How is there not a government institution established to investigate fraud such as this?
Companies controlled by PE firms use bankruptcy to shed pension obligations
61–70 of 155 posts
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#62Still amazing to me that owners and equity firms get money before pension funds. The literal theft - a pension is part of your income, and being able to sell off a company without paying off pension debts literally means retroactively stealing wages from workers. Remember that banks, etc all have insurance on their debt, apparently that doesn’t matter - companies are simply stealing from money that is not theirs, and…
>a pension is part of your income It's usually part of a future worker's income. That is how they are underfunded. If the employee paid into a fund then these problems would happen less. The problem is it's a promise to pay future money to today workers in the future, and when future money does not pan out, there is no reason one debt holder (pensioner) should have absolute precedence over another (lender, who someti…
> It's usually part of a future worker's income. That is how they are underfunded. If the employee paid into a fund then these problems would happen less.
I was operating under the understanding that what you have so wisely suggested is exactly how pensions are generally structured, plus contributions from employers. Have I been misinformed?
I was also under the impression that these contributions are vulnerable to problems like assuming an incorrect long-term discount rate, life expectancy jumps, and more.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#63Earlier quoted context omitted.
If people want to set up annuities that is totally welcome. But they shouldn't be tied to the employer. It should be a separate company that exists solely for the purpose of paying the benefits at retirement. Depending on an employer for your retirement is, in the modern market, a proven bad idea. It's terrible what happened to your grandparents (to anyone else nearing retirement, take this as a cautionary tale and g…
> It should be a separate company that exists solely for the purpose of paying the benefits at retirement. Yes. S.O.C.I.A.L. S.E.C.U.R.I.T.Y. Look how well Americans will fight for and defend Social security benefits. We really should just force an expansion of Social Security like most civilized countries.
1. "S.O.C.I.A.L. S.E.C.U.R.I.T.Y." isn't a separate company. It's a US government program.
2. Social Security isn't doing much better. It will be broke in ~15 years, paying out exactly as much as it takes in.
https://www.cnn.com/2018/06/05/politics/social-security-bene...
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#64Earlier quoted context omitted.
How on earth could a retirement savings have been totally wiped out by the 2008 financial crisis? If you had bought at the peak and sold at the bottom (unlikely for a retirement account), you'd have lost at most 50% of your value. Holding on 5 more years and you'd be totally recovered.
They probably didn't have a whole lot of buffer when they retired, so having a drop of half right when they start to use the money could cause their fund to become unsustainable. Plus a lot of older people tend to rebalance towards bonds when they retire, so if they did that at 2008/2009 they wouldn't have gotten to recover as much from the stock markets in 2010+.
If they were retiring within 5 years and had substantial equity holdings, then this is the real problem. They should have been mostly in credit and as rates plummeted, credit rallied. They would have done quite well.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#65That’s why nobody shall rely on pension plan. Ya a scam. Just take the money and invest on your own terms.
Off the top of my head, what is the difference between these pensions and a.) public employee pensions like state/county/municipal employees or police/fireman pensions at full pay of last year of service b.) military retirement at half pay after 20 years of service? Those seem like a really good deal for the retiree ( that also look unsustainable in some areas for a.) at least)
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#66Earlier quoted context omitted.
I don’t think it’s as simple as this, because alternative instruments for retirement, like 401(k) or “higher wages now” have a lot of severe problems too and typically have no legal recourse for affected people when those instruments experience failures. My grandparents had 401(k) retirement savings and were basically wiped out by the 2008 financial crisis. I think it would be no exaggeration to say that the crisis d…
If people want to set up annuities that is totally welcome. But they shouldn't be tied to the employer. It should be a separate company that exists solely for the purpose of paying the benefits at retirement. Depending on an employer for your retirement is, in the modern market, a proven bad idea. It's terrible what happened to your grandparents (to anyone else nearing retirement, take this as a cautionary tale and g…
> It's terrible what happened to your grandparents (to anyone else nearing retirement, take this as a cautionary tale and get your money in something safe). But hearkening back to the "glory" days of employer-paid pensions is not a viable solution.
What is "something safe"? I was under the impression that 401ks are not really known as risky investments.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#67Just another illustration that the "America" you learned about is not the America™ we live in. As a parent I find it more and more difficult to try to teach my kids the reality of America without sounding like a conspiracy theory nut job. I do not want my kids growing up with blindly trusting that any institution (schools, corporations, government, etc.) have their best interests in mind. In a way I feel like selling…
The two most depressing books I have read recently are A People's History of the United States and Lies My Teacher Told Me and I wish I had read them when I was a child but YMMV.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#68Earlier quoted context omitted.
No. The real risk is not in the present, the real risk is outliving your retirement savings. You can predict how long a population will live, you cannot predict whether a single person will need 5 or 40 years of retirement savings. Collective defined benefit plans mitigate this risk and are the only thing that really make sense. They also end up cheaper because instead of each person needing to save the amount needed…
In the UK you can buy an annuity with the proceeds of your pension fund at retirement. Is the same not true of a 401(k) in the US?
Yes, a variety of products exist in the U.S. But when I did limited research in the past, I found high fees and low returns.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#69Earlier quoted context omitted.
If people want to set up annuities that is totally welcome. But they shouldn't be tied to the employer. It should be a separate company that exists solely for the purpose of paying the benefits at retirement. Depending on an employer for your retirement is, in the modern market, a proven bad idea. It's terrible what happened to your grandparents (to anyone else nearing retirement, take this as a cautionary tale and g…
> It's terrible what happened to your grandparents (to anyone else nearing retirement, take this as a cautionary tale and get your money in something safe). But hearkening back to the "glory" days of employer-paid pensions is not a viable solution. What is "something safe"? I was under the impression that 401ks are not really known as risky investments.
401(k)s are fundamentally about the tax treatment of a certain class of employer-affiliated individual retirement accounts. There's a reasonable range of securities that can be held within a 401(k) account (often at least partially at the account holder's discretion) and some of those securities are considerably more risky than others.
Re: Companies controlled by PE firms use bankruptcy to shed pension obligations
#70Just another illustration that the "America" you learned about is not the America™ we live in. As a parent I find it more and more difficult to try to teach my kids the reality of America without sounding like a conspiracy theory nut job. I do not want my kids growing up with blindly trusting that any institution (schools, corporations, government, etc.) have their best interests in mind. In a way I feel like selling…
The two most depressing books I have read recently are A People's History of the United States and Lies My Teacher Told Me and I wish I had read them when I was a child but YMMV.
Hopefully the fourth paragraph of the Wikipedia article will help you feel less depressed, since
"A People's History of the United States has been criticized heavily by historians from across the political spectrum. Critics assert blatant omissions of important historical episodes, uncritical reliance on biased sources, and systematic failures to examine opposing views."
https://en.wikipedia.org/wiki/A_People%27s_History_of_the_Un...