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I read that TIAA-CREF was started by a financial person who met a retired schoolteacher living in a chicken coop on $40/month (around 1941).
I have a defined benefit pension plan at my job, and it's a healthcare corporation that is old, fat and rich, and covers thousands of people affiliated with a major Ivy League college (meaning, I don't think they'd stand for it being messed with). I will have the choice, among others, of getting a monthly payment from the corporation or buying an immediate annuity, and my thought is, which is more financially stable? What if you buy an annuity from an AIG and it goes south? Am I misunderstanding the risk?
I also read that the federal pension guarantee agency is not fully funded. Who to trust?
If I wanted an annuity benefit from a defined benefit plan, I would opt to receive it directly from the plan. I would not take a lump sum and then go buy an annuity.
I would not want to lose money to fees and commissions associated with purchasing an annuity. I would not want to give up the PBGC coverage of my benefit. Yes, the PBGC is struggling, but they are also taking steps to remain solvent, they are backed by the government, and even if they have to take over a plan, current retirees are among the first in line to be paid and there is usually enough money in the Plan to do that, even in a distress termination.
As I have stated previously in several threads wait until the new fiscal year reports for the state pensions come out. All the hype was based on last years which was near rock bottom at the end of June. Just saw flashed on the screen (Bloomberg) that the California Teachers Pension was up 12% for the fiscal year just ending and seeing a loss last year. Oh back to the calculator nay sayers to crunch the numbers. With the amount of money they had in reserves that is a chunk of change. Betcha the state wants the pension fund to bail them out. Don't let them grab our money folks that is part of their end game.
On July 16, it was reported in the LATimes that CalPERS reported an 11.4% gain on its investments this year. The Govinator asked them months ago to "invest in banks". Bah on Arnie!
My "Ivy League" pension isn't directly linked to the Harvard endowment (larger than many small countries) but with the pension system covering so many Harvard docs and the H. Medical School and all, I think it'd be unlikelyl that us peons would see our pensions go down with theirs. (When if first came here, RNs and assistants only got vested after ten years, and all the "real professionals" after five. I guess that must have been illegal or something, because we got moved to five. Suddenly last year, it became three years for everyone. Couldn't figure that out at all.
I believe there are many options for taking out the pension an annuity or whatever. There is a woman in that office who knows a lot. I am several years away from deciding, so who knows what the picture will be then.
I've come and gone from this job four times in 29 years and came back for good when I began to understand the pension and vesting and stuff. Late bloomer.
On July 16, it was reported in the LATimes that CalPERS reported an 11.4% gain on its investments this year. The Govinator asked them months ago to "invest in banks". Bah on Arnie!
Yup demand that he anticipated rate of return be lowered to a more realistic 3-4% and then expect the money to be invested in California and local bonds. Now how safe are they? Makes it easier to not pay back a pension fund bond holder.
Recently announced yearly gains for CalPERS and CalSTRS of 11.4% and 12.3%, respectively should be understood against the background of losses for the previous year of 23.4% and 25%, respectively. So roughly speaking, the two pension giants have only climbed half way out of their enormous hole when you take a two-year perspective. I am not saying they performed badly over the past year, but things look less rosy just by doubling the time frame.
My "Ivy League" pension isn't directly linked to the Harvard endowment (larger than many small countries) but with the pension system covering so many Harvard docs and the H. Medical School and all, I think it'd be unlikelyl that us peons would see our pensions go down with theirs. (When if first came here, RNs and assistants only got vested after ten years, and all the "real professionals" after five. I guess that must have been illegal or something, because we got moved to five. Suddenly last year, it became three years for everyone. Couldn't figure that out at all.
I believe there are many options for taking out the pension an annuity or whatever. There is a woman in that office who knows a lot. I am several years away from deciding, so who knows what the picture will be then.
I've come and gone from this job four times in 29 years and came back for good when I began to understand the pension and vesting and stuff. Late bloomer.
Law changes affected your vesting schedule. If you have a cash balance plan or certain other features to your plan, it is now required to vest those at 3 years. Most plans (affected by that requirement) have simply opted for a 3 year vesting schedule to keep things simple and consistent with other plans or features of plans.
Since you have come and gone a few times from your job, you should pay very close attention to your benefit statements. Quite often when participants are rehired, some of their past service can get lost in administrative shuffle. Happens all the time. If you don't see all of the details of your benefit calculation, you should request them to make sure that all of your past service has been properly reinstated. Do this now, before you are ready to retire as it can take a while to get it straightened out if it's wrong.
Your knowledgeability about pensions as demonstrated in your posts in the Retirement forum is very impressive. I am wondering if you are a professional in the field? For me it is a side-interest born of curiosity to understand better the context and details of my Social Security retirement benefit and of my own pension. I can't imagine it also being just a "side interest" in your case; I would defer to your superior knowledge in a split second.
Recently announced yearly gains for CalPERS and CalSTRS of 11.4% and 12.3%, respectively should be understood against the background of losses for the previous year of 23.4% and 25%, respectively. So roughly speaking, the two pension giants have only climbed half way out of their enormous hole when you take a two-year perspective. I am not saying they performed badly over the past year, but things look less rosy just by doubling the time frame.
That is why the board of each of those pension funds looks at and discusses their return over a 20 year period and what that averages. They have a large enough nest egg to be able to do that. The question to them becomes just because you were able to do it in previous 20 year look backs doesn't mean that will hold for the future and what if it doesn't? That is a question that would impact future retiree's and not current or near to ones. Sorta like SS the projection to run out of money is down the road and the fixes are not draconian. Again Illionois and a few other states and locals are a different story.
Actually, coming and going from my pension job resulted in my staying the plan without my understanding that. I stayed perdiem in between staff stints, except the first time- was fully gone for three years, no clue about pensions and vesting then was ten years and I hardly thought ahead more than one year.
Without being aware of it, my perdiem years kept me in the spin cycle. I might not have a pensionable year unless I got in 1000 hours,but I kept my place in line. With that in mind, I returned full time for the fourth time in 1999 and am watching the amount go up and up. I finally figured, if I'm going to live here and do this, I might as well do it as the pension place.
A great site for those with public pensions. Lots of good information from folks on our side. They have thoughts about annuities and did a great job a few years ago dealing with the changes in pension accounting rules. 403(b)wise . The Leading Source of 403(b) Information on the Web
http://403bwise.com/pdf/bwise_press_...rtal_71210.pdf
SACRAMENTO, CA (JULY 12, 2010) – Understanding the workings of the 403(b) and 457(b) supplemental
retirement savings plans is often a daunting task for employees. With this in mind, California State
Teachers’ Retirement System (CalSTRS) has turned to bWise Guys, LLC to create a web-based retirement
plan information tool.
http://online.wsj.com/article/SB1000...mentPlanning_2
State governments, one of the last bastions of guaranteed pensions, are increasingly taking a page from the 401(k) plans that dominate the private sector. Some new state workers in Michigan and Utah will soon begin to receive part of their retirement benefits from a 401(k)-type plan, after lawmakers there recently voted to adopt plans that combine a 401(k) component with a guaranteed benefit
http://www.thestreet.com/story/10756...annuities.html
In response, the U.S. Department of Labor is soliciting opinions on whether new legislation or policy is needed to encourage the conversion of 401(k) assets into lifetime income streams through annuities.
http://online.wsj.com/article/SB1000...639830296.html
The changes stem from new regulations that largely went into effect last year and make 403(b) plans look more like corporate 401(k) plans. That means 403(b) plans, which traditionally have been largely employee-driven, now place much more responsibility on employers to oversee plan investment options, loans and other features. These plans held $711 billion at the end of 2009, according to consulting firm Spectrem Group.
The last article is especially important as it discusses the decreasing number of investment options 403(b) members have. Fewer equity funds and more annuities. Interestingly a lot of the regulation changes are being pushed by the insurance industry. Hmmmmm! Not saying that is bad but hmmmmmm!
Last edited by TuborgP; 07-21-2010 at 04:18 AM..
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Gains or losses - it depends on perspective
