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

Re: GE freezes pension benefits for 20k employees

#131

Post by chrisseaton » Mon, Oct 07, 2019, 3:05 PM UTC

SketchySeaBeast wrote: post #98

lotsofpulp wrote: post #83

Earlier quoted context omitted.

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.

> when I retire they continue pumping money into the same funds

Lol you hope.

Re: GE freezes pension benefits for 20k employees

#132

Post by lotsofpulp » Mon, Oct 07, 2019, 3:08 PM UTC

walshemj wrote: post #119

lotsofpulp wrote: post #116

Earlier quoted context omitted.

I'm not sure what you're claiming. It's possible to design a very lucrative and costly defined benefit pension, but in the US, no employer is offering it other than governments, and even the governments are beginning to croak under the stress of unsustainable benefits, so new employees are not eligible for them.

I was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a SIPP).

Based on some quick Googling, I don't see what is so much better about an SIPP or a group personal pension plan? SIPP offers some kind of matching from the government, but it doesn't seem significant.

Re: GE freezes pension benefits for 20k employees

#133

Post by nwsm » Mon, Oct 07, 2019, 3:09 PM UTC

ishansharma wrote: post #24

zaphod420 wrote: post #20

Earlier quoted context omitted.

This is good for Bitcoin.

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

Basically it's a meme that any news can be spun to be good for bitcoin.

https://knowyourmeme.com/memes/this-is-good-for-bitcoin

Re: GE freezes pension benefits for 20k employees

#134

Post by nguoi » Mon, Oct 07, 2019, 3:11 PM UTC

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…

It also incentivises propping up old, failing companies at the expense of the newer, innovative ones that would replace them in a healthy economy. For the same effect, get everyone to invest their entire private pension into their final employer.

Re: GE freezes pension benefits for 20k employees

#135

Post by lotsofpulp » Mon, Oct 07, 2019, 3:12 PM UTC

froindt wrote: post #101

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 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 r…

>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.

This is the inherent agency risk in defined benefits. The people at the beginning can make off like bandits while screwing those down the line, whether intentionally or not (due to global economic environmental changes).

>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.

401k are extremely easy to administer, or at least much, much easier than defined benefit pensions. However, it would be ideal if the US government stopped giving large companies subsidies (via the 401k tax deduction), and simply gave an IRA deduction to everyone, regardless of employer or whatnot. There is no need for employers to be involved.

Re: GE freezes pension benefits for 20k employees

#136

Post by javagram » Mon, Oct 07, 2019, 3:12 PM UTC

technofiend wrote: post #123

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.

> but this is definitely why I think the 401k/private saving model is the best. Not sure if it made outside just the Houston news cycle at the time but as an employee of a competitor I heard from friends at Enron that their employer froze all sales of their stock in employee 401ks before going under. Lou Pai managed to cash out as part of a divorce settlement as documented here https://www.chron.com/business/enron/ar…

Definitely don’t put your own company’s stock in your 401k.

The 401k plans I’ve seen all had an option to invest the money in a diverse fund. Either a target date retirement fund that auto allocated to a mix of stocks and bonds, or to other funds such as an S&P 500 index.

Freezing employee stock sales is fairly normal as I understand it. I get emails all the time from my publicly traded employer stating I cannot trade in their stock during certain times (due to the risk of insider trading).

Re: GE freezes pension benefits for 20k employees

#137

Post by [deleted] » Mon, Oct 07, 2019, 3:12 PM UTC

chooseaname wrote: post #118

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…

I would love for this to happen. But I see a couple blockers. 1) It is some sort of badge of honor to get a "job with benefits". 2) What if more people decide to not get healthcare? If your job gives it to you and you "only" have to pay a few hundred a month for your family, you are more likely to get it than if you payed everything out of pocket each month (even if your compensation increased). People would see all…

[deleted]

Re: GE freezes pension benefits for 20k employees

#138

Post by admiun » Mon, Oct 07, 2019, 3:16 PM UTC

chooseaname wrote: post #118

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…

I would love for this to happen. But I see a couple blockers. 1) It is some sort of badge of honor to get a "job with benefits". 2) What if more people decide to not get healthcare? If your job gives it to you and you "only" have to pay a few hundred a month for your family, you are more likely to get it than if you payed everything out of pocket each month (even if your compensation increased). People would see all…

Regarding 2), you could just make healthcare insurance mandatory. We have that in The Netherlands.

Re: GE freezes pension benefits for 20k employees

#139

Post by lotsofpulp » Mon, Oct 07, 2019, 3:17 PM UTC

chooseaname wrote: post #118

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…

I would love for this to happen. But I see a couple blockers. 1) It is some sort of badge of honor to get a "job with benefits". 2) What if more people decide to not get healthcare? If your job gives it to you and you "only" have to pay a few hundred a month for your family, you are more likely to get it than if you payed everything out of pocket each month (even if your compensation increased). People would see all…

>2) What if more people decide to not get healthcare? If your job gives it to you and you "only" have to pay a few hundred a month for your family, you are more likely to get it than if you payed everything out of pocket each month (even if your compensation increased). People would see all the extra money and just not get healthcare. If enough people did this, healthcare would be too expensive for the rest of us.

ACA had a solution to this, it was an extra tax for not purchasing health insurance. Because health insurance premiums are basically a tax to provide healthcare to everyone. Because US voters don't want to directly pay the government to provide healthcare to everyone.

Re: GE freezes pension benefits for 20k employees

#140

Post by nguoi » Mon, Oct 07, 2019, 3:17 PM UTC

walshemj wrote: post #100

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.

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

There's no magic financial effect that makes the money going into a DB scheme worth more. The money has to come from somewhere and, in these cases, it's from companies that underestimated or ignored what the future costs would be.