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Anyway, I've suspected for quite a while that there's been a funny money shell game going on with pensions. I'm getting to the point that I've gotta start getting serious about where to move some pension funds or should I just leave them where they are. I'm not the best dollars and cents guy, so I'm gonna have to consult an advisor.
If it is true, defined benefit pension plan you can't do much about it. If you have left the company and they have an offer to give you a cash settlement now (lump fund) as someone else did earlier (percentage payout), take it. A percentage payout is where they give you a percent of the value of the plan of what it would be if you waited until an ordinary retirement date.
My personal thoughts are, not advice to anyone, I would take the percent payout and invest the money with a no load mutual fund with Vanguard or Fidelity or maybe both and diversify using their options. You can almost certainly do better in their funds than you will in a defined benefit program.
The new rules aren't great, but at least there are some rules. They fall under ERISA. There are almost no similar rules for public pension funds or Taft-Hartley funds.
Just a little FYI to those of you that have pensions you plan on drawing from or have loved ones with pensions.
Note: This does not impact 401k's or defined contribution plans.
The link is here just for comedy purposes and to point out how they snuck in this teeny tiny little extra bit into a Highway and Transportation bill. It's in the link if you look hard.
Summary: Instead of using a 2 year average interest rate to calculate pension liabilities they can now use a 25 year average interest rate which makes the numbers look way better. This means that in general companies have to put a lot less money into their pensions and that they are less soundly funded, but companies have more money to hand out as dividends and to hire workers etc.
A company I worked for long ago has had their funding deficit of 335million using the old calculations now grow to >500million but the new calculations say they are fully funded and only have to contribute $1million instead of the 131million that the old calculations would have required.
Yay! Moving ahead for progress! Maybe...maybe not....
The question is why the funding liabilities were changed? I'll have to read up more on it.
I remember when this was done because I have a pension, And its about 95% funded using the new rules.
For me, the legislative action needs to be that the money owed to a pension is by law required to be put into the pension and companies can't steal that money from workers.
The fact this doesn't happen to me this is legalized stealing by companies from workers.
I take a job based in part on the benefits package the company is offering.
The company and I agree that instead of higher pay some of my income will be set aside as a pension for my retirement.
This means the pension is my money.
Its not a gift. Its not a favor.
Yet many, many companies instead of making the contributions consistently underfund their pensions which means they are stealing their employees salary.
The new rules aren't great, but at least there are some rules. They fall under ERISA. There are almost no similar rules for public pension funds or Taft-Hartley funds.
So you are saying public pensions are being funded properly, or are not?
This is an interesting topic, but the main reason it's not drawing people like flies is because contrary to popular CD claims by the usual suspects, most people around here don't have a pension anyway and probably have little in the way of ANY retirement savings.
But it takes a minute to get past all the claims of being multi millionaires that's so rampant on this site.
Anyway, I've suspected for quite a while that there's been a funny money shell game going on with pensions. I'm getting to the point that I've gotta start getting serious about where to move some pension funds or should I just leave them where they are. I'm not the best dollars and cents guy, so I'm gonna have to consult an advisor.
DD..the Retirement Forum is another good place to ask.
There is an especially astute poster..Mathjak107 who posts regularly in both the retirement forum and economics forum.
It's going to take a while to fully understand the options and be able to make an informed decision.
You can never start too early in planning for retirement.
The question is why the funding liabilities were changed? I'll have to read up more on it.
I remember when this was done because I have a pension, And its about 95% funded using the new rules.
For me, the legislative action needs to be that the money owed to a pension is by law required to be put into the pension and companies can't steal that money from workers.
The fact this doesn't happen to me this is legalized stealing by companies from workers.
I take a job based in part on the benefits package the company is offering.
The company and I agree that instead of higher pay some of my income will be set aside as a pension for my retirement.
This means the pension is my money.
Its not a gift. Its not a favor.
Yet many, many companies instead of making the contributions consistently underfund their pensions which means they are stealing their employees salary.
Pensions though are considered "benefits", not contractual agreements of employment.
And as such can be changed.
And even when government sets mandates on funding requirements they are quick to grant waivers to these companies.
And with the new fuzzy math calculations, pension funds all magically became "fully funded".
A new precedent was set by Congress to allow pension plans to cut retiree payments this past December.
In the past you could not cut pension payments once a person was retired and receiving them.
This was a Federal Law on the books for 40 years and it got tossed.
This is an interesting topic, but the main reason it's not drawing people like flies is because contrary to popular CD claims by the usual suspects, most people around here don't have a pension anyway and probably have little in the way of ANY retirement savings.
But it takes a minute to get past all the claims of being multi millionaires that's so rampant on this site.
Anyway, I've suspected for quite a while that there's been a funny money shell game going on with pensions. I'm getting to the point that I've gotta start getting serious about where to move some pension funds or should I just leave them where they are. I'm not the best dollars and cents guy, so I'm gonna have to consult an advisor.
The new rules aren't great, but at least there are some rules. They fall under ERISA. There are almost no similar rules for public pension funds or Taft-Hartley funds.
Yeah, the idea behind the public pensions not being subject to the same funding rules is that they have the ability unlike a company to levy taxes and are supposedly some sort of ongoing concern that cannot fail.
Pensions though are considered "benefits", not contractual agreements of employment.
And as such can be changed.
And even when government sets mandates on funding requirements they are quick to grant waivers to these companies.
And with the new fuzzy math calculations, pension funds all magically became "fully funded".
A new precedent was set by Congress to allow pension plans to cut retiree payments this past December.
In the past you could not cut pension payments once a person was retired and receiving them.
This was a Federal Law on the books for 40 years and it got tossed.
Well anything can be changed. So I fail to see why that point matters, but even true that is a matter of changing the laws regarding pensions.
Yes, we have a society and a government that seem to be aligned against pensions.
Its backwards thinking.
Pensions which are great for workers come under attack from the powerful business lobby and instead of people fighting back to protect those pensions, they start to view pensions negatively as well.
So instead of pensions people get 401k's which in comparison to pensions absolutely suck for the vast majority of workers.
1) Which politician added that provision to the bill.
2) Which company bribed...err....donated to have that provision added.
Considering GE is masterful at screwing everyone at every oppotunity and have a HUGE private pension fund I'd think they'd meet the criteria of being scumbags sophisticated enough to recognize and execute the change and have enough money at stake to motivate them to do it.
These are the same guys that used the roll-out of Obamacare to terminate their retiree health plan and give them $1000 towards buying insurance instead....which doesn't go that far.
Last edited by Mathguy; 04-28-2015 at 11:40 AM..
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