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Good riddance to pensions

  1. Jan 12, 2006 #1
    http://money.cnn.com/2006/01/12/news/economy/pluggedin_fortune/index.htm?cnn=yes


    Good. Why should companies pay people who aren't working? Responsibility for retirement funds should be on the worker not the company. Pension costs will bankrupt 100s of companies once the baby boomers retire. This quote really hits the nail on the head-

     
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  3. Jan 12, 2006 #2

    BobG

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    Because they signed a contract to do so? I don't think the pension commitments a company made to its workers are any different than the commitment the average person makes when they charge something to their credit card. Saying the food has already been eaten, the book's already been read, the gas tank's already empty again isn't going to get you out of paying what you owe.

    I do agree with one part of Fox's article. Company officials ripped off both the unions and the future of the company by making commitments that they personally wouldn't be around to keep.
     
  4. Jan 12, 2006 #3

    True companies made promises they can't keep, but the reality of the fact remains-

    A.) keep pensions, bankrupt compnay, &/or lay off workers

    B.) save billions, cut pensions, profit, no pink slips for xmas for current workers.

    Companies don't owe workers anything once they stop working. Hell, I plan to stop working when I drop dead because there is not going to be any retirement fund for my generation (SS & pensions).
     
  5. Jan 12, 2006 #4

    Art

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    The companies contribution to the pension fund is part of the employees' remuneration package. It is simply a deferred payment. Would you be happy if your employer told you at the end of the month that he / she has decided on reflection to only pay you half of what they contracted to for your previous month's work?
     
  6. Jan 12, 2006 #5

    BobG

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    The problem is that gravenewworld's post is half true and half BS.

    With current pension burdens, the competitive disadvantage would send a lot of these companies out of business and its employees out of work. Either way, the retiree benefits are lost.

    The attitude that companies don't owe workers something they promised them is disgusting - I seriously hope gravenewworld is too apathetic to vote on what to do about Social Security after I'm retired - with his attitude, I'll get nothing in return for the money I paid in. :uhh:

    Maybe the government should make bankruptcy laws more lenient to compensate. After all, these retirees had every reason to believe their employers would follow through on their promises and planned their futures accordingly. It's hardly fair to hold them accountable for the debts they've run up when they've been defrauded out of their income. Or, alternatively, the government could realize the impact that the loss of retirement benefits are going to have and make bankruptcy laws stricter in order to prevent 'poor planning' by these folks from rippling through the economy.

    This is a situation where workers were defrauded jointly by the unions that supposedly represented them and by their employers - probably more so by their unions. The unions took money from them, couldn't deliver anything of substance, so reached unrealistic agreements that at least sounded good in order to keep the dues money coming in.

    After the fact, there is no solution. You just feel disgust.

    We'll face a similar situation in the future with Social Security. The only difference is that the problem with Social Security was seen so long ago that at least a lot of people have had time to make other plans.
     
  7. Jan 12, 2006 #6

    Art

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    To protect employees, pensions should be kept totally away from the management of the company. I don't know if the laws have changed resently in the US but at one time companies in trouble could quite legally use their employees pension funds to shore up the company.
    Some years back I was chatting to the president of a large US multi-national who fervantly believed that ALL of his employees pension fund should be invested in shares in his company so that if the company went under so did they. There was an element of logic in his POV as he saw this as an incentive for them to perform better. However IMHO employees need protection from people such as this.
     
  8. Jan 12, 2006 #7

    Pengwuino

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    There certainly is an incentive in that kind of idea but in the big picture, its absolutely insane! Employees monies that they ALREADY earned shouldn't be accountable to market forces or their managements decisions.
     
  9. Jan 12, 2006 #8

    BobG

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    If he were talking about the old family owned companies, I would agree with him. Somehow, I just wouldn't feel confident making a more serious commitment to the company than the management has. Today, if a corporation is failing, the top executives get bought out with a nice compensation package. Plus, the days where an employee works at one company for his entire career are pretty much over.

    The best option today is to get your money up front and manage your own retirement as much as possible.
     
  10. Jan 12, 2006 #9
    Um, how about because they were PROMISED pensions and was the norm during their day, so they relied on them, but now they have ILLEGALLY violated their contracts and are screwing over the working public that helped to build this country. BobG said it, ur posting BS. Id like to see them suddenly not pay you and your parents and see how you feel about it.


    Wha-wha-WHAT? What idiot wrote this article. What about the 10-20 years time the person put into the company in order to EARN his pension? What about that?
     
    Last edited: Jan 12, 2006
  11. Jan 12, 2006 #10

    Pengwuino

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    See, the more and more responsibility you give to someone else, the more you should regret it :P Health care, retirement, i'll do it all by myself!
     
  12. Jan 12, 2006 #11
    Health Care is like 600 a month, retirement, you gota put away another 2-400 per month. That leaves you with what, 50 bucks for food rent and gasoline? Thats the problem pengwuino, unless you make a LOT of money, you can't do it by yourself. That was the WHOLE reason people had pension plans, to get benifits.

    EDIT: Opps, can't forget insurance, another 300-500 a month.
     
  13. Jan 12, 2006 #12

    Pengwuino

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    Are you prone to running into walls or something??? Those are almost my costs per 6 months!
     
  14. Jan 12, 2006 #13
    I agree with Art that employees have often received lower immediate income in exchange for a package that includes a retirement plan. And I agree with BobG that any plan an employee contributes to, including Social Security, means they need to be reimbursed at least that portion. Company use of funds that include employee contribution, or likewise government use of funds such as Social Security should be illegal.
     
  15. Jan 12, 2006 #14
    Thats the problem with the public: they think they are paying into SS for THEIR retirement. That is completely false. The govt uses a pay as you go system, which a lot of you know already. You aren't paying for any of your retirement, you are paying for the old people of today. The ones who will be contributing to your retirement will be MY GENERATION. When SS was first made there were 23 workers paying into SS to support 1 retiree. When you baby boomers retire there will only be 2-3 workers paying into SS to pay your benefits. The system will collapse, it is inevitable (sp?). You would like to think that you get back what you put in, but why should my generation put any money at all into SS, when under the current system, we are going to likely have to have a 33% decrease in benefits to keep SS alive?

    Yeah it sucks a companies are going to have to break a promise that they made to their employees, but if they want to stay in business they are going to have to. Just look at what the pensions did/and are doing to the airline industry. When the entire company folds retirees get no benefits and employees are out of a job in the end.


    employees should be allowed to control all of their funds. they should have an option of whether or not to put into social security or accept a pension. i would much rather get my pay check without all the deductions and invest it myself.
     
  16. Jan 12, 2006 #15

    russ_watters

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    The fact that companies made commitments they should be required to keep, aside (and regulations need to be tightened to prevent the cheating that created this mess), I don't want a pension. I'm responsible, I'm contributing to an IRA (I'm technically self employed, so I'll also so a SEP instead of a formal pension plan), and I don't trust employers enough to take care of my money (it is my money - as Bob pointed out, it has already been earned).
     
  17. Jan 12, 2006 #16
    Pensions are better for the average worker. Giving money to the people directly only causes inflation to go up. With pensions being run in a way that automatically protects the worker, it is much more efficient.

    If you can find a way to prevent poverty with age and remove pensions, I am for it. However, I do not agree with letting people become poor or live in horrid conditions because of their own mistakes. People have flaws that result from environmental and genetic factors they often have little or no control over; therefore, society should protect all people from themselves while maintaining as much freedom as possible.

    In short, to remove pensions you should come up with something better for the average worker. I have no problem paying the pension fund of the elderly. Money is only a conceptualization anyway. The question is not whether we have enough money to support the elderly - it is whether we have enough work force. With technological advances, I think we do.
     
  18. Jan 12, 2006 #17

    Moonbear

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    I agree with this view. Unfortunately, there's a state law here that requires my employer to put a certain percentage of my salary into the state retirement plan. I hate that, because it never performs as well as what I'd get if I saved the money on my own. My last employer did the same thing and there were several quarters when they LOST money on my savings, yet I still had no way to opt out.
     
  19. Jan 13, 2006 #18

    There is a difference between giving the people more money and increasing disposable incomes. If workers were allowed to control more of their disposable incomes they would hopefully save more, with a little bit of government incentive. One of the biggest threats to the long term American economy is the lack of savings/pitiful savings rate. From what I remember off the top of my head, Americans' marginal propensity to consume is something like .95-.98 (americans consume 95-98% of any extra dollar they get in disposable income). Savings has a large impact on economic growth in the future (the economy tends toward equilibrium which is when savings=investment). One of the major reasons China is seeing huge economic growth (9-10% gdp increases/year) is because of the large amount of savings that their citizens do. I think I remember reading the the American Economist that the Chinese have an MPC of around .8 (they basically save 20% of $1 extra that they get.) The FED ultimately has control of the money supply and employers or the government don't really give people "more money", but can affect disposable incomes. Sure inflation rises when people have larger disposable incomes, becase they CONSUME more, but inflation due to higher consumption is different that inflation due to out of control money supply from the FED.
     
  20. Jan 13, 2006 #19

    russ_watters

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    You haven't considered the alternatives already on the table: 401k and IRA. These things do require a choice by the worker (whereas a pension is mandatory), but otherwise they are similar in effect.
     
  21. Jan 13, 2006 #20

    BobG

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    Yet, there are still an awful lot of workers who won't even invest the employer matched amount no matter how much you twist their arms. That's an immediate raise, plus a tax break, and people can't afford to take advantage of it because they've run their debts to the edge of disaster. How many people reduce their exemptions on their W-4 (thereby loaning the government money interest free) because a tax refund is the only savings they're able to accumulate?

    No matter how much a person deserves a bad fate, we still wind up having to provide some (a lot?) of support for them one way or the other.

    (Not an argument against letting people manage their own retirement - just a rant about how often they manage it badly :grumpy: )
     
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