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Old 10-20-2011, 02:49 PM   #241
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"The masterminds of this heist should take a bow: They managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets."

Quote from the article... but a lie on its face... when there is a lie I tend to not believe the parts that might be true...

Why is it a lie Because the people who were in the plans received (ore will receive) everything they had earned to that day.... period... end of story...

Any excess money in any plan does not belong to the participants... it is not there to pay them anything extra... but to cover any kind of shortfall that the plan might have in the future....


Now, if they had said that the companies lied in that the cost of these pensions were not nearly as much as they say... or that they took away the plans under false pretenses... then it would be more believable... or even they took away FUTURE benefits that the workers were planning to get IF they kept working... but saying they took money intended for the workers is just not true...
That is true. Pensions were very overfunded in the 70's and 80's, so some companies bought annuity policies to guarantee the payments of pensioners, and then took the remaining money and did other things with it. How is that illegal, if the payments paid into the system and the future contributions were guaranteed? I would feel better that MetLife is backing my pension plan than my company's own balance sheet..........
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Old 10-20-2011, 03:10 PM   #242
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Why is it a lie Because the people who were in the plans received (ore will receive) everything they had earned to that day.... period... end of story...

Any excess money in any plan does not belong to the participants... it is not there to pay them anything extra... but to cover any kind of shortfall that the plan might have in the future....
True. And really quite simple.

We can create excess money, or a state of overfunding, trivially within a corporate pension fund. All we need do is recognize that because of our outstanding investment management skills, we can project a much higher rate of return than the pension was funded for. The plan is thus overfunded, and the corporation's obligation for future contributions is consequentially reduced. The reduction in contribution expenses flows directly to reported earnings, spiking our stock price, and so spiking the valuation of the pension fund which is largely invested in a special class of our stock.

The future participants in the pension plan are at no risk, as the plan is fully funded at current contribution levels and stock valuation. Besides, if something does go wrong, the Pension Benefit Guaranty Corporation will pick up the tab (up to $54,000/year) backed by the full faith and credit of the US Government, i.e., taxpayers.

What could possibly go wrong?
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Old 10-20-2011, 03:12 PM   #243
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Originally Posted by Texas Proud View Post
"The masterminds of this heist should take a bow: They managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets."

Quote from the article... but a lie on its face... when there is a lie I tend to not believe the parts that might be true...

Why is it a lie Because the people who were in the plans received (ore will receive) everything they had earned to that day.... period... end of story...
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That is true. Pensions were very overfunded in the 70's and 80's, so some companies bought annuity policies to guarantee the payments of pensioners, and then took the remaining money and did other things with it. How is that illegal, if the payments paid into the system and the future contributions were guaranteed?
You two sound like you would thank a burglar for breaking into your house. The money was diverted from pension funds. Pension funds are required to be managed to the benefit of their participants. Did you read and understand what GE did? They failed to pay a dime in for more than a decade (relying on a temporary excess to justify that). Then they closed the fund so they could capture the liabilities as earnings. They lied about what they were doing. Some of the companies actually violated the law and were prosecuted. The others slipped through loopholes and violated the spirit of the law. The whole thing was a travesty.

Do you guys want us all to trust in free markets if you call this simple fair and square free market activity?
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Old 10-20-2011, 03:17 PM   #244
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Originally Posted by Texas Proud View Post
"

Now, if they had said that the companies lied in that the cost of these pensions were not nearly as much as they say... or that they took away the plans under false pretenses... then it would be more believable... or even they took away FUTURE benefits that the workers were planning to get IF they kept working... but saying they took money intended for the workers is just not true...
Tex, Unless you read the book, it appears your taking snipets of what was said or quoted in the review and drawing your own conclusions. Lying vs covering up is a very fine line.

Nevetheless, I would certainly say that many folks that were working for years with the understanding that certain retirement benefits would be there for them and paid out, did see that understanding change when such benefits were cut or eliminated altogether, as well as their healthcare benefits while employed. Further, I have no doubt that executives have benefited handsomely themselves based on freeing up such $s from employee pension plans and healthcare.
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Old 10-20-2011, 04:05 PM   #245
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...

The future participants in the pension plan are at no risk, as the plan is fully funded at current contribution levels and stock valuation. Besides, if something does go wrong, the Pension Benefit Guaranty Corporation will pick up the tab (up to $54,000/year) backed by the full faith and credit of the US Government, i.e., taxpayers.

What could possibly go wrong?
There wasn't much detail in that story, but AFAIK, everyone received their pensions (up to the PBGC limits) from the 'insurance' payments from the pension funds to the PBGC fund. No taxpayer $ were involved (though they could be if the PBGC finds itself underfunded).

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You two sound like you would thank a burglar for breaking into your house. ....

Do you guys want us all to trust in free markets if you call this simple fair and square free market activity?
I don't trust anyone - that's why I want the money in my own account.

From the responses and from what I know, this all seems like future, unearned benefits were cut, and this 'travesty' had nothing to do with taking anything away from anyone who had earned it (up to that date). Terms like 'raiding' and comparisons to 'burglars' seem a bit over the top to me.

For comparison, if the Feds change the tax laws to eliminate the mortgage deduction (I'd be OK with that), can we claim they are thieves because we always had it in the past, and we were counting on it in the future? Is it a 'travesty', or is it just a forwards-looking change?

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Old 10-20-2011, 04:29 PM   #246
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For comparison, if the Feds change the tax laws to eliminate the mortgage deduction (I'd be OK with that), can we claim they are thieves because we always had it in the past, and we were counting on it in the future? Is it a 'travesty', or is it just a forwards-looking change?
Travesty. We expect private concerns to mislead us and cheat us if they can -- it's part of our free market system; it's all in the game. But the government is our agent, and so we expect from it fair representation and honesty.
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Old 10-20-2011, 06:35 PM   #247
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Tex, Unless you read the book, it appears your taking snipets of what was said or quoted in the review and drawing your own conclusions. Lying vs covering up is a very fine line.

Nevetheless, I would certainly say that many folks that were working for years with the understanding that certain retirement benefits would be there for them and paid out, did see that understanding change when such benefits were cut or eliminated altogether, as well as their healthcare benefits while employed. Further, I have no doubt that executives have benefited handsomely themselves based on freeing up such $s from employee pension plans and healthcare.
I'm also not seeing where the "heist" is. That blog review had an interesting comment:

Quote:
Susan Bishop, Director, Corporate Communications GE:

Steve –

I work in communications at GE and read your blog post yesterday about Ellen Schultz’s book “Retirement Heist.” Ms. Schultz has many of her facts wrong about GE that, unfortunately, you repeat in your blog.

... We are still trying to understand what “heist” occurred at GE since every penny promised to retirees has been paid over the history of our pension plan.
Sorry, but this just seems like another 'stir up people with pitchforks' trip to me. I guess a title like "GE's Benefits Are Not As Good As They Used To Be" would not be a real grabber?

edit/add - and the following comment is a real winner - the guy claims that since GE stock is up, they must have 'looted' the money from somewhere! I'm guessing that guy has never created any value before, so cannot relate



RE: hypothetical end of the mortgage deduction:
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Originally Posted by GregLee View Post
Travesty. We expect private concerns to mislead us and cheat us if they can -- it's part of our free market system; it's all in the game. But the government is our agent, and so we expect from it fair representation and honesty.
But I wouldn't see anything 'unfair' or 'dishonest' about that change. It's not in the Constitution or anything. If it changes it changes, and we adapt. Actually, I only expect to be cheated when there is a lack of a free market (cell phone carriers, cable providers, and to some degree - our govt). In a free market, if a company routinely cheats people, word gets out and people vote with their wallet.


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Old 10-20-2011, 06:54 PM   #248
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I don't trust anyone - that's why I want the money in my own account.

From the responses and from what I know, this all seems like future, unearned benefits were cut, and this 'travesty' had nothing to do with taking anything away from anyone who had earned it (up to that date). Terms like 'raiding' and comparisons to 'burglars' seem a bit over the top to me.

I can agree with your comment about "I don't trust anyone - that's why I want my money in my own account". When I left my mega corp back in 2003, I had the option of a lump sum, annuity or a combination. I took the lump sum.

As far as not taking away anything, I beg to differ. Most of these private plans where back end loaded, so the bigger payouts only came in the later stages of ones career. The promise of those plans probably kept many in their jobs longer than they would have liked, but when the plans were cut or eliminated, folks were left with very little having been accrued, yet they may have invested 10-15 years with that company, maybe more. In my mind that is indeed a traversity or a heist. If that happened to you, I think your perception would be a bit different.
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Old 10-20-2011, 06:57 PM   #249
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It is all a matter of perspective. Yeah, everybody got what they were legally entitled to. No argument there. The entire Derivatives fiasco was also a legal exercise of a poorly regulated the free market that will, of course, eventually correct itself until the next time. In the meantime, the entire world is upended, lives are ruined. It's all good.
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Old 10-20-2011, 07:02 PM   #250
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As far as not taking away anything, I beg to differ. Most of these private plans where back end loaded, so the bigger payouts only came in the later stages of ones career.

The promise of those plans ....
But that is not a promise. You are talking about expectations that the future will remain like it was in the past. Things change.

Quote:
probably kept many in their jobs longer than they would have liked, but when the plans were cut or eliminated, folks were left with very little having been accrued, yet they may have invested 10-15 years with that company, maybe more. In my mind that is indeed a traversity or a heist. If that happened to you, I think your perception would be a bit different.
It DID happen to me, twice at the same MegaCorp. The pension plan formula changed for benefits earned going forward. I had a choice, if I didn't like it I could look elsewhere, like everyone else. It wasn't a 'heist', it wasn't a broken promise. Would I have liked it better if it stayed the same? Yes. There are lotsa things I'd like.


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Old 10-20-2011, 07:07 PM   #251
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It is all a matter of perspective. Yeah, everybody got what they were legally entitled to. No argument there. The entire Derivatives fiasco was also a legal exercise of a poorly regulated the free market that will, of course, eventually correct itself until the next time. In the meantime, the entire world is upended, lives are ruined. It's all good.
But no 'lives were ruined' in this GE case - as you say, everyone got what they were promised. Sorry, but from what I'm reading the book sounds like the typical whiner-fest. The authors should start their own business and offer all the wonderful benefits that they think people deserve, and make sure they stay in business and profitable forever so no ones expectations are ever challenged ('but I thought my great-great-great grandkids could retire from that company with my great benefits!'). Dreamers.


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Old 10-20-2011, 07:38 PM   #252
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But that is not a promise. You are talking about expectations that the future will remain like it was in the past. Things change.



It DID happen to me, twice at the same MegaCorp. The pension plan formula changed for benefits earned going forward. I had a choice, if I didn't like it I could look elsewhere, like everyone else. It wasn't a 'heist', it wasn't a broken promise. Would I have liked it better if it stayed the same? Yes. There are lotsa things I'd like.


-ERD50
When employees are given a handbook and are repeatly told over the years here is how your retirement benefits are calculated and what you will receive at retirement and that understanding is changed in an instant, yes, to me that is a broken promise. Further, if everyone in the mega corp shared the same pain thats one thing, but when the upper crust is immune and even receives huge comp spikes due it, thats quite another. Talk to some of the IBMers about what happened to them. I'm not 100% sure, but I believe IBM was sued by long standing employees when they pulled one of these conversions schemes on them and IBM eventually lost in court. If thats indeed fact, the court must have felt it was a broken promise too.

Of course things do change and we must move on, but that doesn't mean one needs to bury their head in the sand or simply justify it by saying oh, things change so its alright.
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Old 10-20-2011, 08:24 PM   #253
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When employees are given a handbook and are repeatly told over the years here is how your retirement benefits are calculated and what you will receive at retirement and that understanding is changed in an instant, yes, to me that is a broken promise. Further, if everyone in the mega corp shared the same pain thats one thing, but when the upper crust is immune and even receives huge comp spikes due it, thats quite another. Talk to some of the IBMers about what happened to them. I'm not 100% sure, but I believe IBM was sued by long standing employees when they pulled one of these conversions schemes on them and IBM eventually lost in court. If thats indeed fact, the court must have felt it was a broken promise too.

Of course things do change and we must move on, but that doesn't mean one needs to bury their head in the sand or simply justify it by saying oh, things change so its alright.
As the user-manual says - "All specifications are subject to change". I doubt that I was any closer to this than the average employee, but I was well aware that any future benefit earnings were subject to change. I'm somewhat surprised that I'm still allowed in the MegaCorp retiree health insurance, but very little (less than 10%?) is actually subsidized by them. I guess the bad press of cutting it outweighs the $ cost?

For me, I don't see it as a matter of burying ones head in the sand - quite the contrary. I might say that anyone who was thinking that the future had to be like the past is burying their head in the sand. And just like the fact that our wages are now in competition with foreign wages, I see no reason to try to find any 'justification'. It is just a fact that we need to learn to deal with.

I do recall the IBM case, but not all the details. It would be interesting to review (is it a chapter of the book?). IIRC, IBM may have gone too far in implying that future benefits were cast in stone, or there was an age discrimination angle or something?

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Old 10-20-2011, 09:26 PM   #254
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As the user-manual says - "All specifications are subject to change". I do recall the IBM case, but not all the details. It would be interesting to review (is it a chapter of the book?). IIRC, IBM may have gone too far in implying that future benefits were cast in stone, or there was an age discrimination angle or something?

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Or perhaps it wasn't stated in small print in their user manual.
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Old 10-21-2011, 06:33 AM   #255
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But the government is our agent, and so we expect from it fair representation and honesty.
The govt has been nothing but a gross disappointment to me my entire life. I fail to see how they are either honest, representative, or an "agent".......
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Old 10-21-2011, 06:35 AM   #256
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- and the following comment is a real winner - the guy claims that since GE stock is up, they must have 'looted' the money from somewhere! I'm guessing that guy has never created any value before, so cannot relate
Most reporters have no financial acumen of their own, so its no wonder they write stupid articles.......
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Old 10-21-2011, 09:58 AM   #257
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You two sound like you would thank a burglar for breaking into your house. The money was diverted from pension funds. Pension funds are required to be managed to the benefit of their participants. Did you read and understand what GE did? They failed to pay a dime in for more than a decade (relying on a temporary excess to justify that). Then they closed the fund so they could capture the liabilities as earnings. They lied about what they were doing. Some of the companies actually violated the law and were prosecuted. The others slipped through loopholes and violated the spirit of the law. The whole thing was a travesty.

Do you guys want us all to trust in free markets if you call this simple fair and square free market activity?

The money was diverted from the pension fund AFTER annuities were bought to pay for all required distribution and the pension fund closed down.... since all pension obligations were met, who gets the excess It is the plan sponser... which is the company....


I agree that they lied about what they were doing... however, the money that they 'raided' was never owed to the workers... it was not stolen from them.
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Old 10-21-2011, 10:04 AM   #258
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Tex, Unless you read the book, it appears your taking snipets of what was said or quoted in the review and drawing your own conclusions. Lying vs covering up is a very fine line.

Nevetheless, I would certainly say that many folks that were working for years with the understanding that certain retirement benefits would be there for them and paid out, did see that understanding change when such benefits were cut or eliminated altogether, as well as their healthcare benefits while employed. Further, I have no doubt that executives have benefited handsomely themselves based on freeing up such $s from employee pension plans and healthcare.

I said that I agreed that it was not a good thing to do... but that is life... the company provides benefits to attract a certain level of employee... they view the total cost of employment in this decision... they decided that the cost of leaving all the money sitting over in the pension plan was not in the comapnies best interest... they decided to get it... now, the employees had a decision to make... stay where they were with less benefits or go find another job... that is the free market at work...


And I have been on the wrong end of this 3 or 4 times... so it is not without knowledge where I come from.... and believe me when I say that it is not pleasant to lose a future benefit you thought that you would get.... but it was in the plans that they could change them anytime they wanted... so they did... I adjusted... I do not feel like they stole anything from me as I had not earned it yet....
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Old 10-21-2011, 10:10 AM   #259
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I do recall the IBM case, but not all the details. It would be interesting to review (is it a chapter of the book?). IIRC, IBM may have gone too far in implying that future benefits were cast in stone, or there was an age discrimination angle or something?

-ERD50
It was age discrimination.

Added by edit: that's how disgruntled affected employees dealt with it. The sued and won, and the settlement was to allow some of them back into the DB plan. IIRC there was a charge to the balance sheet ($1B-3B?) to cover the cost. Also recall a similar issue for AT&T.
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Old 10-21-2011, 11:00 AM   #260
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I said that I agreed that it was not a good thing to do... but that is life... the company provides benefits to attract a certain level of employee... they view the total cost of employment in this decision... they decided that the cost of leaving all the money sitting over in the pension plan was not in the comapnies best interest... they decided to get it... now, the employees had a decision to make... stay where they were with less benefits or go find another job... that is the free market at work...
I believe companies were and are required to maintain a certain level of funding in their pension plans. What about cases where they raided the fund and thereby put the fund in trouble to the point they then had to pull the plug or implement changes. That would seem to be a heist, and a greed driven one at that.

And absolutely there is an age discrimination eliminate to this with respect to who got the short end of the stick (eg the older long standing employees).

At one time in this country there were company execs who were stewards to their customers, shareholders and employees and they set a great example, but unfortunately they are now a rare breed, having been replaced by those that have done things for their own personal enrichment and screwed everyone else in the process. In my mind that is not something that should be laudable in a free market and goes back to the days of the robber barrons.
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