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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

#91

Post by [deleted] »

mikepurvis wrote: post #51
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.

Americans love having the one company they happened to work for control their healthcare, though.

[deleted]

Re: GE freezes pension benefits for 20k employees

#92

Post by orian »

zarro wrote: post #85

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…

You mean like in good, old Europe? No way!

Re: GE freezes pension benefits for 20k employees

#93

Post by skybrian »

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.

But why is that? It seems like there should be a way to offer a simple annuity product profitably.

Re: GE freezes pension benefits for 20k employees

#94

Post by ghaff »

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…

The other issue is that defined benefit pensions were historically oriented around long-term employment with a single entity. This is most obvious in the case of the US government but pension benefits in general tended to be maximized when you stayed with one employer for a long time.

This worked out pretty well for me [added: it's been through 2 changes in ownership but it's still available for payout] but, if instead you look on 2-5 year job tenure being far more common today, a lot of people would end up with little or no pension under typical defined benefit pension terms.

Re: GE freezes pension benefits for 20k employees

#95

Post by nomel »

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.

Conflict of interest? Isn’t the interest of a business survival and profit?

Re: GE freezes pension benefits for 20k employees

#96

Post by pixel16 »

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.

Microsoft does a 50% unlimited match up to the irs cap FYI.

Re: GE freezes pension benefits for 20k employees

#97

Post by DataWorker »

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…

Have you run the numbers on the cost of raising a family? I agree it’s the best strategy but I’m not sure it’s cheaper. I do believe it pays many psychic dividends, but I’m not sure it’s cheaper but I’ve not done the math.

Re: GE freezes pension benefits for 20k employees

#98

Post by SketchySeaBeast »

lotsofpulp wrote: post #83
SketchySeaBeast wrote: post #61

Earlier quoted context omitted.

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 someon…

Because when I retire they continue pumping money into the same funds - I can't do that, my contributions stop and I enter "withdraw" mode - the company doesn't.

Yes, the plan can have problems, but I'm just saying why I think people still like it, and it does have definite advantages over your own savings.

Re: GE freezes pension benefits for 20k employees

#99

Post by Spivak »

lotsofpulp wrote: post #77
rileymat2 wrote: post #71

Earlier quoted context omitted.

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 gra…

I agree that no individual can reasonably plan for to have enough money for 0-30 years but I disagree that nobody has the ability to spread that risk around.

If your pool is the whole country then it’s very manageable sans the human problems that any large government / financial institutions run into at scale.

Re: GE freezes pension benefits for 20k employees

#100

Post by walshemj »

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.

Don't take this the wrong way but you need to take some serious advice, DB pensions are far far better than a DC.

Look at the transfer values of some DB pensions they can be worth multiple millions and no way would an individual be able to build up an equivalent amount in a DC scheame

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