Preview of the US without pensions

[lwp2017]

What a shock to the retired executives at Westinghouse when they lost their pension this year.

The Westinghouse executive pension plan was non- qualified so the bankruptcy judge stopped paying them when the current executives' decisions bankrupted the company.

Add to the sting, this was deferred salary compensation they lost that could have been personally invested or enjoyed.

Regular employee pensions are qualified and not impacted.

https://www.reuters.com/article/us-...pensions-for-ex-ceos-executives-idUSKBN18L2AF

 

[Curmudgeon]

The article seems to talk only about private-sector pensions. Meanwhile, in the public sectors, 93% of workers are offered defined benefit (!) pensions. And not much fear of them being cut: in Oregon, where unaccountable and over-generous lawmakers granted workers a defined benefits packaged that threatens to bankrupt the state and school system, courts have ruled that once-promised benefits can not be rescinded.

 

[Souschef]

My Megacorp froze the pensions years ago. Nice to have one, even if it is small.

Same here. It is about $1200 a month, but on top of SS, it covers most of my expenses.

 

[Amethyst]

I know I've posted this before, but my agency's HR department holds lots of retirement seminars. Mr. A. and I got some good info out of his, back in the 1990's...it was the first time either of us had heard of "Dollar cost averaging." We knew about index funds but had been reluctant to put much in them, as the stock market seemed high at the time.

Then, the year he retired, I hit 15 years in, and was offered a 2-day,"mid-career" seminar. HR brought in financial advisers and people who were experts on the federal retirement system. They were not allowed to push their businesses during the seminar, but of course their payoff was that employees could contact them later on. The message I best recall was the HR reps telling us that Congress could change our benefits at any time (as they had in 1984) and that even those of us covered under the older Civil Service retirement system should not count on our pensions to be enough for retirement, but should be putting money in the TSP and in private investments, too.

If a Federal agency was willing to caution its employees about the potential risks of a U.S. Govt. pension, it's really a shame that private companies didn't try to prepare their employees for the risks that a private pension is heir to.

 

[IMATERP]

To the extent that long-time government workers increase as a percent of the workforce, the numbers with pensions grow.

Actually, not in all cases. Anyone who begins with the State of NC in 2020 will be eligible for a pension but no longer health insurance. By 2025, I expect the legislature will convert future Pension $ to 401k contributions instead.

The real problem is that States still need to pay "promised benefits" to retired employees.

I

 

[meierlde]

What a shock to the retired executives at Westinghouse when they lost their pension this year.

The Westinghouse executive pension plan was non- qualified so the bankruptcy judge stopped paying them when the current executives' decisions bankrupted the company.

Add to the sting, this was deferred salary compensation they lost that could have been personally invested or enjoyed.

Regular employee pensions are qualified and not impacted.

https://www.reuters.com/article/us-...pensions-for-ex-ceos-executives-idUSKBN18L2AF

You might add that this was the supplemental pension plan that paid benefits above the limits specified by ERISA (currently wages over 250k are not covered by qualified) Most companies provide supplemental retirement plans for executives and the like who make more than 250k for pension and an equivalent for 401k called a supplemental retirement plan. This is how the huge listing for deferred comp for the top 5 execs is reached. In addition they have a deferred income plan where an exec can also differ say part of the bonus and leave it with the company. (I suspect the Westinghouse execs lost this also)
These plans are spelled out in the company prospectus discussion of top 5 execs compensation. Congress chickened out on ending the deferred comp plans this year as it was in the original docs but the lobbyists must have gotten to them.

 

[Huston55]

What strikes me most about the profiles of the MDD workers (who, in this story, are meant to represent everyone in similar situations) is the unfairness of how they were treated. It’s very sad.

I know we all make our own choices, LBYM, save, learn to invest, blah blah blah; and, therefore, think everyone else can do the same. But, the fact that these folks could be subject to such treatment with little/no recourse, is very disappointing to me.

In the end, I suppose we’re all just one catastrophe from being in the same boat.

 

[joeea]

There’s a misperception that more people in the past received pensions than actually did. I don’t believe it’s ever been more than about 40% of workers ever received pensions.

According to this CNN Money article, "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s." (And certainly the public sector had far higher coverage).

Just how common are defined benefit plans? - Ultimate Guide to Retirement

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


When I started working, most companies offered defined benefit pensions. When I recently retired, virtually none did. In the private sector, the financial risk has been shifted from the employer to the employee pretty much completely.

 

[NW-Bound]

From the article, I understand that the MDD workers in the Tulsa plant did not lose their pension, but it was frozen at the level they earned up to that point when the plant was closed.

It would have been better if the pension plan was frozen and converted to cash value as my wife's megacorp did. The workers got to keep their job, but had to start saving in their 401k. I am not knowledgeable about this, but believe that many (most?) aerospace companies have agreements with employee unions, and perhaps pension reform was not possible and closing the plant was the only thing they could do to save money.

 

[gayl]

While we're junking up Xmas eve with doom and gloom, so far the people with public employee pensions have not been mentioned. Chicago, California, Illinois and many other jurisdictions headed towards bankruptcy will, in bankruptcy, be cutting those pensions. For those who are already retired or near retirement, the necessary arithmetic will be very tough. And, worse, these will probably not be people like @midpack who are financially savvy enough to have planned for it.

date of retirement dictated benefits:

• to 1984 = COLA not banked so if COLA was greater than 3% increase capped at 3%
• 1984-2000 = COLA tops at 2%
• 2000-June 2004= cash payment if personal bucket short, I wrote a check for 66k+
• 2004-now= pension can be clawed back if nec

So glad they kept harping on the value of fully funding the 457 so it's all good .... letting 457 ride. Actually this passage says it all:

Those affected are buried by debts incurred for credit cards, used cars, health care and sometimes, the college educations of their children.

outside of health care, those are lifestyle choices (says one whose kids funded their own college through grants / scholarships / 16k debt on graduation)

 

[FreeBear]

As I see it, Megacorp did me a favor by freezing pensions in 1994 when I was 40 yo ** and I still had time to plan to depend on our own resources entirely. I do feel some sympathy for those who were not able to plan for retirement without a pension, but some/many could have. And I don't feel much sympathy for those who still pine for pensions to return, that seems highly unlikely.

Ditto, except, I figured this out even earlier, due to pension freeze, and, more importantly, offshoring most w*rk related to my specialty. I learned that technology and business decisions change w*rking conditions more quickly than I could or even would want to keep up with.

In short, I finally learned what my dad had been trying to teach me: be an owner, not an employee. So I maxed out my 401K, and then almost doubled by savings rate beyond this in my early 30's.

Funny thing is that if I had a pension and good retiree healthcare, I perhaps would have felt the pressure of "golden handcuffs". Instead, once I got comfortable with my withdrawal rate, I moved on to the next phase life. Mini-corp moved on and, eventually, so did I. Win-win!!

After reading these replies, I realize I was fortunate to see the carnage in my industry at the beginning of my career. I had few illusions as to the end. I spent a few decades "managing" it's demise in the US, and said goodbye to tons of good co-w*rkers. I had had a good run, but I was done...

 

[FANOFJESUS]

My father said never trust a company. My father was not crazy about companies. When I got older I understood why.

 

[LOL!]

A kind of pension and retiree healthcare is having a spouse who wants to continue working and has company-provided healthcare for the family.

 

[pb4uski]

I think that pensions should only be for people that really need them, like Jack Welsh, for example.

Who is Jack Welsh?

 

[pb4uski]

Yeah, I just wish that as pensions were being phased out and 401ks phased in that someone had told employees that they needed to save for their retirement rather than pissing their money away on bigger, fancier houses, fancy cars, incredible vacations, etc. Why didn they warn people?

 

[Big_Hitter]

Who is Jack Welsh?

https://en.m.wikipedia.org/wiki/Jack_Welsh

 

[purplesky]

Merry Christmas everyone

https://www.washingtonpost.com/busi...55a220c8cbe_story.html?utm_term=.f0ab38e4e01d

"The way major U.S. companies provide for retiring workers has been shifting for about three decades, with more dropping traditional pensions every year. The first full generation of workers to retire since this turn offers a sobering preview of a labor force more and more dependent on their own savings for retirement."

Corporate greed at its finest. Stealing from workers retirement pensions to increase shareholder value is the greedy corporate American way.

Should be interesting to see if the new corporate tax cuts will trickle down to workers.

I have a mega corp. pension that I will collect very soon. Sometimes I just can't believe how lucky I am my pension is still alive.

I have always expected the worst so I will also retire with a million dollar 401k.

Corporate greed has motivated me to become the millionaire next door.
Go figure.

 

[RobbieB]

That's how I got rich, by investing in greedy corporations stock. Yes, I'm the greedy corporation and I want my dividends -

 

[Dash man]

According to this CNN Money article, "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s." (And certainly the public sector had far higher coverage).

Just how common are defined benefit plans? - Ultimate Guide to Retirement

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


When I started working, most companies offered defined benefit pensions. When I recently retired, virtually none did. In the private sector, the financial risk has been shifted from the employer to the employee pretty much completely.

Offering a pension and the retiree receiving the pension are different statistics.

 

[gayl]

Yeah, I just wish that as pensions were being phased out and 401ks phased in that someone had told employees that they needed to save for their retirement rather than pissing their money away on bigger, fancier houses, fancy cars, incredible vacations, etc. Why didn they warn people?

personal responsibility? I was told and acted. Coworkers were told and didn't act or just put it in General Investment which was a savings account

 

[purplesky]

That's how I got rich, by investing in greedy corporations stock. Yes, I'm the greedy corporation and I want my dividends -

No you didn't make the actual decisions to steal from workers.

You didn't help create the retirement crisis. Greedy people in a boardroom made that decision.

Its great your working career worked for you to build wealth but millions of other workers have been screwed by corporate greed.

You just got lucky. I have been lucky also.

Just because I have ended up on the right side of corporate greed doesn't mean that I am not allowed to call it out for what it is. Its just greed to steal from workers.

 

[MRG]

yeah, i just wish that as pensions were being phased out and 401ks phased in that someone had told employees that they needed to save for their retirement rather than pissing their money away on bigger, fancier houses, fancy cars, incredible vacations, etc. Why didn they warn people?

 

[stepford]

Just because I have ended up on the right side of corporate greed doesn't mean that I am not allowed to call it out for what it is. Its just greed to steal from workers.

Then again all commerce is greed in some form. It's just a matter of how much we decide to let people get away with. We're really getting in the holiday spirit now!

PS. As a longtime employee (and pension recipient) of the Megacorp that swallowed McD-D this article hits pretty close to home. My pension - a meager non-COLA'd 20-something percent of my final salary though it is - provides a handy income stream to pay for the basic essentials of life. That said, I fully expect inflation or perhaps the aforementioned corporate greed to render it of little value eventually and planned and saved accordingly prior to ER.

 

[Mulligan]

Also, many pensions were never inflation-indexed, so the recipients probably would have done better with 401Ks, had those existed. That was true of my Dad, who paid into a union pension for ~35 years, only to retire into the double-digit inflation of the early 1970s. His "generous" pension quickly shrank to a fraction of his SS benefit, and he ended up going back to work as a night manager at a condo. For me, as a teen, it was an early lesson in Beware.

Cola’s definitely make a difference even in low inflation times. My pension is up 9k a year from Cola’s in past 7 years of retirement.

 

[pb4uski]

No you didn't make the actual decisions to steal from workers.

You didn't help create the retirement crisis. Greedy people in a boardroom made that decision.

Its great your working career worked for you to build wealth but millions of other workers have been screwed by corporate greed. ....

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.