The Retirement Heist

[donheff]

Quote:

Originally Posted by Texas Proud 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.

Quote:

Originally Posted by Texas Proud 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

Quote:

Originally Posted by ERD50 As the user-manual says - "All specifications are subject to change".

I just don't get you guys. You seem to view these practices as just ho-hum, business as usual. As if the decision to turn a pension plan into a profit center is no different than discontinuing a product line. ERISA was intended to curb such practices (it backfired in some respects). The government intervened (well or poorly) for a reason -- this isn't just a routine business decision, it is much more than that, and it should be treated as much more than that. In the case of employee pension plans, company efforts to skate around the intent of the law by searching for loopholes and hiding their practices should not, in my opinion, be viewed by us as just another business decision.

[Texas Proud]

Quote:

Originally Posted by DFW_M5 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customers, shareholders and employees and they set a great example, but unfortunately they are now a rare breed, having been replaced by those that have done things for their own personal enrichment and screwed everyone else in the process.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.

Since I did not read the book, I can not comment on any that did not pay the full amount to employees... maybe you can give an example And to me, the steel companies etc. are not the ones as they would be out of business... and went through BK court to get there... so, an example of a company that did not pay what was promised and did not go through BK court... if there is, I will agree with you....

I agree that it is the older folks that get the biggest hit on these plans as they cost more to the companies for an older worker than a younger one... that does not change the other facts that have been mentioned...


You must be remembering things through rose colored glasses... remember the robber barrons of the past Remember why the laws changed for pension plans Remember the underhanded tactics companies used to intimidate unions back in the 20s and 30s... when was this time you remember

To put in perspective of why pension laws were changed... my dad worked for a company that had a 10 year cliff vesting... the company had many managers who would lay off people after 9 years and XX months... so they did not 'earn' any pension... since this is not what has been talked about in the review of the book or these posting it does not apply... but it WAS how companies treated employees in the past and why the law changed on vesting rights... my dad got lucky because someone did a typo on his start date and they fired him a month after he vested... but he had to take them to court to get his pension... he won..

[Texas Proud]

Quote:

Originally Posted by donheff I just don't get you guys. You seem to view these practices as just ho-hum, business as usual. As if the decision to turn a pension plan into a profit center is no different than discontinuing a product line. ERISA was intended to curb such practices (it backfired in some respects). The government intervened (well or poorly) for a reason -- this isn't just a routine business decision, it is much more than that, and it should be treated as much more than that. In the case of employee pension plans, company efforts to skate around the intent of the law by searching for loopholes and hiding their practices should not, in my opinion, be viewed by us as just another business decision.

I view it as part of business.... I have a job today and I hope to have it tomorrow... but they can lay me off today... I have planned on that money, but there is no obligation for them to pay me for future work...

The same with pensions, or healthcare, or anything else I am receiving from my employer...

I just gave an example of how companies used to cheat employees... (if it is not removed since I quoted a post that was)... by back in the 60s, my dad worked for a big company that had a 10 year cliff vest... and there were managers in that company that would lay off employees at 9 years and XX months... they were not vested, so they did not earn any pension... to me, this is ripping off an employee... the only reason they were fired is so they did not earn a pension... that was an abuse that the laws were designed to fix.... I think it has...

But the law was never designed to lock into place a plan... companies make many decision on benefits all the time... sometimes the employee gets better benefits, sometimes not... an example of this is when my mega merged with another... the other had a tiered cost of health insurance to the employees... IOW, if you made more money, you paid more for insurance... I was in the group that had to pay more... shitty for me, but a business decision they made.... I had to decide if the rest of what I got was still worth me working there or would I take my skills somewhere else... of course I stayed.... the cost to me were minor for how long I had worked there... some people might have decided to leave.. it is how business works... and as I have pointed out, how it has been working for a very long time...

[eytonxav]

TP, You seem hell bent on defending big business' actions and treatment of employees and that no wrong has been done, so we can just agree to disagree with each other on that subject.

[Texas Proud]

Quote:

Originally Posted by DFW_M5 TP, You seem hell bent on defending big business' actions and treatment of employees and that no wrong has been done, so we can just agree to disagree with each other on that subject.

No, I am not defending big business action... I am just saying that the words being used by many and the lies that the book has are wrong... but that does not sell books does it

This is way off subject, but might give some perspective on my posts...

I need to put this in perspective... this was before 9/11. When I lived in London, I used to go to Hyde park where people would stand up on a box and spout anything they wanted... there was this communist that was spouting about the evils of commercial society... and this Arab started up on the evil of America... the communist kept asking this guy interesting question about the Middle East... and tried to show the guy that if America was completly out of the Middle East, the problems this guy was talking about would not go away... after this was done I went up to the communist and asked him why he defended America... he said he was not defending America, but trying to point out to the Arab the flaw in his argument... that is what I am doing on my posts... not defending what was done....

So, I am saying that it is not a 'heist', and they are not 'stealing' or any of the other imflamatory words being used... does it hurt the employess... sure does, is it illegal?... some might be... is there redress if it is... sure, the courts...

As I point out, (after thinking, I came up with more) I have been on the wrong end of this 3 times in a pension plan... and twice on a cash balance plan and once on a retirement health plan... If anything, I probably have more to complain about than you do... but all the time they took away future benefits... or as you or someone else has said 'promises'...

[FinanceDude]

Yikes........

[clifp]

Quote:

Originally Posted by donheff I just don't get you guys. You seem to view these practices as just ho-hum, business as usual. As if the decision to turn a pension plan into a profit center is no different than discontinuing a product line. ERISA was intended to curb such practices (it backfired in some respects). The government intervened (well or poorly) for a reason -- this isn't just a routine business decision, it is much more than that, and it should be treated as much more than that. In the case of employee pension plans, company efforts to skate around the intent of the law by searching for loopholes and hiding their practices should not, in my opinion, be viewed by us as just another business decision.

It seems to me there are several cases why companies eliminated pension plans

1. The cost were making themselves uncompetitive see (e.g Steel and Auto industry)
2. Work force turn over was high enough that offering a pension wasn't perceived as benefit (e.g. Silicon Valley)
3. The existence of overfunded pension was an invitation for corporate raiders (e.g. the targets of Carl Ichan over the last 30 years)
4. They need the money to pay the executives big bonuses.

Now it seems to me that only case #4 is really egregious behavior, and while it may have been factor, in most case 1-3 were the primary drivers.

Cutting pension is like a eliminating a product line, the #1 question is does it enhance the long term value of shareholders. If you treat your employers like crap, over the medium to long term the good ones will leave and you'll hurt yourself. So CEO need to balance these factors, clearly many are too short term oriented.

However, as I have posted many times the good old times when workers put in the 30+ years got their gold watch and retired with nice pension is a myth. The majority of American don't work for big companies, so they never had pensions to begin with it. AFAIK less than 1/3 of private American workers were every eligible for pension. A much smaller number ever collected them.

TP stories of companies laying off workers right before they vested for pension is not uncommon. Nor is is restricted to private employers, Nords and others have told me that the military reserves some of its worst assignments for services members with 18,19 years. I guess figuring that is is win win for them, either they take the crappy assignment or they quit and save Uncle Sam the big bucks associated without having to pay a military retirement.

Nor were these private pension all that big, cause most lacked COLAs, my dad put in 30 years at Bristol Meyer before taking an early retirement. My mom's pension is $600 now 30+ years ago that was a decent amount of money, but inflation happens. I don't have a link but exploring the PBGG website I believe the average pension paid out by PBGG is in the same range 600-800/month, i.e much smaller than average SS check.

As said earlier in the thread to the extent that CEO, cut pensions to line their own pockets I am outraged, to the extent that the did it to make their companies more competitive and enhance shareholder value, I have no problems.

[GregLee]

Quote:

Originally Posted by clifp Cutting pension is like a eliminating a product line, the #1 question is does it enhance the long term value of shareholders. If you treat your employers like crap, over the medium to long term the good ones will leave and you'll hurt yourself. So CEO need to balance these factors, clearly many are too short term oriented.

So, if I understand you, treating your employees like crap is okay, just so long as it's in your long term best interests.

[clifp]

Quote:

Originally Posted by GregLee So, if I understand you, treating your employees like crap is okay, just so long as it's in your long term best interests.

I am confused how did you reach this conclusion from my quote?

Corporate managers primary responsibility is to maximize the long-term wealth of their shareholders. This means at times sacrificing short term profitability for long term objectives.

[ERD50]

Quote:

Originally Posted by Texas Proud Quote: Originally Posted by DFW_M5 TP, You seem hell bent on defending big business' actions and treatment of employees and that no wrong has been done, so we can just agree to disagree with each other on that subject. No, I am not defending big business action... I am just saying that the words being used by many and the lies that the book has are wrong... but that does not sell books does it

I gotta agree with TP here, I don't see at all where he was 'defending' big business, just explaining it.

Quote:

Originally Posted by donheff I just don't get you guys. You seem to view these practices as just ho-hum, business as usual. ...

As TP says, the book seems to twist things far too much. When I see that, it is a turn off. There was no 'heist', everyone got what was promised.

Quote:

As if the decision to turn a pension plan into a profit center is no different than discontinuing a product line.

From the descriptions I've read - they didn't turn the pension plan into a profit center (unless you twist it to that). If the plan was over-funded, who over-funded it? GE did, so it was within their right to lock it at that point, pull out their overages, and fund a new plan going forward.

To me, this is as if I agreed to put $10,000 into an escrow account to fix some problem that cropped up in the middle of a house sale, and the price to fix it could not be fully determined at closing. So the final bill comes to $4,000, and I get my $6,000 back. I didn't make a profit, it was my money! I'm getting it back because the escrow account was over-funded. Seems simple to me.

Quote:

In the case of employee pension plans, company efforts to skate around the intent of the law by searching for loopholes and hiding their practices should not, in my opinion, be viewed by us as just another business decision.

One man's loop-hole is another man's interpretation of the intent of the law. I could look at it as a failure of the lawmakers to do their job competently.

Back to 'I just don't get you guys.'...

It seems to be a matter of perspective. I'm not trying to be judgmental here, just trying to explain - it seems like some people look at things as if they have an entitlement at some level, just for existing. A company should provide $X wage, X level benefits, X level of security. Outside events don't matter, it should just be expected. I seem to be hearing this from the 'occupy' crowd - 'pay my student debt'. Why? 'Because I think everyone should be able to go to the school of their choice, study the field of their choice, and the external realities of job markets don't apply'. Just 'because'.

Others feel that life is a series of trade-offs and negotiations. I'll negotiate for the best deal I can get. If no one will give me what I want, there must be a reason. How can I adapt? We have global competition, that's a reality, how can I adapt? Companies (for good reasons, I think) don't want to be on the hook for future costs that are somewhat out of their control. How can I adapt? Maybe a degree in a technical field isn't as 'fun' as some other field, but it is a trade-off between 'fun' and what can lead to a good career.

Is the author of that book contributing to the pensions of everyone in the chain of getting that book out the door? Does that author want to be on the hook for someone's costs 40 years from now? I doubt it, I wouldn't want to be in that position. But it's so terrible when someone else does it? Gimme a break.

-ERD50

[GregLee]

Quote:

Originally Posted by clifp I am confused how did you reach this conclusion from my quote?

If CEOs "need to balance these factors", sometimes the first factor will outweigh the second, and sometimes the second will outweigh the first. Doesn't that follow? And one of the factors is the loss of good employees when you treat them like crap. So when the scales tip a certain way, that's what the good CEO will do: treat his employees like crap in the interest of enhancing shareholder value. It's right there in what you wrote.

[ERD50]

Quote:

Originally Posted by GregLee If CEOs "need to balance these factors", sometimes the first factor will outweigh the second, and sometimes the second will outweigh the first. Doesn't that follow? And one of the factors is the loss of good employees when you treat them like crap. So when the scales tip a certain way, that's what the good CEO will do: treat his employees like crap in the interest of enhancing shareholder value. It's right there in what you wrote.

I don't mean to sound condescending, but you really need to apply some intelligence/filtering to what is written.

A baker could decide to cut his costs and produce crappy bread with sawdust in place of flour for a day. It would be a crappy way to treat his loyal customers, but he'd make a short term profit on that bread, selling it for the old price. But he'd lose business very quickly, and have an awful hard time getting it back.

Is it really such a stretch to see that big business is under the same constraints (except for monopolies)?

And if your employer is treating you like crap, go look for a new job! The same way those customers will look for a new baker. These old pension plans ended up locking people into their jobs, another reason I'm glad to see them go.

Maybe this book shouldn't be seen as a "Heist", but as a breaking of chains - freedom! Good riddance to the plans this book holds up as a something wonderful.

-ERD50

[GregLee]

Quote:

Originally Posted by ERD50 I don't mean to sound condescending, but you really need to apply some intelligence/filtering to what is written. A baker could decide to cut his costs and produce crappy bread with sawdust in place of flour for a day. It would be a crappy way to treat his loyal customers, but he'd make a short term profit on that bread, selling it for the old price. But he'd lose business very quickly, and have an awful hard time getting it back.

I do understand that. Do you understand this? People are not like bread.

[ERD50]

Quote:

Originally Posted by GregLee I do understand that. Do you understand this? People are not like bread.

Customers are people, and the baker treated the customers badly. In that little parable, customers = employees, bread = benefits.

-ERD50

[Helen]

Quote:

Originally Posted by ERD50 And if your employer is treating you like crap, go look for a new job! The same way those customers will look for a new baker. -ERD50

There are plenty of places to buy bread. Where is the 50 year old worker suppose to go to find an employer whose benefits include a pension plan? At 50 good luck getting hired anywhere.

The pension plan extinction has morphed into the 401k down grade. When 401k plans started out they often had a pretty generous matching component. Over time, the matching component has been down graded or eliminated at many places. In addition, a lot employer sponsored plans have been replaced with high expense ratio/employee sponsored plans, which in some cases makes them useless.

I have this book on reserve at my local library. I am looking forward to reading it.

[ChrisC]

Quote:

Originally Posted by ERD50 I seem to be hearing this from the 'occupy' crowd - 'pay my student debt'. Why? 'Because I think everyone should be able to go to the school of their choice, study the field of their choice, and the external realities of job markets don't apply'. Just 'because'. -ERD50

You lost me when you went there. I don't hear that from that "occupy" crowd but I do hear it from the farm subsidy crowd, the banker crowd, and the keep-my-mortgage-interest-deduction crowd which includes realtors, lenders, and residential builders -- all because the government is supposed to serve their interests since that crowd makes alot of political contributions!

I agree that pension surplus for defined benefit plans belongs to the employer making the contributions (and all nine Justices of the U.S. Supreme Court likewise agree with you), but you do appear to have a tin ear when it comes to over the top corporate actions.

[ERD50]

Quote:

Originally Posted by Helen There are plenty of places to buy bread. Where is the 50 year old worker suppose to go to find an employer whose benefits include a pension plan? At 50 good luck getting hired anywhere. The pension plan extinction has morphed into the 401k down grade. When 401k plans started out they often had a pretty generous matching component. Over time, the matching component has been down graded or eliminated at many places. In addition, a lot employer sponsored plans have been replaced with high expense ratio/employee sponsored plans, which in some cases makes them useless. I have this book on reserve at my local library. I am looking forward to reading it.

I agree that things are not what they used to be. But is that a 'heist', or just a changing world? As I've said before, the idea of handcuffing a 50 YO to a job because of the pension is a dark side of pensions. I think we are better off w/o them in many ways.

Bread and jobs are both products of supply/demand. We can't just 'wish' for the market we want. If there are plenty of places selling bread, yet few places offering jobs, there are reasons for it.

Quote:

Originally Posted by ChrisC You lost me when you went there. I don't hear that from that "occupy" crowd but I do hear it from the farm subsidy crowd, the banker crowd, and the keep-my-mortgage-interest-deduction crowd which includes realtors, lenders, and residential builders -- all because the government is supposed to serve their interests since that crowd makes alot of political contributions! I agree that pension surplus for defined benefit plans belongs to the employer making the contributions (and all nine Justices of the U.S. Supreme Court likewise agree with you), but you do appear to have a tin ear when it comes to over the top corporate actions.

google: occupy wall student debt

I'm fine with eliminating all those subsidies/deductions. What 'over-the-top' corp actions do I have a tin-ear to? I always join in any thread that bemoans the tie in between BOD and CEO, I see it as a big problem, but I don't know what to do about it.

-ERD50

[Helen]

Quote:

Originally Posted by ERD50 I agree that things are not what they used to be. But is that a 'heist', or just a changing world?

You seem to be dwelling on the title of the book.

Quote:

Originally Posted by ERD50 As I've said before, the idea of handcuffing a 50 YO to a job because of the pension is a dark side of pensions. I think we are better off w/o them in many ways.

I'd rather be "handcuffed" to a job that I can choose to walk away from as opposed to working until I'm 65+ because meaningful retirement benefits have vanished.

Quote:

Originally Posted by ERD50 If there are plenty of places selling bread, yet few places offering jobs, there are reasons for it.

It was your analogy.

[clifp]

Quote:

Originally Posted by GregLee If CEOs "need to balance these factors", sometimes the first factor will outweigh the second, and sometimes the second will outweigh the first. Doesn't that follow? And one of the factors is the loss of good employees when you treat them like crap. So when the scales tip a certain way, that's what the good CEO will do: treat his employees like crap in the interest of enhancing shareholder value. It's right there in what you wrote.

CEO need to treat employees badly at times in order to ensure the long term viability of firm, anything else is false compassion. It is bit of semantic argument if, cutting wages, eliminating pensions, cutting 401K matches, raising health care premiums, and most importantly laying them off include 50 years olds with bad job prospects, is treating them crappy or acting responsibly. A personal anecdote.

My first job out of college, was working for chip company AMD. In the early 80s they were a hot company (equivalent to Google now) not as hot as my first choice Apple. But they had great growth, and reputation of being a good place to work. They threw awesome Christmas parties feature top name bands like Police, and gave away cars, and 1,000/month for life at the parties. The offices were nice, the headquarters pretty fancy, and the pay and benefits good. The CEO was flamboyant guy by the name of Jerry Sanders, who dressed well, drove fast cars, and had plenty of hot babes around. Jerry was especially proud of his no layoff policy which for very cyclical semiconductor business was unheard off.

A few years, after being laid off from my second company, I arrive at Intel. Intel was the opposite of AMD. Everybody worked in a cubicle, no fancy parties, no give aways, the whole place was beige. No gym and for years they even prohibited showers at work (not great for me who wanted to ride my bike to work.) Unlike most every other place in Silicon Valley, engineers were expected to be at their desk at 8 AM, and if you were late you had to sign a list. People yelled at each other a lot. Andy Grove didn't have a no lay off policy, and while the company tried to avoid them they weren't uncommon. During downturn, pay was cuts and hours were increased. The companies 401K contribution, and bonuses were primarily dependent on a single factor, profit.

Now AMD no lay off policy lasted until the mid 80s and since then the company has score off layoffs over the years. In the last 25 of years, thousand of other companies of sprung up in Silicon Valley, include several dozen medium size chips company. I bet the vast majority of them had more maternal benefits than Intel, but ultimately if you don't make money it doesn't matter. Apple is another good example, it is never been picnic to work there especially with Jobs as boss. He cut Apple sabbatical program after coming back as CEO in 97 and AFAIK they never had pension plan. Google perks are way nicer than Apples.

Shortly before leaving Intel, I attend a talk from a well known Harvard business professor. In this talk he compared the total employment from tough bosses, like GE"s "Neutron" Jack Welch, Jobs, Andy Grove, Bill Gates, and several other guys who were notorious for slashing jobs and benefits, vs the more paternalist companies like HP 10 years after they took over. Now while there plenty of exception the overall results were pretty clear employees were better off working for the SOBs, cause the CEO who were too nice to their employees went out of business. Or to put it more simply nice guys finish last.

It might be nice to live in world where that isn't true, and you certainly don't have marry one, but you probably want to work for pretty ruthless CEO.

[Chuckanut]

Quote:

Originally Posted by Texas Proud But the law was never designed to lock into place a plan...

Agreed. If a company wants to revise its pension plan let it do so - for new employees. The pension is earned over a long period of time. Employees cannot go back into time and make new choices based upon what is happening today.

I simply argue for keeping promises, honoring agreements and doing the right thing. As an employee I would not destroy work done for the company just because it suited me to do so. The company has paid for the work and deserves to get it and keep its results. The same goes for a pension. The employee has worked to earn it and should be allowed to keep it.


Remember that we trade our time and skills for our pay package. We cannot go into the past and recover our time.