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

Re: GE freezes pension benefits for 20k employees

#101

Post by froindt » Mon, Oct 07, 2019, 2:42 PM UTC

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…

I agree. It was interesting to see this all come up with union negotiations. The union's push against switching to a 401k was that it puts them at risk when the market performs poorly. Unfortunately from a company standpoint, when the market goes down, their required pension contributions go up, a real bind in cash when you need it most.

There's more politics involved - like the automotive unions giving up numerous raises for better pensions, companies refusing to fully fund pensions in good years leading to them being woefully underfunded in bad, etc.

Personally I'm glad to not have a pension hanging over my head. I could leave tomorrow and have the full value of my 401k. I know people who are miserable and hate their jobs, but if they leave before hitting 30 years, they get barely anything. At my company, leaving at 29 years would yield less than half the monthly payout compared to 30 years. The pension and social security is the retirement plan for those who live paycheck to paycheck.

I do really wish everyone had the same access to tax advantaged accounts. The administration costs of 401k's make it more challenging for small companies to offer. All else equal, having a 401k available versus unavailable is with a few thousand dollars per year to me because of the tax deferral.

Re: GE freezes pension benefits for 20k employees

#102

Post by lotsofpulp » Mon, Oct 07, 2019, 2:43 PM UTC

skybrian wrote: post #93

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.

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

Predicting the future is extremely difficult (if not impossible).

Re: GE freezes pension benefits for 20k employees

#103

Post by Miner49er » Mon, Oct 07, 2019, 2:43 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...

What's even worse is how much dividends they've paid out to shareholders. $394 million this year and $3.23 billion last year, if my math is right. Before that they paid out $4 billion a year, but they reduced it in December, 2018.

Re: GE freezes pension benefits for 20k employees

#104

Post by ghaff » Mon, Oct 07, 2019, 2:44 PM UTC

SketchySeaBeast wrote: post #70

joeyrideout wrote: post #41

Earlier quoted context omitted.

Not any more... "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types." [1] [1] https://money.cnn.com/retirement/guide/pensions_basics.money...

All that tells me is that there are no more pensions, not that the definition has changed. Employers are contributing money now, but have pushed any risk onto the employee, making it feel pretty worthless as a retirement strategy.

> Employers are contributing money now, but have pushed any risk onto the employee, making it feel pretty worthless as a retirement strategy.

You seem to be arguing that saving for retirement is futile. You can invest is (almost) arbitrarily low risk to principal investments like US treasuries. I probably wouldn't advise that as the sole investment strategy for most people. But it is one way to reduce certain types of risk. (And most defined benefit plans have the same risk with respect to inflation.)

Re: GE freezes pension benefits for 20k employees

#105

Post by grogers » Mon, Oct 07, 2019, 2:45 PM UTC

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.

Don't know how to verify what it was, but their current match is 100% up to 5% of pay, plus a free 1% of pay. It's good compared to most tech companies but not outrageously good.

Re: GE freezes pension benefits for 20k employees

#106

Post by walshemj » Mon, Oct 07, 2019, 2:45 PM UTC

lotsofpulp wrote: post #54

joeyrideout wrote: post #41

Earlier quoted context omitted.

Not any more... "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types." [1] [1] https://money.cnn.com/retirement/guide/pensions_basics.money...

I mean that in common vernacular, when someone says "pension", they are referring to a defined benefit pension. Otherwise, in the US, we use 401k, IRA, "retirement funds", or other words.

And a 401k and IRAs is are very poor "pension" plan compared two other countries.

Re: GE freezes pension benefits for 20k employees

#107

Post by geogra4 » Mon, Oct 07, 2019, 2:49 PM UTC

orian wrote: post #92

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!

Well, the european model sees these as natural monopolies and just provides them at the state level

Re: GE freezes pension benefits for 20k employees

#108

Post by Spivak » Mon, Oct 07, 2019, 2:49 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...

Okay look, I get that it’s fun to be angry the high salaries of CEOs but it’s one of those things that just doesn’t matter and does nothing but distract from the actual problems. That 2.5 million dollars distributed to the 20k pensioners amounts to $125/person/year. If you distribute it to all $300k GE employees they get a $6/yr raise.

Re: GE freezes pension benefits for 20k employees

#109

Post by zarro » Mon, Oct 07, 2019, 2:50 PM UTC

orian wrote: post #92

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!

I'm not sure that the European version of outsourcing that responsibility to the government is the way to go for the same reason.

Letting people set up private companies with competitive options I think would probably drive the best results.

Re: GE freezes pension benefits for 20k employees

#110

Post by lotsofpulp » Mon, Oct 07, 2019, 2:50 PM UTC

DataWorker wrote: post #97

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…

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.

I don't believe it's quite possible to put numbers on the benefits of being part of a tribe that has your back, but I doubt any realistic amount of money can get you the kind of care that family (and friends) can.

Assuming a birth costs $5k to $10k, and the kid costs $20k per year for first 5 years for daycare, and then $3k per year, ballpark $200k, not adjusted for inflation, plus tons of time spent teaching and raising them, should buy you a relationship worth much more. But you also have to be surrounded by the right people and culture, so it's super complicated to calculate.

But most successful families I know are successful because they can rely on each other to help each other out, and there are exponential benefits to knowing someone who knows someone, so as their networks expand, so do yours.