Pensions? are they safe? (benefit, attractive, older, opinion)
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The best program I have seen was the PBS porgram on it not long ago. It looed at the total outcomes in pension plans . Itwas quite enlightening onwahy companies are starting are offering to help more with thier employeees with their 401Ks etc because of teh disparity of outcomes amoung their employees from abilty to do so. On public its those thinking about a career that need to look at the changes comig which have been goign on for some time really. The biggest changes really seem to be comig in the way of employer health insurance changes that do effect even those reitre or working for public sector that will ot be medicare ages especailly when retiring.
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!
The insurance industry is pushing for it because they want to sell the annuities, simple as that.
Then who backs the benefits when the insurance company goes under?
The insurance industry is pushing for it because they want to sell the annuities, simple as that.
Then who backs the benefits when the insurance company goes under?
On this one we agree 100%. The 403bwise site is excellent and was following the history of the new accounting rules as they were being discussed, written and implemented. A lot of the changes have come from push by anti pension lobbyist/politicians and the Insurance industry. They would love for all state pensions to be annuities. The 403Bwise folks have been working with school systems to help them maintain equity choices for their employees and not be burdened down with implementation. It is good to be retired as some districts are dropping the funds that people already have. They can keep their money in but can't make new contributions. I was careful not to say it before but I am no fan of annuities. Especially for people with pensions. It is a personal bias.
I thought Insurance annuities were backed by the FDIC or some other agency?
Nope. That's why AIG had to be bailed out. But that wasn't a given and if such a thing happens again, they may not be. Or, in the case of small insurance companies, there may be no recourse at all if the company goes under.
Now if you want a state pension fund that really is in trouble Illinois turns to borrowing to nurse budget to health - Jul. 14, 2010
And, the state plans to turn to the debt markets to fund $3.7 billion in pension obligations in December, if the state legislature approves. The state already sold $2.4 billion in pension notes in January.
States don't traditionally fund their pensions with debt, but the practice frees up other money that can be used for operations,
Now if you want a state pension fund that really is in trouble Illinois turns to borrowing to nurse budget to health - Jul. 14, 2010
And, the state plans to turn to the debt markets to fund $3.7 billion in pension obligations in December, if the state legislature approves. The state already sold $2.4 billion in pension notes in January.
States don't traditionally fund their pensions with debt, but the practice frees up other money that can be used for operations,
The pension isn't in trouble. It will be the future generations who will have to pay on the bonds that will have problems.
The pension isn't in trouble. It will be the future generations who will have to pay on the bonds that will have problems.
That is one part of the problem but I don't think Illinois like most states is sitting on ton of reserves in their pension fund. I think ( may be wrong ) that they need money to meet near term pension payments. That would mean they would need to keep selling bonds each year to fund their pension contribution and that isn't going to continually happen. I believe the amount they have in reserve is about 20 years of funding and that because of lifespan is a big problem reforming. The link is a state by state summary with a color code indicating the shape they are in
Assessment of Threats to Public Defined Benefit Pensions (http://www.cwapublicandhealthcare.org/pensions/st-pension-threat-levels.html - broken link)
A fund with 30-40 years reserve has enough to get through the draw down period for current and near term employee's. It is new and younger that have the uncertainty. Twenty years of reserve is another story because current retiree's will still be around in good numbers.
Current retiree's get their annual statement showing the reserves in their pension fund and the outlay for the previous year. They can tell from that the relative health of the system in meeting their OWN pension check.
The pension isn't in trouble. It will be the future generations who will have to pay on the bonds that will have problems.
So per the thread title you are saying the pension is safe?
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