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Old Yesterday, 04:19 AM
 
6 posts, read 743 times
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10 years of great stock market returns but America still has a terrible pension problem. This is due to a number of issues including: more pensions money going out than people putting money in, poor choices of investments by pension managers, and underfunding of pensions by governments.

The experts are saying that future stock market returns will likely be 0-2% real during the next ten years but pensions are being funded with an expectation of 4-5% real returns. (The people who estimate future stock market returns and pension officials who set return estimates have not met in years!)

I suspect many pensions will go broke in the next 10-20 years. Could this be your pension and are you worried?
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Old Yesterday, 06:13 AM
 
2,456 posts, read 2,094,300 times
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Who are the so called experts predicting future stock market returns?
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Old Yesterday, 07:20 AM
 
Location: Ypsilanti, MI
2,484 posts, read 3,699,384 times
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Yes, a closely associated concern.

I resigned via my previous employer's retirement plan in 2013 then went looking for my current job. The primary motivation for leaving at age 56 was concerns regarding the long-term health of the company's pension plan, and their recently introduced option of taking a lump sum. I took the lump sum, turned it over to the Planner with whom we had been working for 20 years, and found another job.

This company currently has 10 times as many retirees as active workers! Every time they close another factory in the dreams of becoming profitable, they push hundreds/thousands of long-term employees into the Pension Plans. Their US pension plan is 'claimed' to be 92% funded but this claim is supported by an assertion they will receive a 6.9% future return on all pension investments, investments which are 75% fixed income products.

The company's international pension plans, which somewhat surprisingly includes Canada, are less than 40% funded! And this is again using the insane claims of 6.9% future return using primarily fixed income securities. These numbers simply do not make sense to me.

So my fear is the plans will go bankrupt and I may be subject to "claw-back" of a portion of my Lump Sum payment as part of the PBGC program to provide some level of pension income to the hundreds of thousands of eligible retirees.

You may have heard of my former employer, General Motors.

My Mother-in-Law took a "28 and Out/Grow Into Retirement" offer from GM when they closed her plant. She has now been retired for more years than she worked!

And if I am subject to claw-back, I wonder if I can write my check to the Pension Plan Administrators on a post card? Just like they issued my 33-Years of Service, Pension Account Balance Cash-out Check, to me. They wouldn't pay for a sealed First Class mail envelope with tracking, or even offer me the option of paying for Express Delivery with tracking. What a bunch of cheap sleazy buffoons!

Last edited by MI-Roger; Yesterday at 07:43 AM..
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Old Yesterday, 07:21 AM
 
29 posts, read 6,160 times
Reputation: 107
I don't worry about my pension going bankrupt. It is a multi employer pension and is always over 100% funded. Nobody has ever lost a dime. They are very conservative with investments and won't increase pension amounts unless funding hits certain levels. So if the market is bad, you get what you are promised and no more. If returns are good, you get an increase. So no I don't worry about it going bankrupt. What I never thought of was the danger my company represented.



In 2016 we had a meeting. They were leaving the multi employer pension and putting everyone in a 401k. Instead of contributing 7% a check to the pension, they would match up to 2.5% in the new 401k. So a 4.5% pay cut across the board for all employees, since we were all in the pension. It was a good day for the company. There was no requirement to participate in the 401k. So if you did not join, the company put in nothing. Even the max match was 4.5% less than before. Pension credits were frozen. That was it, no discussion, no nothing. They wanted to pay less each payroll and this was a way to do that. I went back to my office in shock. An old man in his 50's, who was counting on the pension and credits until retirement. No union, nobody to speak for me but myself. I sat down and wrote a e-mail to the CFO asking to allow senior employees to remain in the multi employer plan. I was humiliated. After 20 years of service, this was my reward. Others were upset as well. I don't know how many spoke up. Just a few I think. Some had contracts that had the pension listed as a benefit and were thinking about getting lawyers. Finally, a deal was worked out so that people of a certain age and service could stay in the plan. Everybody else, all the younger employees, went to the 401k. Part of the deal was that if you wanted to stay in the pension YOU paid the extra 4.5%. It was a shocking thing. I took a pay cut but still am in the pension and contribute each check. So the threat did not come from the stock market or the pension, it came from the company I worked for. At that point I really began to look forward to retirement.
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Old Yesterday, 07:53 AM
 
289 posts, read 112,808 times
Reputation: 614
DH's pension is 138% funded according to the May newsletter. It is a multi-employer plan. There is no COLA but they do give bonuses every year that the fund is over 100%. The bonus is equal to one month's pension check. We don't worry about it going broke as the plan administrator is uber conservative with the investment and they didn't see a big loss in the recent recession.
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Old Yesterday, 07:58 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
30,092 posts, read 54,929,169 times
Reputation: 31567
Mine is huge, through the state, making it much less likely to have financial problems in the future. My 401K and 457 are probably more vulnerable, but they contain less to lose than the pension.
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Old Yesterday, 08:15 AM
 
Location: SoCal
13,762 posts, read 6,534,991 times
Reputation: 10296
Not worrying about mine. Right now that’s my Las Vegas money. That’s the beauty of having money comes from 6-7 different sources. Not a single one of them going away will bankrupt me. They are nice money to have. But all in together, they reduce my risk of depending on my portfolio.
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Old Yesterday, 08:46 AM
 
672 posts, read 320,467 times
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Not at all it is very well funded (I check each year).
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Old Yesterday, 09:05 AM
 
26,235 posts, read 33,224,353 times
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Quote:
Originally Posted by Expert Investor View Post
10 years of great stock market returns but America still has a terrible pension problem. This is due to a number of issues including: more pensions money going out than people putting money in, poor choices of investments by pension managers, and underfunding of pensions by governments.

The experts are saying that future stock market returns will likely be 0-2% real during the next ten years but pensions are being funded with an expectation of 4-5% real returns. (The people who estimate future stock market returns and pension officials who set return estimates have not met in years!)

I suspect many pensions will go broke in the next 10-20 years. Could this be your pension and are you worried?
Nope.
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Old Yesterday, 09:06 AM
 
Location: Spring, Texas
140 posts, read 67,251 times
Reputation: 286
We are planning to retire at the end of this year.

As to the concerns for the pension for my publicly held major mega oil corporation.

Yes to some degree we have some concerns regarding the pension being there for us in 30+ years. (if one of lives that long)

Fortunately, we have a choice of the Pension or to take the Lump Sum upon retirement.

Since the Pension is not cost of living adjusted we have always leaned towards the Lump Sum.

We are planning to take the Lump Sum.
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