News, Shell-shocked GM retirees react: 'This is a knife stab in the back' (deduction, purchase)
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A 401K at least belongs to you.
But look at the poor souls who have been done by the likes of MCI, or the Union funds looted by criminals.
It's not an either-or thing; a person can have a pension AND save and invest on their own.
Since the scandals of the 1970s federal watchdogs keep very close tabs on union controlled pensions and they're generally financially safer than company controlled ones because so many employers pay into them they're not dependent on a single company's financial health. That's the case with construction union pensions anyway.
Also with many union controlled pensions the money that's there is there; there's no overfunding or money a company can take back. In the Boilermakers the employers have to pay the fund on a regular basis, every couple of weeks as I recall. The union keeps track of every nickel paid into a member's pension fund account and a member can call the fund at any time to check his hours worked against funds paid in.
The Boilermaker's union pension gives raises to the pensioners when the fund becomes particularly healthy; during the 90s and early 00s there were several raises.
Mu uncle retired from the Ford plant in St Paul. When he left, he was making six figures. His pension is now $72,000/year and has full health benefits. I don't see how American auto manufactures are still in business.
Oh to be an auto worker from his era. They're a bunch of lucky.....
So in order to save the stockholders, executives and bankers, it is better to bankrupt the retirees than meet the obligation to provide health care?
IMHO bankrupt the mess and sell the assets to someone that can keep their word.
No, this saves the current workers since their jobs won't all immediately disappear because the company would go under, and former workers because they get something rather than nothing.
The discussion was about 401k vs pension. Pensions are administered by professional investment companies. 401K's are managed by the individual.
This is a valid point.
Quote:
Originally Posted by HappyTexan
And this whole discussion started off by me saying that I worry what happens in 20-30 years from now when all people have is their 401K's to retire on..no pension and probably no SS.
I will have enough in my 401k to retire on. Pension and SS will be gravy.
When my dad retired he got a pension (38 years same company) of maybe 35k a year at age 60. The Present Value of this life annunity structure is worth maybe about 450,000 and he had that much in his 401k despite only contributing for 15-20 years or so and not his entire employment.
I worked for this company. There are some potential flaws in the study but suffice to say that 1% investment return difference is not catastrophic but this does support your first point. People should get some advice on where to put thier 401k monies.
My bottom line: If you contribute steadily to your 401k and put it in a balanced portfolio like a pension fund does...then you should be able to by a life annunity that at least matches what a typical pension plan would have provided.
All the 401k schemes depend on the market staying intact. Not very likely.
I think you posted to the wrong thread unless you are implying that pensions will be fine when the markets collapse. Ok, keep telling yourself that.
Main reason employers don't offer pensions is that employees see no value in it. Tons of benefits studies out there back this up.
Tell an employee they stay <5 years they get no pension and if they stay 30 years they get a good one..... or just offer them a 401k. Gee, wonder which one most people want.
For the people who keep mentioning contract - THIS AFFECTS NON-UNION SALARIED WORKERS.
No contracts. There was an understanding of course - in that workers took jobs with GM because of the BENEFITS. They took lower raises - BECAUSE OF THE BENEFITS - so to revoke those benefits after the fact, is kinda terrible.
However, I agree - if it is sacrifice this but still receive a PENSION - vs. immediate bankruptcy and NO PENSION. I think the option that preserves the pension benefit is important.
Also for those people complaining that these people are spoiled - it is ONE THING for you find out/realize at age 40 or age 20 or age 5 that you will NEVER have a pension -- you still have a little time to do something about it.
But if you started working in 1960 and retired in 2000 (a lot of salaried workers for these companies worked 30 - 40 years for them) and now you're nearly 80 -- and now you find out they are changing the rules??
That is difficult to adjust to. Many of these workers counted on their "Agreement" with GM and this will come as a difficult shock.
Stop blaming them for being born in a different period of time and having opportunities that are harder to find for the rest of us.
yes - today is a different world, and we are all adjusting accordingly, but that is no reason to be gleeful when today's elderly retirees are caused pain.
The contracts that automakers signed are way too expensive compared to other like industries. That is why it really does them no good to layoff as they really don't save money because they still have to pay for along time ;work or no work. In the end this just maybe the death of american auto companies.If the auto industry goes the way of Enron then the benefits mean nothing really.
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or just offer them a 401k. Gee, wonder which one most people want. 
