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PostPosted: Tue Mar 13, 2018 11:24 am 
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glen, I know you have a problem with reading but please go back and reread, slowly and out loud if necessary, what I wrote. I don't deny CalPERS is underfunded but that's because elected officials, not the employees, didn't fund it. And those elected officials are at the city/town/county/state levels and these people are republicans and Democrats. Neither party is innocent but you can't put the blame on one party because it's the elected officials in each political jurisdiction that are under-funding it. IMO, if you are an elected official you're obligated to fund employee pensions. You have to make the decisions as what programs to cut funding to in order to meet your employee obligations.


In the private sector, if you fail to pay your payroll taxes or you determine you cannot fund your payroll taxes, then you simply don't fund payroll. If pensions, which are setup in place of social security cannot be funded or are not being funded, then that is the same as not paying or funding payroll taxes. The penalties associated with failure to fund payroll taxes are punitive. In addition, anyone responsible for such failure and everyone upstream in their reporting structure can have personal liability for such failure. It's a pretty serious deal.

As to pensions vs 401K's, we have discussed this before. My 401K is funded every payroll. The employer match is funded every payroll. As soon as it is funded, control of those funds is out of the hands of the employer. I have a variety of funds from which to select for investment and those choices vary as to risk, return, and fees. I can make changes to these investments at any time simply by going online and moving the money between funds. I have access to all kinds of information on the funds as far as their performance over time and how they compare to other funds in their investment class. I have access to information on their fee structure and on their management. I do not have to consult with anyone or depend on anyone to make changes in my investment portfolio. I can get advice if I desire it but the decision as to what I invest in is left to me. It isn't made by a committee and I don't have to worry if someone is or is not going to fund.


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PostPosted: Tue Mar 13, 2018 1:36 pm 
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In the private sector, if you fail to pay your payroll taxes or you determine you cannot fund your payroll taxes, then you simply don't fund payroll. If pensions, which are setup in place of social security cannot be funded or are not being funded, then that is the same as not paying or funding payroll taxes. The penalties associated with failure to fund payroll taxes are punitive. In addition, anyone responsible for such failure and everyone upstream in their reporting structure can have personal liability for such failure. It's a pretty serious deal.

If a company fails to pay payroll taxes then that's a crime punishable by fine and/or jail time. However, failure to pay pension costs isn't a crime but a violation of contractual obligation between the employees and the company or government agencies. It's the contractual relationship why I believe a company or government agency has to fund their pensions fully each year.

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As to pensions vs 401K's, we have discussed this before. My 401K is funded every payroll. The employer match is funded every payroll. As soon as it is funded, control of those funds is out of the hands of the employer. I have a variety of funds from which to select for investment and those choices vary as to risk, return, and fees. I can make changes to these investments at any time simply by going online and moving the money between funds. I have access to all kinds of information on the funds as far as their performance over time and how they compare to other funds in their investment class. I have access to information on their fee structure and on their management. I do not have to consult with anyone or depend on anyone to make changes in my investment portfolio. I can get advice if I desire it but the decision as to what I invest in is left to me. It isn't made by a committee and I don't have to worry if someone is or is not going to fund.

I have a defined benefits pension from the military. I've said it before the reason I joined the military was because I didn't trust a company to provide me a pension or medical benefits and I saw how well my father did after he retired from the Navy as a Captain (O-6). When IRA's opened to the military in the mid-80s I jumped on it and established and started funding my IRA. The military didn't match funds but that was okay because the military had one of the best pension programs in the country. I'm now retired and I've never missed a retirement check nor had my medical benefits denied or cut. As for my IRA, the only management I have to do with it is to watch what my mutual fund manager does and that's it. I pay a small yearly fee for it to be professionally managed but it beats me having to research the companies to put my money in.

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PostPosted: Tue Mar 13, 2018 2:25 pm 
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In the private sector, if you fail to pay your payroll taxes or you determine you cannot fund your payroll taxes, then you simply don't fund payroll. If pensions, which are setup in place of social security cannot be funded or are not being funded, then that is the same as not paying or funding payroll taxes. The penalties associated with failure to fund payroll taxes are punitive. In addition, anyone responsible for such failure and everyone upstream in their reporting structure can have personal liability for such failure. It's a pretty serious deal.
Unfortunately, that is not accurate. The private sector cannot avoid participating in social security by offering pensions. This is available only to governmental employers. As is so often the case, the government sets up different rules for them vs the rest of the country. The private sector can sponsor pension plans in addition to participating in social security. Governmental agencies have the option to participate in social security as well...but often don't, so they don't have the additional cost (either for the agency or for the employee).

Unfortunately, government are not required to fully fund their pension liabilities, usually. A few do. And perphaps there are a very small number of juristictions that require it. But the public pension crisis is precisely because so many public agencies have not done so. To make matters more complicated, there are circumstances where the SSA applies a Government Windfall Penalty, in which people who are eligible to receive social security based on non-government employment have their social security payout reduced because they receive a government sponsored pension. As for your military pension, it is funded because the people of the United States pay for it and fund it. Just as they are supposed to (but often don't) for teachers and other public sector workers. To your benefit, support for the military and people who serve in it, are in favor just now. But one might ask, if teacher pensions should be reduced, why not other public sector pensions?

In the private sector, I'm not certain that business are required to fully fund pension liability either. Private sector businesses are certainly are allow to, and often do, borrow again those funds.


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PostPosted: Tue Mar 13, 2018 2:34 pm 
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Unfortunately, that is not accurate. The private sector cannot avoid participating in social security by offering pensions. This is available only to governmental employers. As is so often the case, the government sets up different rules for them vs the rest of the country. The private sector can sponsor pension plans in addition to participating in social security. Governmental agencies have the option to participate in social security as well...but often don't, so they don't have the additional cost (either for the agency or for the employee).

Unfortunately, government are not required to fully fund their pension liabilities, usually. A few do. And perphaps there are a very small number of juristictions that require it. But the public pension crisis is precisely because so many public agencies have not done so. To make matters more complicated, there are circumstances where the SSA applies a Government Windfall Penalty, in which people who are eligible to receive social security based on non-government employment have their social security payout reduced because they receive a government sponsored pension. As for your military pension, it is funded because the people of the United States pay for it and fund it. Just as they are supposed to (but often don't) for teachers and other public sector workers. To your benefit, support for the military and people who serve in it, are in favor just now. But one might ask, if teacher pensions should be reduced, why not other public sector pensions?

In the private sector, I'm not certain that business are required to fully fund pension liability either. Private sector businesses are certainly are allow to, and often do, borrow again those funds.


I did not mean to imply that private companies can opt out of social security. I was merely comparing funding pension obligations by governmental agencies to the payment of social security taxes by private industry. Failure to fund social security/medicare by a private company translates into a world of hurt for the owner as well as those employees who have responsibility for payroll.

As for whether there is any obligation to fund pension plans, why would anyone want to rely on a retirement plan that may or may not be funded? Why would anyone want to rely on a retirement plan that they have so little ability to control?


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PostPosted: Tue Mar 13, 2018 2:48 pm 
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As for whether there is any obligation to fund pension plans, why would anyone want to rely on a retirement plan that may or may not be funded? Why would anyone want to rely on a retirement plan that they have so little ability to control?
They wouldn't want to. But generally speaking, its not up to the employee. If the State legislature doesn't fund, for example, an employee could quit their job, I suppose.


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PostPosted: Tue Mar 13, 2018 2:57 pm 
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They wouldn't want to. But generally speaking, its not up to the employee. If the State legislature doesn't fund, for example, an employee could quit their job, I suppose.


I guess that is the point I am making. Given a choice between a 401K that is funded on an ongoing basis and provides more control over the investment by the employee versus a pension plan that may or may not be funded sometime in the future and whose investments are controlled by people other than the retiree/employee, I would choose the investment option that is funded on an ongoing basis and which provided more flexibility and control. It isn't a matter of loving or hating on pensions. It is a matter of having greater control over one's own retirement.


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PostPosted: Tue Mar 13, 2018 3:09 pm 
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I guess that is the point I am making. Given a choice between a 401K that is funded on an ongoing basis and provides more control over the investment by the employee versus a pension plan that may or may not be funded sometime in the future and whose investments are controlled by people other than the retiree/employee, I would choose the investment option that is funded on an ongoing basis and which provided more flexibility and control. It isn't a matter of loving or hating on pensions. It is a matter of having greater control over one's own retirement.
Oh....well that's a different question. One that has many answers. One might, as you seem to be suggesting, solve the problem by eliminating pensions. Or one might solve the problem by requiring that they be fully funded (public or private) and then by having a reinsurance pool.

So why might someone prefer a pension over a 401k. Well, its a defined benefit as opposed to a defined contribution. One might prefer the certainty of a defined benefit (especially where government sponsored/guaranteed) to the uncertainly of 'the market.' The 401K contribution isn't guaranteed either. A company could increase or decrease the amount. (yes, like a pension, you can quit your job if you don't like how its run...but how many people do). The US has pretty low 401K participation....there are certainly ways to deal with that issue as well, for example defaulting to participation as opposed to defaulting to non-participation.


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PostPosted: Tue Mar 13, 2018 5:59 pm 
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Oh....well that's a different question. One that has many answers. One might, as you seem to be suggesting, solve the problem by eliminating pensions. Or one might solve the problem by requiring that they be fully funded (public or private) and then by having a reinsurance pool.

So why might someone prefer a pension over a 401k. Well, its a defined benefit as opposed to a defined contribution. One might prefer the certainty of a defined benefit (especially where government sponsored/guaranteed) to the uncertainly of 'the market.' The 401K contribution isn't guaranteed either. A company could increase or decrease the amount. (yes, like a pension, you can quit your job if you don't like how its run...but how many people do). The US has pretty low 401K participation....there are certainly ways to deal with that issue as well, for example defaulting to participation as opposed to defaulting to non-participation.


I am not suggesting the elimination of pensions. If a group of employees wants to push for a pension and an employer agrees to fund a pension then I have no problem with the arrangement. Why should I? But as you point out, if you are looking for certainty, then you need to get the money up front. If you wait there is no guarantee the money will be there. As has been pointed out in this thread, there are a number of these plans that are underfunded. My 401K however is fully funded. It's fully funded within 48 hours of each and every payroll. A company may increase or decrease the match but the company cannot increase or decrease the amount of my contribution. That is my money. I control where it is invested. I can't see where the average pensioner has all that much control if the pension is funded or where the fund is invested. Much is dependent upon future events and decisions which are beyond the control of the pensioner.


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PostPosted: Tue Mar 13, 2018 6:33 pm 
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As to pensions vs 401K's, we have discussed this before. My 401K is funded every payroll. The employer match is funded every payroll. As soon as it is funded, control of those funds is out of the hands of the employer. I have a variety of funds from which to select for investment and those choices vary as to risk, return, and fees. I can make changes to these investments at any time simply by going online and moving the money between funds. I have access to all kinds of information on the funds as far as their performance over time and how they compare to other funds in their investment class. I have access to information on their fee structure and on their management. I do not have to consult with anyone or depend on anyone to make changes in my investment portfolio. I can get advice if I desire it but the decision as to what I invest in is left to me. It isn't made by a committee and I don't have to worry if someone is or is not going to fund.

That is simply not true. Let's be clear: In MOST 401(k)s for those in the working class, the company match usually doesn't vest for 5 years. In other words, the match isn't yours for five years - you have to work for five years somewhere for the matching funds to actually BELONG to you. Plus, the vesting of the match is rolling - in other words, if you worked somewhere for ten years, you only own five years of the match.

401(k)s have been a scam from the beginning - so the bankers can get their hands on your retirement savings. You might be able to track your investments, and since you're a finance guy with the schooling, you might be able to do okay. But most working people don't have your savvy and education, so the banks just screw them over, siphon their money away with all kinds of hidden fees.

And the employer DOES have control, by what plans they offer. You can only take the products they offer.


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PostPosted: Tue Mar 13, 2018 7:32 pm 
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That is simply not true. Let's be clear: In MOST 401(k)s for those in the working class, the company match usually doesn't vest for 5 years. In other words, the match isn't yours for five years - you have to work for five years somewhere for the matching funds to actually BELONG to you. Plus, the vesting of the match is rolling - in other words, if you worked somewhere for ten years, you only own five years of the match.

401(k)s have been a scam from the beginning - so the bankers can get their hands on your retirement savings. You might be able to track your investments, and since you're a finance guy with the schooling, you might be able to do okay. But most working people don't have your savvy and education, so the banks just screw them over, siphon their money away with all kinds of hidden fees.

And the employer DOES have control, by what plans they offer. You can only take the products they offer.


Let's be clear. If the employer is using the safe harbor rules (and a number of them do), they are required under those rules to fund the match every payroll and the funds vest immediately. Some employers do not use the safe harbor rules and they do have a vesting schedule. However, your contributions as an employee are always fully vested. Further, my ability to track the performance of my investments is available to every employee/participant. If they are uncomfortable making decisions on their own, experts are available to help employees choose funds which match the employee to funds that meet their investment profile and objectives. The returns on these funds (after fees) varies depending on the market and the type of the investment. But based on what I have observed, it is generally much better than, what an average investor can make investing in CD's or trying to pick stocks on their own. The employer generally picks a company to manage the program such as ADP or Principal Financial Group. The company pays a fee for the service.

But bottomline, the employee owns their retirement account. Not the employer. The employee has greater control over their investments. You may prefer a pension. That's okay. I prefer to own my own account and have the control. I prefer not to have to worry about whether someone else is making the right investment decisions or if someone is going to fund the pension liability in the future.


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PostPosted: Tue Mar 13, 2018 8:07 pm 
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Let's be clear. If the employer is using the safe harbor rules (and a number of them do), they are required under those rules to fund the match every payroll and the funds vest immediately. Some employers do not use the safe harbor rules and they do have a vesting schedule. However, your contributions as an employee are always fully vested. Further, my ability to track the performance of my investments is available to every employee/participant. If they are uncomfortable making decisions on their own, experts are available to help employees choose funds which match the employee to funds that meet their investment profile and objectives. The returns on these funds (after fees) varies depending on the market and the type of the investment. But based on what I have observed, it is generally much better than, what an average investor can make investing in CD's or trying to pick stocks on their own. The employer generally picks a company to manage the program such as ADP or Principal Financial Group. The company pays a fee for the service.

But bottomline, the employee owns their retirement account. Not the employer. The employee has greater control over their investments. You may prefer a pension. That's okay. I prefer to own my own account and have the control. I prefer not to have to worry about whether someone else is making the right investment decisions or if someone is going to fund the pension liability in the future.

Oh, that's soooo nice - the company lets the worker keep their own money. It's always vested!

How WONDERFUL OF THEM! [/scarcasm]

They can bait and switch you on the money they supposedly match, but hey, that's business, right? And if the rules allow them to fuck you, then fuck you they will!

A pension is safer - and you don't run out of money if you keep living. It's a bitch to get to 80 and too old to do any work, but you run out of your money.

But you guys don't give a shit about that, do you?

Having that control means that you're easily ripped off by the banker class - which is there to take as much of your money as possible. Ask Wells Fargo.

That isn't control.


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PostPosted: Tue Mar 13, 2018 8:25 pm 
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Oh, that's soooo nice - the company lets the worker keep their own money. It's always vested!

How WONDERFUL OF THEM! [/scarcasm]

They can bait and switch you on the money they supposedly match, but hey, that's business, right? And if the rules allow them to fuck you, then fuck you they will!

A pension is safer - and you don't run out of money if you keep living. It's a bitch to get to 80 and too old to do any work, but you run out of your money.

But you guys don't give a shit about that, do you?

Having that control means that you're easily ripped off by the banker class - which is there to take as much of your money as possible. Ask Wells Fargo.

That isn't control.


As has been mentioned numerous times in this thread, there are a number of pension plans that are unfunded or underfunded. So pensions, in some cases aren't exactly a safe bet. Pension funds have been ripped off in the past. They aren't immune to theft. Ask Bernie Madoff. It's a bitch to get to 65 and find out your pension has run out of money. So given the choice of having some control versus having no or little control, you are free to make whatever choice you choose. It's your money and your future. If you feel safer in a pension plan then that's your choice. I got no problem with that. I, only the other hand, prefer to have my money in an account with my name on it. I prefer to have my money in an account where I control the investment decisions.


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PostPosted: Tue Mar 13, 2018 8:31 pm 
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But bottomline, the employee owns their retirement account. Not the employer. The employee has greater control over their investments. You may prefer a pension. That's okay. I prefer to own my own account and have the control. I prefer not to have to worry about whether someone else is making the right investment decisions or if someone is going to fund the pension liability in the future.

Yes, the employee has more control over their retirement account but how many people are capable of handling it on their own. One of the things the American education system fails at is teaching students financial management. Financial management includes not only how to maintain a savings/checking account but how to invest via the stock market, government bonds, etc. so how is someone who doesn't know how to do this going to learn given all the other things in life that take up their time? You, personally, may have the knowledge and ability to handle your own investments but most people don't. One of the positive aspects about a government pension plan is there is an expected rate of return on the pension investments that the government will guarantee so if the investment under-performs the government makes up the losses. That's something private pensions or 401ks don't do.

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PostPosted: Tue Mar 13, 2018 8:31 pm 
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As has been mentioned numerous times in this thread, there are a number of pension plans that are unfunded or underfunded. So pensions, in some cases aren't exactly a safe bet. Pension funds have been ripped off in the past. They aren't immune to theft. Ask Bernie Madoff. It's a bitch to get to 65 and find out your pension has run out of money. So given the choice of having some control versus having no or little control, you are free to make whatever choice you choose. It's your money and your future. If you feel safer in a pension plan then that's your choice. I got no problem with that. I, only the other hand, prefer to have my money in an account with my name on it. I prefer to have my money in an account where I control the investment decisions.

And stocks have been manipulated to inflate their value causing investors to lose their money.

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PostPosted: Tue Mar 13, 2018 8:36 pm 
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As has been mentioned numerous times in this thread, there are a number of pension plans that are unfunded or underfunded. So pensions, in some cases aren't exactly a safe bet. Pension funds have been ripped off in the past. They aren't immune to theft. Ask Bernie Madoff. It's a bitch to get to 65 and find out your pension has run out of money. So given the choice of having some control versus having no or little control, you are free to make whatever choice you choose. It's your money and your future. If you feel safer in a pension plan then that's your choice. I got no problem with that. I, only the other hand, prefer to have my money in an account with my name on it. I prefer to have my money in an account where I control the investment decisions.

Again, you have no answer for the FACT that most people don't have your training in investing. Those that don't are set up to be ripped off. And, if pension funds can be ripped off, what chance does an uneducated working guy have? They don't even know about they myriad of hidden fees that can drain 30% of their retirement!

The big reason that some funds are underfunded is that the laws changed, allowing companies not to fund their pensions, or allowed them to invest in risky investments. In the past, companies had to regularly fund their pensions, and invest them in safe investments. They were well-regulated.

But I remember when GM lost their pension fund in the market during the bubble in the early 2000's, and then said that the workers just wouldn't get it. Those folks should be in prison. If I loaned you a hundred bucks, and you went and lost it in a casino, that doesn't mean you don't still owe me.

The reason that companies are pushing 401(k)s is that they are getting by with murder on them. They scam you into thinking they are giving you all this money, when they aren't, because it takes so long to vest. Then they set up sweetheart deals with kickbacks with the bankers, and set you up to give your money to the bankers. If you think that's better than a defined-benefit pension plan, then you're on their side, in on the swindle.

Pretty soon they'll start letting people invest their 401(k) in bitcoin and such, and the banks will tell them how fucking smart that is.

And, pensions ARE insured by the government, so even if it goes belly up, you still get some of it. Not so much with a 401(k). If you're wiped out, you're wiped out. And nothing to do about it. It's perfectly legal to steal your 401(k) money.


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PostPosted: Tue Mar 13, 2018 8:45 pm 
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Again, you have no answer for the FACT that most people don't have your training in investing. Those that don't are set up to be ripped off. And, if pension funds can be ripped off, what chance does an uneducated working guy have? They don't even know about they myriad of hidden fees that can drain 30% of their retirement!

The big reason that some funds are underfunded is that the laws changed, allowing companies not to fund their pensions, or allowed them to invest in risky investments. In the past, companies had to regularly fund their pensions, and invest them in safe investments. They were well-regulated.

But I remember when GM lost their pension fund in the market during the bubble in the early 2000's, and then said that the workers just wouldn't get it. Those folks should be in prison. If I loaned you a hundred bucks, and you went and lost it in a casino, that doesn't mean you don't still owe me.

The reason that companies are pushing 401(k)s is that they are getting by with murder on them. They scam you into thinking they are giving you all this money, when they aren't, because it takes so long to vest. Then they set up sweetheart deals with kickbacks with the bankers, and set you up to give your money to the bankers. If you think that's better than a defined-benefit pension plan, then you're on their side, in on the swindle.

Pretty soon they'll start letting people invest their 401(k) in bitcoin and such, and the banks will tell them how fucking smart that is.

And, pensions ARE insured by the government, so even if it goes belly up, you still get some of it. Not so much with a 401(k). If you're wiped out, you're wiped out. And nothing to do about it. It's perfectly legal to steal your 401(k) money.

IIRC, GM tried to claim the didn't have to fund the pension funds they agreed to in previous contracts because those contracts had expired. The courts threw out their case.

As for 401ks, the guy who came up with the idea of 401ks never envisioned them to be a substitute for a pension but rather as a savings plan for retirement. He now regrets pushing it.

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PostPosted: Tue Mar 13, 2018 8:47 pm 
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Yes, the employee has more control over their retirement account but how many people are capable of handling it on their own. One of the things the American education system fails at is teaching students financial management. Financial management includes not only how to maintain a savings/checking account but how to invest via the stock market, government bonds, etc. so how is someone who doesn't know how to do this going to learn given all the other things in life that take up their time? You, personally, may have the knowledge and ability to handle your own investments but most people don't. One of the positive aspects about a government pension plan is there is an expected rate of return on the pension investments that the government will guarantee so if the investment under-performs the government makes up the losses. That's something private pensions or 401ks don't do.


But as has been mentioned in this thread, some of these pension plans are greatly underfunded. The government entities that guarantee these pension liabilities are also strapped for cash. So something is going to have to give. I guess in the end the taxpayer will have to cough up the cash. But the point that pensions are somehow better managed or better funded isn't necessarily valid. As far as private pensions are concerned, I don't see them as any safer than 401Ks.


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PostPosted: Tue Mar 13, 2018 8:55 pm 
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But as has been mentioned in this thread, some of these pension plans are greatly underfunded. The government entities that guarantee these pension liabilities are also strapped for cash. So something is going to have to give. I guess in the end the taxpayer will have to cough up the cash. But the point that pensions are somehow better managed or better funded isn't necessarily valid. As far as private pensions are concerned, I don't see them as any safer than 401Ks.

As I mentioned earlier, government agencies has a contractual obligation to make these contributions and if they can't then they have to make cuts to other programs to fund the pension programs.

From this discussion, there are three routes for investing pensions/401ks: 1) they are managed by the individual, 2) they are managed by the company/government agency, 3) they are managed by an independent manager. Regardless, they are only as good as the person responsible for making the investment decision. It's all a risk when it comes to investing and it comes down to who you trust.

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PostPosted: Tue Mar 13, 2018 8:56 pm 
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But as has been mentioned in this thread, some of these pension plans are greatly underfunded. The government entities that guarantee these pension liabilities are also strapped for cash. So something is going to have to give. I guess in the end the taxpayer will have to cough up the cash. But the point that pensions are somehow better managed or better funded isn't necessarily valid. As far as private pensions are concerned, I don't see them as any safer than 401Ks.

You may not see it, but that's willful blindness. Because, as I said, they ARE insured, but your 401(k) isn't insured in any way whatsoever.

Simple fact.


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PostPosted: Tue Mar 13, 2018 9:03 pm 
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Again, you have no answer for the FACT that most people don't have your training in investing. Those that don't are set up to be ripped off. And, if pension funds can be ripped off, what chance does an uneducated working guy have? They don't even know about they myriad of hidden fees that can drain 30% of their retirement!

The big reason that some funds are underfunded is that the laws changed, allowing companies not to fund their pensions, or allowed them to invest in risky investments. In the past, companies had to regularly fund their pensions, and invest them in safe investments. They were well-regulated.

But I remember when GM lost their pension fund in the market during the bubble in the early 2000's, and then said that the workers just wouldn't get it. Those folks should be in prison. If I loaned you a hundred bucks, and you went and lost it in a casino, that doesn't mean you don't still owe me.

The reason that companies are pushing 401(k)s is that they are getting by with murder on them. They scam you into thinking they are giving you all this money, when they aren't, because it takes so long to vest. Then they set up sweetheart deals with kickbacks with the bankers, and set you up to give your money to the bankers. If you think that's better than a defined-benefit pension plan, then you're on their side, in on the swindle.

Pretty soon they'll start letting people invest their 401(k) in bitcoin and such, and the banks will tell them how fucking smart that is.

And, pensions ARE insured by the government, so even if it goes belly up, you still get some of it. Not so much with a 401(k). If you're wiped out, you're wiped out. And nothing to do about it. It's perfectly legal to steal your 401(k) money.


The people who don't have the training to make their own investment decisions are just as exposed in a pesion as they are in a 401K. In both cases they have to depend on someone else to help you manage your money. You have more control in a 401K to change investment decisions than you do in a pension. I have belonged to or invested in 401K programs in a number of companies over the course of my career. In every case, I made money over the course of my participation. At no time did I feel or believe that I was being scammed or swindled. The funds I invested in usually returned over time as they were projected and the return was AFTER fees. So I got what was promised to me. In the last couple of positions, I had responsibility for working with the 401K provider. We discussed the funds to be offered and made changes to the offering based upon a review of how these funds were performing in the market over time and how they compared to other funds in their investment class. I can assure you that nobody was plotting how to steal money. In fact, we wanted the best return for our employees because that grew the entire portfolio value and reduced our overall cost as a result. All of us were invested in the 401K as participants. As many here are so fond of saying, why would we vote for something that is not in our best interest?

So, if you like pensions, fine. Whatever works for you. I like 401Ks for the reasons I have stated.


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PostPosted: Tue Mar 13, 2018 9:04 pm 
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As I mentioned earlier, government agencies has a contractual obligation to make these contributions and if they can't then they have to make cuts to other programs to fund the pension programs.

From this discussion, there are three routes for investing pensions/401ks: 1) they are managed by the individual, 2) they are managed by the company/government agency, 3) they are managed by an independent manager. Regardless, they are only as good as the person responsible for making the investment decision. It's all a risk when it comes to investing and it comes down to who you trust.


That is true.


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PostPosted: Tue Mar 13, 2018 9:10 pm 
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The people who don't have the training to make their own investment decisions are just as exposed in a pesion as they are in a 401K. In both cases they have to depend on someone else to help you manage your money. You have more control in a 401K to change investment decisions than you do in a pension. I have belonged to or invested in 401K programs in a number of companies over the course of my career. In every case, I made money over the course of my participation. At no time did I feel or believe that I was being scammed or swindled. The funds I invested in usually returned over time as they were projected and the return was AFTER fees. So I got what was promised to me. In the last couple of positions, I had responsibility for working with the 401K provider. We discussed the funds to be offered and made changes to the offering based upon a review of how these funds were performing in the market over time and how they compared to other funds in their investment class. I can assure you that nobody was plotting how to steal money. In fact, we wanted the best return for our employees because that grew the entire portfolio value and reduced our overall cost as a result. All of us were invested in the 401K as participants. As many here are so fond of saying, why would we vote for something that is not in our best interest?

So, if you like pensions, fine. Whatever works for you. I like 401Ks for the reasons I have stated.

Yeah, facts be damned. You've been unable to actually rebut my points. Sure, you did well, but you have a degree in finance. But when you don't, you can get easily scammed. It's obvious from our history with both types of retirement plans, that people with pensions are far more likely to be able to retire comfortably than people with 401(k)s.


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PostPosted: Tue Mar 13, 2018 9:24 pm 
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Yeah, facts be damned. You've been unable to actually rebut my points. Sure, you did well, but you have a degree in finance. But when you don't, you can get easily scammed. It's obvious from our history with both types of retirement plans, that people with pensions are far more likely to be able to retire comfortably than people with 401(k)s.


I think Number 6 put it quite well:

From this discussion, there are three routes for investing pensions/401ks: 1) they are managed by the individual, 2) they are managed by the company/government agency, 3) they are managed by an independent manager. Regardless, they are only as good as the person responsible for making the investment decision. It's all a risk when it comes to investing and it comes down to who you trust.

Obviously you like and trust pensions and the folks who manage and fund them. That's wonderful for you. I, on the other hand, prefer the 401K model for the reason I have mentioned. As I have mentioned I have absolutely no issues with your preference for pensions. We simply have different preferences.


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PostPosted: Thu Mar 15, 2018 12:04 am 
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Tidbits that Clarify.

401K Vesting

From the Department of Labor.

"In a defined contribution plan such as a 401(k) plan, you are always 100 percent vested in your own contributions to a plan, and in any subsequent earnings from your contributions. However, in most defined contribution plans you may have to work several years before you are vested in the employer's matching contributions. (There are exceptions, such as the SIMPLE 401(k) and the safe harbor 401(k), in which you are immediately vested in all required employer contributions. You also vest immediately in the SIMPLE IRA and the SEP.)

Currently, employers have a choice of two different vesting schedules for employer matching 401(k) contributions. Your employer may use a schedule in which employees are 100 percent vested in employer contributions after 3 years of service (cliff vesting). Under graduated vesting, an employee must be at least 20 percent vested after 2 years, 40 percent after 3 years, 60 percent after 4 years, 80 percent after 5 years, and 100 percent after 6 years. If your automatic enrollment 401(k) plan requires employer contributions, you vest in those contributions after 2 years. Automatic enrollment 401(k) plans with optional matching contributions follow one of the vesting schedules noted above.

Employers making other contributions to defined contribution plans, such as a 401(k) plan, also can choose between two vesting schedules. For those contributions made since 2007, they can choose between the graduated and cliff vesting schedules. For contributions made prior to 2007, they can choose between schedules.

You may lose some of the employer-provided benefits you have earned if you leave your job before you have worked long enough to be vested. However, once vested, you have the right to receive the vested portion of your benefits even if you leave your job before retirement. But even though you have the right to certain benefits, your defined contribution plan account value could decrease after you leave your job as a result of investment performance"

https://www.dol.gov/agencies/ebsa/about ... a-consumer

From the Bureau of Labor Statistics

"Vesting: How long do you have to wait
before you can leave with your
employer matching contributions?

Twenty-two percent of employees can leave with their
employers contribution at any time, while 69 percent must
wait a period of time, such as one year."

https://www.bls.gov/opub/mlr/cwc/how-do ... tch-up.pdf

P.S.
It is unfortunate that some here think uneducated workers lack the ability to learn about their retirement plans.


Last edited by Librarian on Thu Mar 15, 2018 12:18 am, edited 1 time in total.

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PostPosted: Thu Mar 15, 2018 12:16 am 
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Tidbit #2

From the GAO

" About one-fourth of public employees--primarily state and local government workers--are not covered by Social Security and do not pay Social Security taxes on their government earnings."

https://www.gao.gov/products/GAO-08-248T

So 75% of public employees are in Social Security.
As I recall 35 states are in, 12 states are out, and 3 states have a mix.


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