Young workers want good old fashioned pension

[easysurfer]

Security does have it's appeal. Even for the young...

Why Young Workers Want a Good Old-Fashioned Pension - DailyFinance

 

[haha]

My friend is a union negotiator and analyst for a large union. Some employers are trying to dump their DB in favor of 401K. He says that no way can a DC scheme replace what a worker currently has with a DB, even a DC scheme that would be considered generous by some.

Ha

 

[Ally]

I agree. My husband has a DB and I have a DC - his is much better and has health insurance. I work at a nonprofit and we could never afford that.

 

[thefinancebuff]

If two jobs have the same pay but one has a pension and the other has a DC match, the job with a pension actually pays more. Of course they want it. The question is whether people are willing to accept a lower cash pay for a pension. I'm guessing the answer is no.

 

[haha]

If two jobs have the same pay but one has a pension and the other has a DC match, the job with a pension actually pays more. Of course they want it. The question is whether people are willing to accept a lower cash pay for a pension. I'm guessing the answer is no.

No problem; just work for the government and get more pay and a COLA pension and great health insurance and special investment vehicles...

Of course, this requires that you could tolerate working for the government.

 

[devans0]

I am an exception to the norm, but my DC is much better than my DB is. I w**k still and have DB grandfathered in, but it was frozen to the current level, no cola, three years ago. I also have a DC. I have just passed the 5 year minimum for for 401k withdraw but already have a DC benefit that equals my DB. Thirty years of DB is being passed by 5 years of DB.
From my view, DB is a secure bond-like guarantee while a DC can build rapidly. This rapid growth is largely from LBYM and extreme saving and investing into DC. DC gives me control to make my FIRE happen. DB meant trudging the road to a happy destiny by a longer slower route.

 

[traineeinvestor]

No problem; just work for the government and get more pay and a COLA pension and great health insurance and special investment vehicles...

Of course, this requires that you could tolerate working for the government.

I agree. Everyone should work for the government and collect the COLA'd pension, health etc. Why should anyone have to miss out?

 

[donheff]

No problem; just work for the government and get more pay and a COLA pension and great health insurance and special investment vehicles...

Of course, this requires that you could tolerate working for the government.

I agree. Everyone should work for the government and collect the COLA'd pension, health etc. Why should anyone have to miss out?

Sarcasm? Or do I detect some sour grapes here? I didn't hear anybody saying this in the 80s or 90s when the mantra was public service was a dead end for anyone wanting to make money. We took the lousy pay and (allegedly) regimented lives but lucked out on the pension side. Now, suddenly, voices are raised about the unfairness of it all. Even teachers are public enemy #1. Rational response to Wall street irresponsibility and reckless tax breaks.

 

[nun]

I work for state government and have a choice of a BD or a DC plan. The pay in terms are exactly the same ie mandated 11% of salary with 5% state match. However, there's a 10 year vesting on the BD plan and it only becomes a good benefit after 15 or 20 years of service. As I began my job at age 42 with the plan to retire in my early 50s I went with the DC plan because of it's flexibility. I've run the numbers and the value of my DC plan could buy a lifetime annuity thats a bit more than the value of the BD plan I'd get if I retired now.

 

[samclem]

If two jobs have the same pay but one has a pension and the other has a DC match, the job with a pension actually pays more. Of course they want it. The question is whether people are willing to accept a lower cash pay for a pension. I'm guessing the answer is no.

Right. And whether they are willing to wait for vesting. And whether this willingness to accept lower pay and less flexibility for greater income stability in retirement will last once the economy recovers.
Anyone wanting a DB plan can buy one via annuity. That few do implies they like the idea of a DB plan more than the reality of one.

 

[Gone4Good]

I didn't hear anybody saying this in the 80s or 90s when the mantra was public service was a dead end for anyone wanting to make money. We took the lousy pay and (allegedly) regimented lives but lucked out on the pension side.

The studies I've seen seem to suggest that once adjusted for educational differences (public sector workers tend to be more highly educated than their private sector counterparts) total public sector compensation, including benefits, is on par with what the private sector pays. It is highly strange to see the compensation of people making $50,000-$80,000 per year become fodder for public outrage when many here believe that $250,000 is still middle class.

 

[Gone4Good]

My personal preference would be for a defined contribution plan, even though the apparent 'security' of a defined benefit plan is appealing. The problem I've seen first hand with DBs is that after an employee commits most of a lifetime of work in an attempt to earn one, the employer forces an 'early retirement' with reduced benefits. I'd rather have the cash up front.

 

[haha]

Sarcasm? Or do I detect some sour grapes here? I didn't hear anybody saying this in the 80s or 90s when the mantra was public service was a dead end for anyone wanting to make money. We took the lousy pay and (allegedly) regimented lives but lucked out on the pension side. Now, suddenly, voices are raised about the unfairness of it all. Even teachers are public enemy #1. Rational response to Wall street irresponsibility and reckless tax breaks.

Absolutely not sarcasm. My modest proposal is to shut down all those grasping private businesses, and have everyone work for a much more beneficent employer, the government.

Ha

 

[almost there]

Gov. jobs for everyone?
Our current tax base could never cover medical and full retirement for everyone. The math does not work.
The product produced by the Gov. operates in the negative. Zero profit. The rest of the economy allows it to operate.

I am also sure young people now understand why big Co's went from pensions to 401k's. Take $$ from the little fish in the Co. and funnel it to the big fish.
Check what CEO's get now and V. S. early 80's.


Its much cheaper for a co to fund a 401k rather than a pension. Simple math.

But 40 yrs from now we really have no idea how things will be.

Were folks in 60's discussing 401k's? No......

So for know it seems the younger generation has caught on how the last generation got one puller over their eyes by big Business.

 

[nun]

Right. And whether they are willing to wait for vesting. And whether this willingness to accept lower pay and less flexibility for greater income stability in retirement will last once the economy recovers.
Anyone wanting a DB plan can buy one via annuity. That few do implies they like the idea of a DB plan more than the reality of one.

People have a hard time making the correct financial decisions. A classic example is when choosing between a cash pay out and a lifetime pension. The lure of immediate cash is tempting and companies know that so they make the payment less than the equivalent pension value.

The attraction of DC plans over DB plans is also due to today's uncertainty of employment. Many workers don't have collective bargaining or contracts and can be sacked without much notice and without cause so the value of a BD that might require 10 year vesting is pretty tenuous. I have seen employees fired a month short of BD vesting......and I've encouraged then to take the company to court....I no longer work for that company.

The big rip off came when non-contributory DB plans were replaced by DC plans funded mostly from the employee's salary. The cost was shifted from the employer to the employee without an equivalent increase in employee salary.

 

[FinanceDude]

Sarcasm? Or do I detect some sour grapes here? I didn't hear anybody saying this in the 80s or 90s when the mantra was public service was a dead end for anyone wanting to make money.

I am old enough to remember the 80's and 90's and I don't remember everyone pounding the table on how public service was a dead end job. Teachers and govt workers were held in high regard when I grew up.

We took the lousy pay and (allegedly) regimented lives but lucked out on the pension side.

But you did it so you could retire in your 50's when most work til 65 or later, right?

Now, suddenly, voices are raised about the unfairness of it all. Even teachers are public enemy #1. Rational response to Wall street irresponsibility and reckless tax breaks.

A little clarification: The ONLY teachers that become public enemy number one are those that whine and complain about their benefits.....like the guy who said any changes in his benefits would "ruin his life". There has been a rash of 20-30 year teachers here taking retirements, because they are worried about the future, even though they are long vested in their pensions and healthcare benefits...........

 

[ziggy29]

Why shouldn't they *want* it? They've seen the bill of goods the "401K Generation" is getting, and that most of them look like they'll never be able to retire. The question is, how can we afford it? And even then, what do we do about all the pensionless folks already out there, well into their 40s and beyond, who will likely never retire (and create job openings for the next generation)? Those older and younger would have pensions, but not them.

 

[FinanceDude]

The big rip off came when non-contributory DB plans were replaced by DC plans funded mostly from the employee's salary. The cost was shifted from the employer to the employee without an equivalent increase in employee salary.

Welcome to the private sector......

 

[ziggy29]

Pensions are the new stock options.

 

[nun]

I am old enough to remember the 80's and 90's and I don't remember everyone pounding the table on how public service was a dead end job. Teachers and govt workers were held in high regard when I grew up.

I don't understand why people attack the teachers who get paid below average salaries to nurture of the minds of our children. I'd want the best and the brightest to do that job, and the way you get those folks is to offer good pay and benefits. We have our priorities reversed when teacher pay and benefits is the issue rather than company tax evasion and CEO pay.

 

[almost there]

Welcome to the private sector......

Agree 100%.
But Co's got greedy.
Before the 80's most large co's had "profit sharing".
(in addition to a pension/medical)
Great incentive for employees to do well.
They also valued loyalty.
Those days are long gone.
Today, unions cant compete and loyalty in the private sector means nothing.
I guess that's why things are the way they are today.........

College students today have zero trust in Gov. or Big business.
For good reason.

 

[nun]

Welcome to the private sector......

Indeed. I started in academia and then moved to NASA before working for a private sector defence contractor. The only place I ever saw people actively screwed was in the private company and that was by managers who were nice people, but had to make short term financial targets. I saw those managers selling a little of their souls and walked away from that job and went back to academia. I didn't need the money at that price. I now work for a state university. I've taken a pay cut, have more vacation, don't pay SS, pay 11% of salary to a DC plan and get a 5% state contribution......on the whole I'm financially worse off, but the working environment is far better.

 

[ziggy29]

I don't understand why people attack the teachers who get paid below average salaries to nurture of the minds of our children.

IMO, it's a problem that we can't even debate this without this card being played as if anyone who feels otherwise is a monster.

I'd want the best and the brightest to do that job, and the way you get those folks is to offer good pay and benefits.

And yet, many (if not most) of the people making this argument in "defense" of teachers and their compensation vehemently oppose the ability to get rid of bad teachers more easily, eliminate K-12 tenure or offer merit pay for top performers. Cognitive dissonance, methinks, if the goal is to have the best and brightest become teachers.

 

[almost there]

On the other hand, if the last 15 yrs of market volatility looked more like the past 70 years we would not be having this discussion.

 

[samclem]

I'd want the best and the brightest to do that job, and the way you get those folks is to offer good pay and benefits.

To attract and keep the best, good pay and benefits are necessary but not sufficient. Employers also have to have a rigorous selection process to hire the right folks, and be ready to "un-hire" them efficiently so another applicant can move in. Throwing more money at a present batch of mediocre employees (regardless of the job) will not make them better, and if they've got effective lifetime employment guarantees and advancement based on seniority rather than performance, then higher pay is just wasted.