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It just hasn't been public service employees either Carterstamp, I knew several people whose company/corporation they spent lifetimes with either downsized or went out of business whose pensions were affected, this happened quite a few years ago too.
I know of one woman who worked for K-Mart many years, she was basically cheated from a great portion of her retirement. IBM did the same thing, at least that's what a former IBM employee told me.
This is why there have been a lot of adjustments to private pension laws over the years.
Even still, a financially struggling private company does not have to fully fund thier pension but needs to be working towards it and can fall behind if they hit rough times financiallly and if future assumptions turn out to be lower.
The other part that might have occurred might be retiree medical plans which is a completely different animal.
The K-mart situation is a skeevy one....the Kmart pension invested in Kmart stock which tanked.
In general, I despise Defined benefit pension plans and prefer to have a 401k that I can control...that is fully funded as it grows etc.
Part of the Detroit lesson would be to not give tax breaks to large corporations and companies who want to set up in yours and my communities, and try balancing their books on local citizens and voters.
In my community, the village gave companies/corporations tax incentives for putting their businesses here. Did property taxes for citizens go down? Did property taxes for citizens become frozen? They did not.
Yes all of these tax breaks must end for corporations.
Yes it sounds good to lure them to the area with all these incentives but in the long run it will bite the taxpayers in the ass. When (not if) they leave they not only take all the jobs but they leave the area in fiscal ruins. As usual the taxpayer is screwed.
The problem is that the pensions are underfunded. A promise isn't worth a hill of beans if there is nothing left in the pension fund. Florida started deducting 3% before taxes (as per the law) to suppliment the pension fund. they are also requiring new employees to enroll in the defined contribution pension fund, instead of the defined benefit. It was a blow to state employees, who hadn't gotten a raise in over 6 years.
Florida doesn't pay pensioner's HC insurance, you either pay for it in full or you go on Medicare.
The stock market has never returned less than the returns on a program such as social security over the working lifespan of any given person in this country.
what does social security have to do with his comment?
the problem is stock market returns are too volatile for the shorter time frames.
Think about a police officer who retires after 20 years. Well the overall rate of return from the market cannot be applied to that relatively small sample.
CDs and Munis would be the wisest investments for pensions.
I agree, but even the returns 100% in equity are higher than something such as social security (or his plan, for that matter). The problem in 2008 was people expected a lifetime of 15% return and ended up with a lifetime return of 8% (or numbers different to that magnitude). They didn't think that even the lower number was higher than the alternative plans.
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Originally Posted by le roi
what does social security have to do with his comment?
It was an example of another investment vehicle. Re-read what I posted. As I said, there is not another investment vehicle with returns greater than the stock market over a working lifespan, including his idea.
Yes all of these tax breaks must end for corporations.
Yes it sounds good to lure them to the area with all these incentives but in the long run it will bite the taxpayers in the ass. When (not if) they leave they not only take all the jobs but they leave the area in fiscal ruins. As usual the taxpayer is screwed.
That's happened here in Wisconsin where some companies owned by foreigners closed a couple of factories around the Milwaukee area, and were invited to move to Kenosha, it was strictly a strategic attempt for the company to save money, and it helped bust up a couple of unions. Kenosha gave those companies tax breaks for moving, but the property owners have not and probably will not benefit.
But, you know what city officials always say when you question their reasoning, they say well the company is bringing jobs here. Oh, ok, they fired 40 workers in West Bend, and hired 20 in Kenosha, big deal huh?
Then, we have Detroit, and the surrounding cities of Flint and others, GM, Ford, and Chrysler said, well, Detroit, do you want the jobs we're offering or not, cause if you don't, we'll move or go to another state where the business climate is more suitable. In other words, give us the tax breaks we want, otherwise, we'll go somewhere else. The politicians sold the souls of their voters and citizens, and set themselves and the city up for failures. The politicians must have thought some jobs are better than no jobs, which is the point they came to in the mid 1980's and it's declined ever since.
GM closed the Janesville, WI assembly plant because they found cheap labor somewhere else. Janesville sure is going to miss that revenue GM was paying them.
meanwhile, the workers lost their retirement benefits because people intended to retire from these companies.
Florida is a right to work state. I doubt employee unions have any teeth whatsoever outside of public safety unions. The vast majority of Fl public employees probably take whatever they are offered or look somewhere else.
I was referring to public/government employee unions, where the politicians and union leaders sit down to make deals to enrich and empower each other, while the taxpayers just pay taxes
GregW's idea didn't allow money to grow in any market at all. social security at least allows money to grow a bit, so it was obviously a much better example than even his original idea.
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southeast asian black market organ harvesting has provided greater returns over a working lifespan than the stock market.
or were you talking about risk-adjusted returns?
I am not a fan of investing in things that kill people. Good lord, why would you bring up organ harvesting? Try to have a serious discussion.
Obviously a real portfolio is risk adjusted, but even if you didn't move more into fixed income as a person gets older, the returns on a 100% equity portfolio will have a greater ROI than any other idea proposed in this thread (or otherwise)
GregW's idea didn't allow money to grow in any market at all. social security at least allows money to grow a bit, so it was obviously a much better example than even his original idea.
Social security isn't intended to grow money in a private market. In fact the whole point of it is to provide a safety net for whenever the market fails an individual person.
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I am not a fan of investing in things that kill people.
So don't buy shares of Lockheed Martin.
Personally, I'm not a fan of investing public money that cannot afford be lost in a high-risk/high-return investment vehicle like equities.
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Good lord, why would you bring up organ harvesting?
Because you asked for examples of high-return ventures, and you seem to demonstrate no understanding of the concept of risk. You sound like someone who gets paid to sell equities.
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Obviously a real portfolio is risk adjusted, but even if you didn't move more into fixed income as a person gets older, the returns on a 100% equity portfolio will have a greater ROI than any other idea proposed in this thread (or otherwise)
Nobody ever said that ROI should be the primary goal for state-managed pension plans; that's what an individual's 401k's and real estate holdings are for.
State-managed pension plans should
(A) Take in money via taxes and employee contributions
(B) Invest that money, which cannot afford to be lost, in something with LOW RISK. (not something that maximizes ROI)
(C) Make less-ambitious assumptions regarding investment returns
Then, maybe they wouldn't be so underfunded.
Last edited by le roi; 08-07-2013 at 08:43 AM..
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