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GE freezes pension benefits for 20k employees

businessinsider.com

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Re: GE freezes pension benefits for 20k employees

#11

Post by JoeAltmaier »

MuffinFlavored wrote: post #8
JoeAltmaier wrote: post #3

Earlier quoted context omitted.

Pensions are very strange. IBM abolished its pension program some decade ago, replaced with a 401K funded to 25% or some such. Saved IBM billions; pissed off a generation of employees. So no, not really a contract.

> replaced with a 401K funded to 25% or some such. 25% employer contribution match? That seems very high. I've never worked at a company with higher than 5% match.

No, funded to up to 25% of pay. The pension terms were much much better than that.

I don't know what kind of match they had.

Re: GE freezes pension benefits for 20k employees

#13

Post by Retric »

matthewaveryusa wrote: post #4
dannykwells wrote: post #2

Can someone explain what this means, and how its not illegal? Arent pensions a contract?

Not sure if this is legal or not, but this is definitely why I think the 401k/private saving model is the best. It's a lot easier for governments/corps to change the payout of a system they run vs. clawing money away from an account you own. That being said there should be a minimum safety net for those that don't have the diligence to save by their own accord.

Personal 401k’s don’t offer much over saving directly. It has some tax advantages at the individual level, but those tax savings are just shifting money around at the societal level.

The upside of public / private pensions is pooling money among a pool of survivors. Rather than saving X money to live off of at 95 while risking dying sooner you essentially save less on a bet that will live to be 95. Die early and you don’t care about losing that bet. Of course this means less money for people to inherit.

Sadly for individuals it’s illegal to set contracts up to do this as they create incentives to kill people which have resulted in past murders. Annuity‘s can offer some of the benefits, but are forced to make less risky investments.

Re: GE freezes pension benefits for 20k employees

#14

Post by Clubber »

I inherited the desire to buy American cars to support America workers from my Uncle would was a WWII vet. He didn't like Japanese products (he was in the Pacific theatre). I've been buying American cars for the last 20+ years and currently own a GM. I think the next one I buy will be Japanese or German and it's ironic. While I spent my money on American cars to support American workers, the American companies offshore their manufacturing / assembly to Mexico while foreign companies who sell cars in the US use domestic labor for manufacture / assembly.

So it seems like if you want to support American workers, you should buy foreign cars that manufacture / assemble in the US. That's certainly unintuitive.

Re: GE freezes pension benefits for 20k employees

#15

Post by eternalny1 »

Keep in mind this comes on the heels of the Madoff whistleblower saying GE is a fraud:

https://www.barrons.com/articles/ge-insurance-fraud-madoff-w...

They piled up massive losses in their insurance division (long term care) and guess who gets slammed because of it?

The workers.

Re: GE freezes pension benefits for 20k employees

#16

Post by anonuser123456 »

twodave wrote: post #7

Do pension funds rely on a growing population in order to sustain themselves? I wonder whether they'll see a resurgence as the baby boomers die off and the age distribution in the U.S. becomes more uniform, or if these sorts of plans are a thing of the past.

In the corporate world, probably not. Pensions obligations just look like debt on the balance sheet... but they have high administrative overhead. Further, there is the risk that life expectancy will continue to grow... thus making those liabilities much larger.

In government... I don't think pensions ever went out of fashion. Why bother when you can always just print more money?

Re: GE freezes pension benefits for 20k employees

#18

Post by bryanlarsen »

twodave wrote: post #7

Do pension funds rely on a growing population in order to sustain themselves? I wonder whether they'll see a resurgence as the baby boomers die off and the age distribution in the U.S. becomes more uniform, or if these sorts of plans are a thing of the past.

Pension funds (and retirement savings in general) depend on low-risk investments returning significantly above inflation. These no longer exist, for a variety of reasons, demographics being one of many.

People have been assuming that negative interest rates are a temporary thing but people are beginning to think that this may actually be the natural state of affairs.

Historically, protecting your wealth cost real money: banks had to hire guards to protect the gold in their vault. Fractional reserve banking flipped this so that the banks started paying interest.

But now the world is awash in capital so low risk investments now return interest less than the inflation rate. Even the nominal rate is now sometimes below 0. (https://news.ycombinator.com/item?id=20696343)

There is no longer such a thing as a "safe investment". The only way to grow your money is to take risks with it, and the level of risk required to get returns significantly above inflation is growing.

Re: GE freezes pension benefits for 20k employees

#20

Post by zaphod420 »

bryanlarsen wrote: post #18
twodave wrote: post #7

Do pension funds rely on a growing population in order to sustain themselves? I wonder whether they'll see a resurgence as the baby boomers die off and the age distribution in the U.S. becomes more uniform, or if these sorts of plans are a thing of the past.

Pension funds (and retirement savings in general) depend on low-risk investments returning significantly above inflation. These no longer exist, for a variety of reasons, demographics being one of many. People have been assuming that negative interest rates are a temporary thing but people are beginning to think that this may actually be the natural state of affairs. Historically, protecting your wealth cost real mon…

This is good for Bitcoin.
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