Most Americans In the Dark About Their Pensions

[Texas Proud]

Standardization or not, the concepts still work the same way. Even if they didn't, I guarantee if I was spending $5-10k/year on something, you can be damn sure I'd understand every single facet of how it worked.

In regards to pensions, I wouldn't trust anyone to set aside money better than I can. Give me the money now and let me figure out how to spend/save it...there are no guarantees a pension will exist in the future, but money in my pocket today is real and tangible. Same thing applies to SS, but I don't want to derail the thread. Back on topic....

Just started to read this thread... but did not go to the first post...

When it comes to health care insurance I doubt anybody can understand 'every single facet' of how it works....

I am finding out that my insurance covers one kind of diabetes medicine and equipment but not another.... and I can say that I read a LOT on this plan (I am responsible for the purchase decision for out company) and did not know this aspect...

 

[Mulligan]

I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50

30 years ago people beginning their career with a pension probably weren't thinking in terms of funding ratios and solvency of pensions (if they were even thinking about their pensions at all). In today's world ERD50, you may very well be spot on. Drawing a pension now, the train has left the station for me, I won't know if it was the best choice until I die, or the pension gets reduced or eliminated. Whichever comes first will determine whether it was a success or failure for me!

 

[fritz]

I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50

I would agree with you - non-union employees (white collar especially) need to move around to get ahead these days. It used to be "stay no more than 5 years without movement", but now I hear that it is acceptable to stay no more than 2-3 years w/o movement. I moved around (literally and figuratively) to further my career.

Vesting in pensions used to be +/- 10 years until they started throwing people out around 8-9 years for nothing more than improving bottom lines. Pensions used to be an enticement for employees to stay with a company - now you are hard pressed to find one (where you'd really want to work) offering one anymore. Even the big ones have held back contributions to employees 401ks in recent past...

Although I am retired, I would like to see every employee required to set up a standardized individual retirement account with a regulated financial service when they first start their careers. Just like a Social Security account - it would force people to confront their eventual retirement and plan for it accordingly by supplementing future Social Security. You would control your own retirement destiny. Employers would be required to submit any type of voluntary contributions to each employee's account - not their own stock. Forces them to let go of control of their portion (get rid of unfair vesting scheduling). Financial services would be required to provide you with an annual retirement payment schedule based on your retirement funds, similar to what we used to get from Social Security. Today's financial services companies are only interested in getting your money, and not in any detailed guidance with your personal retirement. I feel the current 401k, IRA, Roth, etc, fall far short of giving those with no real interest in investing or their own retirement plans, a reason to get involved. And no - it would not be a locked-in annuity account from an insurance company - you would be in control and at liberty to switch companies (force competition).

If it were possible - would like to see everyone required to purchase their own health insurance also. If everyone handled their own retirement and health care - they would not be tethered to any employer programs that hobbled their advancements through life (i.e. losing health care coverage at the wrong time, or losing employer retirement money). Just a pipe dream...

 

[Alan]

I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50

I absolutely agree with you, that for you and for most on this site, having no company pension scheme or opting out of the one on offer, will work out better.

However, as the report points out, too many folks make no other provisions. Just like the title of this thread, they don't understand their pension scheme, or understand what it means not to have one.

 

[fritz]

Originally Posted by dgoldenz
Standardization or not, the concepts still work the same way. Even if they didn't, I guarantee if I was spending $5-10k/year on something, you can be damn sure I'd understand every single facet of how it worked.

In regards to pensions, I wouldn't trust anyone to set aside money better than I can. Give me the money now and let me figure out how to spend/save it...there are no guarantees a pension will exist in the future, but money in my pocket today is real and tangible. Same thing applies to SS, but I don't want to derail the thread. Back on topic....

Just started to read this thread... but did not go to the first post...

When it comes to health care insurance I doubt anybody can understand 'every single facet' of how it works....

I am finding out that my insurance covers one kind of diabetes medicine and equipment but not another.... and I can say that I read a LOT on this plan (I am responsible for the purchase decision for out company) and did not know this aspect...

I said the same, but when he said he was damn sure that he would understand what he was buying (health insurance, and he sells it for a living) I let it go. Figured those people he sold, that didn't understand their policies, were taking it out on him for not explaining the unknown when it came back and bit them...

 

[ERD50]

Although I am retired, I would like to see every employee required to set up a standardized individual retirement account with a regulated financial service when they first start their careers. Just like a Social Security account - it would force people to confront their eventual retirement and plan for it accordingly by supplementing future Social Security. You would control your own retirement destiny. ....

If it were possible - would like to see everyone required to purchase their own health insurance also. If everyone handled their own retirement and health care - they would not be tethered to any employer programs that hobbled their advancements through life (i.e. losing health care coverage at the wrong time, or losing employer retirement money). Just a pipe dream...

I agree, and unfortunately, I have to agree with your last phrase in that quote.

I absolutely agree with you, that for you and for most on this site, having no company pension scheme or opting out of the one on offer, will work out better.

However, as the report points out, too many folks make no other provisions. Just like the title of this thread, they don't understand their pension scheme, or understand what it means not to have one.

Agreed. What I'd like to see is far more education for the average Joe/Jane regarding this. It isn't rocket science. If it was presented in bite-size chunks, I'm certain that most people would understand what they need to do to fund their retirement.

Personally, I was probably 'in the dark' over most of my career. I knew there was a formula, and it was what it was. I couldn't do anything about it (other than work to get raises), so I didn't spend much time thinking about it. As I got closer to retiring, I got more involved. It's a non-cola pension, so after 20 years it won't mean much at all. But I do vaguely recall that the line was that at age 65 with 35 years in (or something like that), the company pension plus SS should get you to 80% of your 5 year average income. heh-heh - they never mentioned (nor did I think about it in the early days) that the non-cola effect would be huge 20 years down the road.

-ERD50