Preview of the US without pensions

[purplesky]

WADR, that is clear, unadulterated BS. Nobody stole anything from anyone.

The short story is that many companies just decided that they no longer wanted to accept the investment risk associated with sponsoring a defined benefit plan so they stopped doing it. There is nothing written in stone anywhere that an employer has to offer a DB plan and where companies did make changes they gave fair notice.

The problem was that many short-sighted employees decided not to save and are now paying the price. Those of us who listened and took their advice to save are doing fine, proving that the change was fair as long as you adjusted your habits.

They had the same opportunities that we had and they squandered them.

There are millions of workers who have been screwed by corporate greed. Its a fact.

Money stolen from workers is not BS. That is corporate greed. Its theft.

Its funny if you mention corporate greed many people get very defensive for some reason.

As an investor I get the fiduciary responsibility to shareholders thing but you have to admit in this day and age of ridiculous wealth and wage inequality something is not working.

The shrinking middle-class has not received a real wage increase in 40 years.
How can you keep a straight face.

 

[travelover]

Ski/sky, I think the truth lies in between. There has been deliberate theft of pensions by some bad actors, but not all pensions that went away were theft.

 

[purplesky]

Ski/sky, I think the truth lies in between. There has been deliberate theft of pensions by some bad actors, but not all pensions that went away were theft.

Yes I totally agree. There are many good corporate citizens.

 

[Montecfo]

This Forbes article shows that 61% of all workers were offered a defined benefit plan in 1999:

https://www.forbes.com/sites/lauras...g-in-an-employer-sponsored-plan/#6e12148e2152

The article referred to employer sponsored plans. Not defined benefit.

 

[Montecfo]

Ski/sky, I think the truth lies in between. There has been deliberate theft of pensions by some bad actors, but not all pensions that went away were theft.

Most pensions went away because of cost and competitive pressures. People were informed and could seek other jobs. Others embraced defined contribution, saved, and took responsibility for their future.

Not to say it was always "fair" to all. But you have to strike a balance compared to staying in business too in severe cases.

I'm not sure I see greed as a big factor but, if so, I guess we have been investing in a lot of those greedy corporations which lack pensions but have been good investments.

 

[NW-Bound]

Most pensions went away because of cost and competitive pressures. People were informed and could seek other jobs. Others embraced defined contribution, saved, and took responsibility for their future.

Not to say it was always "fair" to all. But you have to strike a balance compared to staying in business too in severe cases.

I'm not sure I see greed as a big factor but, if so, I guess we have been investing in a lot of those greedy corporations which lack pensions but have been good investments.

That's the other side of the coin.

I hate to see upper management treating themselves well with high salaries, pensions, and golden parachutes. Whether the company is doing well or not, they always take care of themselves, and do not share in the pain with the rank and file.

But if we took away all the cushy management benefits, would it be enough to help the pension shortfall? Is it not that a big part of the problem being demographic changes, that retirees live longer? If so, it's the same problem as the one SS is facing right now.

 

[NW-Bound]

Pension funds are running short everywhere. I did not know some unions like the Teamsters have their own pension funds. Here's what's happening to them as described in a Web article.

The Western Pennsylvania Teamsters fund — which has about 48 cents for every $1 in benefits it owes to retirees and workers — notified participants in April that it is considering cutting benefits in order to insure that the fund doesn’t become insolvent. The plan is expected to pay out nearly $129 million in benefits this year but will collect only about $54 million in contributions.

If the current level of benefits is maintained, the fund is projected to run out of money in 2028.​

 

[meierlde]

Actually pensions also went away because the whole career at one company model on which they are based became obsolete for both corporate and individual reasons. A pension really only paid well if you had a fairly large number of years in the last job you held when you combine the typical final average pay formula (average pay 3 out of the last 5 years or something like it) times a percentage times the number of years in service. typical formulas might be from 1.4 to 1.6 for the percentage.
So for a job mobile workforce the pension model no longer worked.

 

[bada bing]

I (still) work in one of the last industries where most of the major players still offer some form of pension to their workers - Big Oil. I have been bounced around through my career by asset sales and plant closures and have worked for 4 different oil "majors" and have vested in 4 different pension plans. I have worked on 3 continents and the pension has been the one stable piece of what I was paid. None of my pensions are very large and I have since lump sum'ed out of 2 of them. I still have one that doesn't offer a lump sum option and the current active pension at my present employer. I appreciate all of the pensions as benefits offered by employers, but to be honest, they were never a big driver in who I chose to work for. Most workers don't evaluate pensions much in the choice of who to work for and companies can get more bang for their buck in attracting and retaining workers spending money on other things. You can blame corporate greed, but the truth is that an awful lot of the blame for the retirement crisis rests with choices made by individuals. Another truth is that if you take responsibility for managing your own affairs, you can do better with money in your own hands rather than held for you by supposedly benevolent trustees. That is true whether you are talking about pensions or Social Security verses retirement savings accounts. Freedom and responsibility go together and when you argue against responsibility you are also arguing against freedom.

The 401K and the transition from pension to 401K should have been a boon to workers, and for some it has been. For it to be a blessing requires the earned value be continued by employers, but it also requires the individual taking responsibility for their own outcome. I can't tell you how many of my working peers talk about 401K loans to pay for something like a new bass boat and anguish over putting in the bare minimum to capture the match .

The flip side of the retirement crisis and the transition from pension to 401K as the model for retirement funding is the number of $1,000,000+ estates that will be inherited in the coming years. The 401K arguably doesn't work for a lot of people, but when it does, it is a benefit. But the difference in how people have managed it is responsible for some of the growing wealth disparity (inequity??)

 

[skipro33]

I started working for a municipal utility electric company that has a pension in 1983 at age 27. During my first year there, a senior co-worker encouraged me to take advantage of the 401K and the 457 plans that were also available. There was some fund matching but I don't really recall what it was.
Anyway, when I started there, I left a job that paid $11 an hour for this one at $7 an hour. And that seems to be something a lot of folks forget about pensions; that it is PART of the compensation, not in addition to pay, but in combination with pay. If I had earned $11 an hour, the extra 30+% pay would have made it easy to save for my retirement, but at $7 an hour, not so much.
At some point in the 90's I think, then pension was 'super funded'. The stock market was doing so well and the funding for the pensions so flush, that the pension management informed the company that they didn't need to continue paying into our pensions. I asked management when I would start seeing that 30+% of my pay on my paycheck that had been going to the pension fund. Of course they just laughed and said it wasn't MY money if the pension management didn't require payments. I disagreed, but kept my mouth shut. Now fast forward to around 2008 when the market started really dropping. Not only was the super funding no longer, but funding as it was wasn't adequate to cover the promised pensions. Whoa! Wait a minute! What did the company do all those years with the funds they were not being required to pay into our pensions? They sure weren't giving it back to me and as a municipal utility, it is, by definition a non-profit governmental agency. What they did was lower the utility rates for the rate payers. They sure were happy. But when required funding returned with a vengeance, these rate payers reaping the benefits of a hot market earlier bitched like hell that keeping the pensions as promised was going to require a rate increase.
In hind site, the utility should have continued to bank and invest the funds all along, even during those super funded years. After all, what goes up must come down.
But like I mentioned, I was advised early in my career to invest in the 401K and 457, which I did with every pay raise until I maxxed out the amount I was allowed to pay in.

Anyways, I just wanted to point out that pensions were offset by a smaller salary or hourly wage when they were offered where I worked. So anyone thinking it's a gravy train on top of a fat wage is probably mistaken. Figure too, that pensions are based on the employee's hourly wage, reduced to compensate for a match to the pension from the utility, and there's no real way to see a pension as a sole source for funding retirement. It's just one leg of a 3 legged stool. The other legs being the personal savings of a 401K/457 and social security.
Lastly, I'd like to also point out that many pensions were offered to labor intensive work. For me, an electric company, it is rare that anyone over 50 is still climbing poles, let alone in bad weather or other severe conditions. Many wear out their bodies after a couple decades of that type work and either disable out or are terminated because they no longer can perform their daily duties.

 

[Amethyst]

If the employees paid a portion of their salary into a pension fund and got nothing back, not even their paid-in portion, I certainly would consider that to be stealing from them. A fact of life is that companies can and do fail. Creditors get whatever's left. If the employees had paid into a pension fund, that ought to be a top "creditor."

If the employee wasn't paying anything, however, then any future pension payments were always riding on the company's health. In that scenario, to believe that the company will always be there for you would constitute fairy-tale thinking.

WADR, that is clear, unadulterated BS. Nobody stole anything from anyone.

The short story is that many companies just decided that they no longer wanted to accept the investment risk associated with sponsoring a defined benefit plan so they stopped doing it. There is nothing written in stone anywhere that an employer has to offer a DB plan and where companies did make changes they gave fair notice.

The problem was that many short-sighted employees decided not to save and are now paying the price. Those of us who listened and took their advice to save are doing fine, proving that the change was fair as long as you adjusted your habits.

They had the same opportunities that we had and they squandered them.

 

[Danmar]

Having or not having a pension would make no difference to me. I still would have done the same amount of saving.

Same here. Never counted on the pension. In the end though, due to very good luck on my part, the pension ended up being very large. In addition, having a considerable part of our spending covered by a pension allowed for a more equity weighted AA which has worked out exceptionally well.

Not a day goes by that I don’t think “how lucky I am”. Merry Christmas.

 

[Midpack]

If the employees paid a portion of their salary into a pension fund and got nothing back, not even their paid-in portion, I certainly would consider that to be stealing from them. A fact of life is that companies can and do fail. Creditors get whatever's left. If the employees had paid into a pension fund, that ought to be a top "creditor."

If the employee wasn't paying anything, however, then any future pension payments were always riding on the company's health. In that scenario, to believe that the company will always be there for you would constitute fairy-tale thinking.

It’s not bulletproof by any means, but I think ERISA and PBGC do provide some protection of employee retirement assets whether the employees contributed directly or not.

The law includes specific requirements on how pensions funds are held, which becomes especially important when a company declares bankruptcy. Pension funds should not be at risk when a company goes bankrupt because ERISA requires that (1) pension plans be properly funded to meet promised benefits and (2) pension money be kept separate from the company's business assets and held in trust or in some other separate means. Holding the pension separately should protect it from creditors in a bankruptcy proceeding.

While ERISA sets minimum standards for pension plans, many of the important provisions such as the level of benefits and what happens in case of a bankruptcy are left up to the employer and are detailed in the pension summary plan description, a document ERISA requires to be distributed to all employees and plan participants. ERISA also requires the employer to uphold any plan obligations stated in the summary plan description. U. S. DOL advises plan participants, especially in bankruptcy cases, to become familiar with their summary plan descriptions.

I became familiar with my megacorps summary plan document, one of several reasons I took a lump sum the minute I was eligible. However, my long frozen pension wasn’t that significant, an easier choice than someone relying heavily on a pension.

 

[Colreb1962]

Pensions are deferred compensation. The employee
traded labor and time for the pension. A company who
doesn’t fully fund the pension or knowingly used overly
optimistic return assumptions is guilty of theft.
Bait and switch. In most cases it wasn’t an inability
to fund the pension plan but a desire to loot the pension
plan that caused failure.

 

[43210]

Here's a relevant article.
https://www.investors.com/politics/editorials/the-states-unfunded-pension-nightmares/

However people need to stop calling these "under-funded" because what they actually are is "over-promised".

Pension funds are causing huge social and economic damage by sucking in vast quantities of money out of their surroundings. This needs to stop. They should make do with the funds they have now. However, first they should return the funds they have taken from people who are not party to the pension. I have personally been harmed by a six-figure amount, and that should certainly be returned to me, and everyone else in my situation.