed decisions.
Obviously not. You recognize that it would take massive changes to existing infrastructure from government legislation, to corporate responsibility for training, to overwhelming required training for every employee in America. If there is naivity here, it is in estimating the cost of this vs the cost of cleaning up America's corporations.*
__________________
sgeeeee is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 03:29 PM   #117
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: The pension system destruction continues

Quote:
Look to the sky, Justin. Do you see any flying pork?
Why is it that you expect corporations to be responsible with respect to DBP's and not w.r.t. 401k plans? How are the two fundamentally different?


Quote:
Now you are proposing a prescription that involves new government laws and regulations, revision of existing 401(k) plans to match the new laws and regulations as well as massive training. Doesn't this begin to strike you as expensive and inefficient. You propose all of this to avoid corporate responsibility relative to pension planning.
I think you may be over exaggerating what would be required to implement what I propose. Expensive and inefficient? Not any more than pension plan regulations and accounting. It would be more efficient in the sense that employees have more flexibility in what their retirement money is invested in.



Quote:
Obviously not. You recognize that it would take massive changes to existing infrastructure from government legislation, to corporate responsibility for training, to overwhelming required training for every employee in America. If there is naivity here, it is in estimating the cost of this vs the cost of cleaning up America's corporations.
Don't fix it if it ain't broken. The pension system as it has existed historically is broken. Do we fix it and patch it up so it'll eek out a few more years, or modernize and replace it with a new system? I don't know what it will cost to implement what I'm describing. However, it doesn't seem that complicated to me when compared to the pension regs and accounting required presently.
__________________
justin is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 03:30 PM   #118
Thinks s/he gets paid by the post
SteveR's Avatar
 
Join Date: Jul 2005
Posts: 2,803
Re: The pension system destruction continues

Quote:
Originally Posted by ((^+^)) SG
..* It would require corporations to hire HR departments that knew their @ss from a hole in the ground which would require additional money.* It would require that all workers go through the training.* Compute the cost of every worker in every industry spending several hours per year learning about investments....
*
HR won't discuss investment specifics out of fear of being sued if somebody loses money by listening to them. *My previous and current employers both had reps. from the 401(K) holder come in and do a 45 minute "talk" on the evils of not investing every dime you can with them. *Most people just glazed over. *

You can lead a horse to water but you can't make him invest for FIRE.
__________________
Work? I don't have time to work....I'm retired.
SteveR is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 03:38 PM   #119
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: The pension system destruction continues

Quote:
Originally Posted by SteveR
HR won't discuss investment specifics out of fear of being sued if somebody loses money by listening to them. My previous and current employers both had reps. from the 401(K) holder come in and do a 45 minute "talk" on the evils of not investing every dime you can with them. Most people just glazed over.
Pass liability shield laws with "safe harbor" advice that HR or 401k reps can give out.

How is "invest in this balanced mutual fund that is catered to your age and holds diversified assets picked by the mutual fund manager" any different than having the employee's money invested in a pension that "holds diversified assets picked by the mutual fund pension manager (or his adviser)" but the holdings are not catered to the employee's age? Plenty of pension funds are following the diversified passive index fund approach to investing. Not much different than a diversified passive index mutual fund.

__________________
justin is offline   Reply With Quote
Re: The pension system destruction continues
Old 01-10-2006, 04:30 PM   #120
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Re: The pension system destruction continues

Seems un-American to excuse people from the responsibility of managing their money, whether it's balancing their checkbook, or deciding where to invest...
__________________

__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Military pension and pay - how much is it past 20 Average Joe FIRE and Money 13 03-18-2007 11:22 AM
Traditional Pension being frozen by megacorp murg FIRE and Money 16 03-15-2007 11:41 AM
Pension Time Bomb Article Mountain_Mike FIRE and Money 11 01-17-2006 07:49 AM
The Fat Pension newellcr Young Dreamers 34 07-26-2005 09:23 AM

 

 
All times are GMT -6. The time now is 03:09 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.