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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

#81

Post by throwaway926 »

rayiner wrote: post #46
eternalny1 wrote: post #15

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.

Yes, GE lost a bunch of money in purpose so it could screw over workers.

Usually companies cut compensation as a last resort, as it's damaging to morale. They don't do it for fun. Some people are obsessed to see employment relations as a zero sum game.

Re: GE freezes pension benefits for 20k employees

#82

Post by sailfast »

eternalny1 wrote: post #15

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.

For what it's worth, shareholders are also getting slammed, but they can always sell to get away. Not always an option for folks that are employed at the organization.

Re: GE freezes pension benefits for 20k employees

#83

Post by lotsofpulp »

SketchySeaBeast wrote: post #61
chrisseaton wrote: post #42

Earlier quoted context omitted.

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.

It still has value, assuming you're intending on working until you retire and the company has no signs of failling - why wouldn't you want a (nearly) guaranteed income for the rest of your life? That doesn't preclude you from investing your own extra cash into investments. I understand the dynamics have changed, but my boomer parents and in-laws are both enjoying retirement with the fruits of a defined benefit pensio…

30 years ago, if you said GE might be failing in 2019, you would have been considered crazy. There are no guarantees in life, even if the law says there are.

The only reason your elders are enjoying the fruits of a defined benefit pension is because the costs of their pensions was hidden by an assumption of ever growing populations and economic growth.

Additionally, why give control of your retirement funds to someone else when you can have control of your money? They're investing it in the same place as you would, and not getting any better returns.

Re: GE freezes pension benefits for 20k employees

#84

Post by nilkn »

chrisfinazzo wrote: post #63
lotsofpulp wrote: post #30

Earlier quoted context omitted.

In the US, "pension" typically means a defined benefit pension.

In the past, this was generally true, but not anymore. Case in point, my great uncle - yes, that's a thing in genealogy, look it up - was fortunate enough to retire with one in the late 80's/early 90's. You don't even have to know much about the system to understand how this works. Defined benefit - Your pension is X, determined by rank, years of service, etc. Defined contribution - While the above conditions may sti…

I think the point is about vocabulary more than anything. Most people (in the US) understand the word "pension" to specifically refer to a defined benefit plan.

Re: GE freezes pension benefits for 20k employees

#85

Post by zarro »

I really think that the sooner we can separate out pensions and healthcare from employers, the better.

Businesses main area of expertise is not in pensions and healthcare, and they cannot provide these services as efficiently as if there were many different insurance companies on the market offering these services for sale, and instead the company paid you a fee for your services, and then you went out on the market and bought your own pension plan and health insurance.

Re: GE freezes pension benefits for 20k employees

#86

Post by walshemj »

lotsofpulp wrote: post #21
eternalny1 wrote: post #15

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.

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…

1 DB schemes are much better for the employee than DC

2 Pensions funds are different to investing for individuals (with small portfolios)

DB schemes have very long lifetimes and have to invest for multiple generations and cant just invest in a tracker - they have to have a suitable investments in bonds and guilts for example./

Re: GE freezes pension benefits for 20k employees

#87

Post by CalRobert »

chrisfinazzo wrote: post #63
lotsofpulp wrote: post #30

Earlier quoted context omitted.

In the US, "pension" typically means a defined benefit pension.

In the past, this was generally true, but not anymore. Case in point, my great uncle - yes, that's a thing in genealogy, look it up - was fortunate enough to retire with one in the late 80's/early 90's. You don't even have to know much about the system to understand how this works. Defined benefit - Your pension is X, determined by rank, years of service, etc. Defined contribution - While the above conditions may sti…

I never heard anyone in the US in my 30 years there use the term "pension" to refer to the typical retirement plans available in the US.

In UK and Ireland, though, most retirement plans are called "pensions", even defined contribution.

The first time I told my mom about pensions after moving, she said "oh my god you get a PENSION?!??" like it referred to the paycheck for life her parents got from the paper mill.

It's just semantics.

Re: GE freezes pension benefits for 20k employees

#88

Post by eternalban »

rwmj wrote: post #76
spo81rty wrote: post #45

Earlier quoted context omitted.

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.

I believe the "conflict" is called class warfare.

Re: GE freezes pension benefits for 20k employees

#89

Post by beached_whale »

joeyrideout wrote: post #22

An important distinction to make with GE is that most of their pension plan is "defined benefit" as opposed to "defined contribution". The latter is much more common nowadays because it avoids these massive long-term obligations to the company. EDIT: Added "most of". A percentage of their employee base has already transitioned to defined contribution.

It seems that when the companies do not own the pensions and they are funded properly this issue goes away. It's when the companies play games with other peoples money that we have victims. Independent 3rd party management of pensions often means less shenanigans and trouble

Re: GE freezes pension benefits for 20k employees

#90

Post by lotsofpulp »

ghaff wrote: post #74
chrisseaton wrote: post #42

Earlier quoted context omitted.

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 so…

>For example, there are protections through the Pension Benefit Guaranty Corporation and you could probably arrange for your own insurance as well.

The PBGC is just for show. They can't even guarantee the pensions of the multi employer defined pension plans that are about to fail, so there is a bill in congress to bail them out currently:

https://burypensions.wordpress.com/2019/01/09/butch-lewis-ac...

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