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Boeing will end its pension plans for non-union employees by 2016 in an effort to curb the company's growing pension costs.
The change in retirement plans will impact 68,000 workers including managers and executives, Boeing (BA, Fortune 500) said Thursday.
Those employees will transition to a 401(k) plan. Boeing will contribute directly to these plans and match any money that workers opt to save. Any benefits earned from the current, traditional pension plan will be paid when the worker retires, along with the 401(k) funds.
The objective is to provide market-leading benefits, according to human resources senior vice president Tony Parasida, while also curbing unsustainable growth of in pension liabilities.
Is anyone else disturbed by the recent trend of corporations getting rid of pensions for the American worker? You and I both know that the vast majority of people are not disciplined enough to contribute a sufficient amount to their 401k accounts to fully fund their retirements.
Yes it does, longterm results of this is if people don't take care of their own retirement plans, they'll end up on government programs to keep them afloat until they finally pass away. I count myself LUCKY to be able to put away 10% for retirement BUT even then I'm sure I'll have to rely on my inheritance to help me out.
Is anyone else disturbed by the recent trend of corporations getting rid of pensions for the American worker? You and I both know that the vast majority of people are not disciplined enough to contribute a sufficient amount to their 401k accounts to fully fund their retirements.
Not at all look at Detroit need I say more ? The city has just 9,700 workers but 21,000 retirees drawing benefits.
For accounting purposes, private pension plans use the market value of their liabilities. This rule requires future liabilities to be discounted at an interest rate that matches the risks associated with the assets; the resulting value represents the amount a private insurance company would demand to issue annuities covering all the benefits owed by a given plan. By contrast, states calculate the value of pension liabilities based on the returns they expect from investing pension assets. And on average, the states assume an unrealistically high 8 percent annual return on pension investments while the actual rate should be closer to the yield of 15-year treasury bonds. Here is why that’s so problematic.
Pension funds need to assume a certain rate of return on their current assets in order to gauge whether or not the assets held today will be enough to pay future benefits. Obviously, the assumed interest rate or rate of return has a major impact on whether a pension plan is adequately funded. Most pension plans would rather play it conservatively and assume a lower rate of return, so that they ensure that the assets they have today will be enough to cover tomorrow’s promised benefits. But the states would rather put less money up front today, so they’re pinning all their hopes of being able to pay benefits tomorrow on an 8.5 percent annual growth rate. If that 8.5 percent growth rate doesn’t come to fruition, either tomorrow’s beneficiaries will see a cut in their benefits or taxpayers will be asked to pick up the tab. It would be much more prudent to assume an adequate risk-adjusted rate of return closer to the rate offered on 15-year Treasury bonds—3.5 percent, say—and fund their plan accordingly.
Once the pension plans run out of money, the payments will have to come out of general funds, meaning taxpayers’ pockets. If states want to avert that, they need to push through reforms as soon as possible. A first step would be to switch to accounting methods that show the true market value of their liabilities. Once these methods are in place, lawmakers could consider moving away from defined benefit pensions. Otherwise, taxpayers will discover too late that the Tooth Fairy of their dreams is actually the Wicked Witch of the West.
BTW I do not make that much money and I still invest in a 401k it come right out of my pay check so I really do not miss it.
Yes it does, longterm results of this is if people don't take care of their own retirement plans, they'll end up on government programs to keep them afloat until they finally pass away. I count myself LUCKY to be able to put away 10% for retirement BUT even then I'm sure I'll have to rely on my inheritance to help me out.
Yep people my age (30) and younger and older will not see Social security . To me it is a unicorn I feed that I never get to see. I plan on not needing it and my boss try to say you only 30 why worry about retirement you got Social security I was like are you no drugs or just stupid ?
I rather be in control of my own money in a 401k so i have something my company only matches 6% but it better than nothing.
Is anyone else disturbed by the recent trend of corporations getting rid of pensions for the American worker? You and I both know that the vast majority of people are not disciplined enough to contribute a sufficient amount to their 401k accounts to fully fund their retirements.
Disturbed, no, it isn't corporate's problem some employees lack discipline.
Yep people my age (30) and younger and older will not see Social security . To me it is a unicorn I feed that I never get to see. I plan on not needing it and my boss try to say you only 30 why worry about retirement you got Social security I was like are you no drugs or just stupid ?
I rather be in control of my own money in a 401k so i have something my company only matches 6% but it better than nothing.
FICA taxes aren't going away into some magic place and waiting for you to turn whatever magical age it is to get monthly checks. Your FICA taxes is paying your grandmas checks. Hopefully your grandkids will do the same for you. I doubt it though.
FICA taxes aren't going away into some magic place and waiting for you to turn whatever magical age it is to get monthly checks. Your FICA taxes is paying your grandmas checks. Hopefully your grandkids will do the same for you. I doubt it though.
While I feel for those who don't have the financial ability and/or discipline to contribute to a 401k, I personally am just fine with having a defined contribution plan vs a defined benefit plan. It makes me feel like I have more control. I could end up with a smaller nest egg than a pension would provide, but I think it just as likely that I will end up with more.
I have also been fortunate to work for employers that have made decent employer matches and additional discretionary contributions.
I think I might still get some social security benefits, but I think I might be the last generation to receive them. American workers need to be prepared for the economic reality that they are going to be, in most cases, solely responsible for their own retirement nest egg.
Not at all look at Detroit need I say more ? The city has just 9,700 workers but 21,000 retirees drawing benefits.
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I was like are you no drugs or just stupid ? 
