GE freezes pension benefits for 20k employees • Hacker News Board

Re: GE freezes pension benefits for 20k employees

#71

Post by rileymat2 » Mon, Oct 07, 2019, 2:28 PM UTC

lotsofpulp wrote: post #66

rileymat2 wrote: post #55

Earlier quoted context omitted.

The simple answer is that group mortality is easier to estimate and plan for than individual mortality. At 65, you do not know if you are going to live to 70 or 101, so you need to plan your 401k accordingly, pessimistic. Couple that with the fact that many many americans could not save enough to last to 101, but could last until 72. So they are left with the choice of living more poorly than they should or running o…

Defined benefit might make sense on a societal level, aka Social Security benefits in the US. On an employer level, it does not make sense as they have no idea if they will exist in the next 10, 20, 30 years, especially with automation and globalization changing the economic environment very quickly. Which is exactly what real life shows, as companies are jettisoning defined benefit pensions to stay competitive. On a…

At an individual level, You can invest the same way, the problem is, you don't know how long you will live. Which was my main point.

There are annuities, but my research into those has come up with very high costs with lots of fees.

Re: GE freezes pension benefits for 20k employees

#72

Post by jonathankoren » Mon, Oct 07, 2019, 2:29 PM UTC

Retric wrote: post #13

matthewaveryusa wrote: post #4

Earlier quoted context omitted.

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…

That’s not why New York, et al, banned them. They became horribly mismanaged and turned into scams that paid out far less than they offered.

The idea that these encourage murders only came after they were banned, and used in plot devices that required a small number of people. (e.g the Fighting Hellfish)

There is plenty of discussion about brining them back as financial instrument.

https://www.npr.org/2015/11/27/457392597/live-long-and-prosp...

https://www.npr.org/2017/10/26/560152250/a-case-for-tontines...

Re: GE freezes pension benefits for 20k employees

#73

Post by eternalny1 » Mon, Oct 07, 2019, 2:29 PM UTC

spo81rty wrote: post #45

kpmcc wrote: post #27

And while they cut pension benefits, this is what the CEO makes: https://www.cnbc.com/2018/10/05/new-ge-ceo-larry-culp-inks-s...

It says his compensation is largely tied to company stock performance. He is not guaranteed all of that money. He and the company have to perform.

And shares rose on the news of the pension cuts.

It's not hard to play this game, if your incentive is to make the stock price go up.

Slash and burn.

Re: GE freezes pension benefits for 20k employees

#74

Post by ghaff » Mon, Oct 07, 2019, 2:30 PM UTC

chrisseaton wrote: post #42

lotsofpulp wrote: post #21

Earlier quoted context omitted.

I doubt it, defined benefit pension plans don't make financial sense in the current climate. Who is able to predict which company will be around in 30 to 60 years in the future, and what the economic climate will be? And much of the pension fund investments are going to the same place as 401k money anyway. Why not directly invest in VTI and skip paying all the pension fund managers and staff? It's not like they have…

I wouldn’t even agree to getting a defined benefit pension these days - why wouldn’t you want to invest your own money instead of letting one company you happened to work for control your pension? I have a defined benefit pension from a previous employer and frankly I count it as zero in my financial planning since I have no idea if it’s actually coming or not.

Paying out defined benefit plans aren't totally at the whim of the company. For example, there are protections through the Pension Benefit Guaranty Corporation and you could probably arrange for your own insurance as well.

Having some savings as defined benefit does give you predictability. Even if you don't have a defined benefit plan through a company, it may make sense to convert some savings into an annuity of some sort.

Re: GE freezes pension benefits for 20k employees

#75

Post by mherdeg » Mon, Oct 07, 2019, 2:30 PM UTC

rileymat2 wrote: post #55

lotsofpulp wrote: post #21

Earlier quoted context omitted.

I doubt it, defined benefit pension plans don't make financial sense in the current climate. Who is able to predict which company will be around in 30 to 60 years in the future, and what the economic climate will be? And much of the pension fund investments are going to the same place as 401k money anyway. Why not directly invest in VTI and skip paying all the pension fund managers and staff? It's not like they have…

The simple answer is that group mortality is easier to estimate and plan for than individual mortality. At 65, you do not know if you are going to live to 70 or 101, so you need to plan your 401k accordingly, pessimistic. Couple that with the fact that many many americans could not save enough to last to 101, but could last until 72. So they are left with the choice of living more poorly than they should or running o…

This is an interesting view. For some reason I had never considered that participating in a large employer's defined-benefit pension fund might be kind of equivalent to signing up for a tontine with a bunch of your peers and all putting your cash in SPY for the duration.

Re: GE freezes pension benefits for 20k employees

#76

Post by rwmj » Mon, Oct 07, 2019, 2:30 PM UTC

spo81rty wrote: post #45

kpmcc wrote: post #27

And while they cut pension benefits, this is what the CEO makes: https://www.cnbc.com/2018/10/05/new-ge-ceo-larry-culp-inks-s...

It says his compensation is largely tied to company stock performance. He is not guaranteed all of that money. He and the company have to perform.

Stock is up 3% on this news, and no doubt will be up on future news of cuts to headcount, benefits, etc. So there's a conflict of interest here.

Re: GE freezes pension benefits for 20k employees

#77

Post by lotsofpulp » Mon, Oct 07, 2019, 2:31 PM UTC

rileymat2 wrote: post #71

lotsofpulp wrote: post #66

Earlier quoted context omitted.

Defined benefit might make sense on a societal level, aka Social Security benefits in the US. On an employer level, it does not make sense as they have no idea if they will exist in the next 10, 20, 30 years, especially with automation and globalization changing the economic environment very quickly. Which is exactly what real life shows, as companies are jettisoning defined benefit pensions to stay competitive. On a…

At an individual level, You can invest the same way, the problem is, you don't know how long you will live. Which was my main point. There are annuities, but my research into those has come up with very high costs with lots of fees.

>There are annuities, but my research into those has come up with very high costs with lots of fees.

Yes, as most non taxpayer funded employers have found out, and reduced their offering of defined benefit pensions accordingly.

My point is that no one has the ability to protect and afford against the kind of long term risk that you are talking about, and the best model I've seen to address it is when children and grandchildren take care of their elders.

Re: GE freezes pension benefits for 20k employees

#78

Post by Phillips126 » Mon, Oct 07, 2019, 2:32 PM UTC

kpmcc wrote: post #27

And while they cut pension benefits, this is what the CEO makes: https://www.cnbc.com/2018/10/05/new-ge-ceo-larry-culp-inks-s...

Was just about to link the same article. It's sickening how much these CEO's make.

For those who want the stats from the SEC[0]:

  (1) a base salary of $2,500,000 per year.

  (2) a target annual bonus opportunity at 150% of base salary ($3,750,000).

  (3) annual equity awards in the form of performance share units (“PSUs”) 
      that will have grant date fair values of $15,000,000, beginning in 2019.

  (4) a one-time inducement award of PSUs that will pay out [...] as a number of 
      GE shares ranging from 2.5 million to 7.5 million shares, based on a GE stock 
      price appreciation target ranging from 50% to 150% using the highest average 
      closing price over 30 consecutive trading days during the four-year period from 
      October 1, 2018 to September 30, 2022, with no payout for stock price appreciation 
      of less than 50% (This could net him $47,000,000 - $233,000,000!).

  (5) cash severance in an amount equal to two times the sum of Mr. Culp’s base salary 
      and target annual bonus opportunity, in the event that his employment is terminated 
      by the Company without cause or by Mr. Culp for good reason.

[0] https://www.sec.gov/Archives/edgar/data/40545/00000405451800...

Re: GE freezes pension benefits for 20k employees

#79

Post by Retric » Mon, Oct 07, 2019, 2:34 PM UTC

nerdponx wrote: post #31

Retric wrote: post #13

Earlier quoted context omitted.

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…

Personal 401k’s don’t offer much over saving directly. I beg to differ. My IRA doesn't offer a 6% match.

That’s a company 401k with matching funds. Clearly, if the company is willing to give you more money that’s a benefit, but you don’t get that opening a 401k at fidelity etc.

Re: GE freezes pension benefits for 20k employees

#80

Post by SketchySeaBeast » Mon, Oct 07, 2019, 2:35 PM UTC

zaphod420 wrote: post #47

ishansharma wrote: post #24

Earlier quoted context omitted.

Can you explain further? I’m curious how Bitcoin benefits from it?

The comment I replied to said "There is no longer such a thing as a "safe investment". The only way to grow your money is to take risks with it". Bitcoin is seen as a risky investment by most people. To those of us that understand what it actually is and how it works, it's the best kind of money/store of value ever invented. The only other options I see for storing wealth are things like precious metals, real estate,…

> Bitcoin is seen as a risky investment by most people. To those of us that understand what it actually is and how it works, it's the best kind of money/store of value ever invented.

Why? Just because the other options have downsides, what makes Bitcoin good? There was a rush in 2018 - are you assuming it's going to happen again? Bitcoin seems to be super unstable, more so than anything else I'm aware of - why would I want my retirement savings to be able to fluctuate that much every year? What stops a new cypotcoin from coming along and being dubbed superior, removing the value of Bitcoin overnight?