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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

#171

Post by [deleted] »

_ah wrote: post #23
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…

The "death contract" is a Tontine. https://en.m.wikipedia.org/wiki/Tontine

[deleted]

Re: GE freezes pension benefits for 20k employees

#172

Post by lotsofpulp »

zarro wrote: post #167
chooseaname wrote: post #118

Earlier quoted context omitted.

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…

Contrarian argument regarding point 2: I find it weird and misguided how people think that using coercion to force people into buying healthcare is somehow acceptable. To those that think it will make the cost of healthcare more expensive for the rest of us, I think that is a dubious assertion, in fact I think it will get much cheaper. The presumption that they are in contentious debate with is the necessity that dif…

>It makes all the sense in the world when you compare it to any other business. You wouldn't expect for someone who paid $1M to get the same level of treatment as someone who paid $100.

Currently, society does not find it acceptable for someone to die from a heart attack if they cannot pay for healthcare. And people already get different levels of care.

Re: GE freezes pension benefits for 20k employees

#173

Post by specialist »

dx87 wrote: post #144
admiun wrote: post #138

Earlier quoted context omitted.

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

What if someone refuses to pay? Do they get a fine that's higher than what the cost of paying for healthcare would have been?

There's always stragglers, hold outs, conscientious objectors, cheats, freeloaders, randos, or whatever.

Just think of them as "overhead".

Spend a little on "enforcement", because rules are important. Call it audits, compliance, metrics, or whatever.

But not more than would be saved without enforcement. Because diminishing returns.

And at some tipping point, ratcheting up cost of compliance backfires, leading to more cheating.

So strive for some happy equilibrium. So that the general population (taxpayers) feel the system is reasonable, if not exactly fair, and overall friction is minimized.

Re: GE freezes pension benefits for 20k employees

#174

Post by bjourne »

bryanlarsen wrote: post #18
twodave wrote: post #7

Do pension funds rely on a growing population in order to sustain themselves? I wonder whether they'll see a resurgence as the baby boomers die off and the age distribution in the U.S. becomes more uniform, or if these sorts of plans are a thing of the past.

Pension funds (and retirement savings in general) depend on low-risk investments returning significantly above inflation. These no longer exist, for a variety of reasons, demographics being one of many. People have been assuming that negative interest rates are a temporary thing but people are beginning to think that this may actually be the natural state of affairs. Historically, protecting your wealth cost real mon…

Piketty would claim that wealth accumulation has reached a maxima. Return on investment is, after all, wealth being concentrated into fewer and fewer richer and richer individuals. If wealth can't be concentrated further then return on investment can't happen either. We might have reached such a state in which the rich, relatively speaking, can't get richer and the masses of poor, relatively speaking, can't get poorer. You can't squeeze water out of a stone.

Re: GE freezes pension benefits for 20k employees

#175

Post by jogjayr »

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…

> The administration costs of 401k's make it more challenging for small companies to offer.

It's not at all clear to me that 401Ks need to exist when we already have IRAs. Why not just increase the contribution limits on traditional IRAs to 401K levels? It gives everyone access to the same savings options, employees aren't tied to a single 401K provider that can gouge them on fees, employers don't have to administer anything.

Re: GE freezes pension benefits for 20k employees

#176

Post by ScottFree »

chooseaname wrote: post #161
ScottFree wrote: post #151

Earlier quoted context omitted.

I have yet to meet a single person who hasn't enthusiastically agreed that we should separate healthcare from employment. The reluctance comes when nobody has any idea what we're going to replace it with. We're at an unusual social state in this country where nobody trusts the government and nobody trusts big business. What does that leave? I'm a US freelancer, so I don't get health insurance through my employer. I g…

> I have yet to meet a single person who hasn't enthusiastically agreed that we should separate healthcare from employment. The reluctance comes when nobody has any idea what we're going to replace it with. Sadly, I have, and it is invariably from people who basically say those who don't work don't deserve healthcare. It is disturbing to hear people say this. They don't want to "pay" for someone else's healthcare. Th…

Despite all our democratic and republican[0] efforts, we still wound up with a ruling class. Ruling classes aren't necessarily bad, but in order for that to work, the ruling class need to care about the welfare of the people they rule. That is not the case in the US right now. Our ruling class has turned parasitic and doesn't care that they are killing their constituents. The opioid crisis proves that.

[0]: the political systems, not the political parties

Re: GE freezes pension benefits for 20k employees

#177

Post by hocuspocus »

rumanator wrote: post #164
hocuspocus wrote: post #157

Earlier quoted context omitted.

Here in Switzerland if you don't give proof of insurance the state will pick one for you. Then if you don't pay, it's like with any other bill, you'll get into troubles really quick.

Sounds like it would be far simpler and easier for everyone if the state provided healthcare services paid by everyone through taxes.

Yes of course, but that's beyond the point. Americans cannot argue that mandatory healthcare couldn't work in a multi-payer, private system.

Re: GE freezes pension benefits for 20k employees

#178

Post by froindt »

lotsofpulp wrote: post #135
froindt wrote: post #101

Earlier quoted context omitted.

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 env…

>401k are extremely easy to administer, or at least much, much easier than defined benefit pensions.

Definitely so! They require filing the Form 5500 annually with severe penalties for not doing so, and if safe harbor criteria aren't met, I believe an actuary may be required. I helped setup a small business 401k a few years ago and found Human Interest to be about the cheapest option overall at {employer: $120/month + $4/user/month} + {employee: 0.5% AUM management fee + fund expense ratios (good funds available, coming in around 0.07%.)}.

The direct employer cost is still $1,500/year for 2 employees before any match. Simple IRA's are an option, but have much lower contribution limits.

>However it would be ideal if the US government stopped giving large companies subsidies (via the 401k tax deduction)

Do you mean the administrative expenses and employer contributions being tax deductible, or a more specific nuance to the tax code?

The intent of the 401k safe harbor rules is to ensure they don't only benefit the highest compensated employees. For someone earning 30k/year, saving for the future is a legitimately tough proposition. I haven't fully fleshed out how I'd best handle ensuring all groups can reasonably be able to retire.

Re: GE freezes pension benefits for 20k employees

#179

Post by zarro »

lotsofpulp wrote: post #172
zarro wrote: post #167

Earlier quoted context omitted.

Contrarian argument regarding point 2: I find it weird and misguided how people think that using coercion to force people into buying healthcare is somehow acceptable. To those that think it will make the cost of healthcare more expensive for the rest of us, I think that is a dubious assertion, in fact I think it will get much cheaper. The presumption that they are in contentious debate with is the necessity that dif…

>It makes all the sense in the world when you compare it to any other business. You wouldn't expect for someone who paid $1M to get the same level of treatment as someone who paid $100. Currently, society does not find it acceptable for someone to die from a heart attack if they cannot pay for healthcare. And people already get different levels of care.

I don't see how you can justify without using a double standard the idea that its okay to use coercion to take advantage of a minority to enforce an idea of "acceptable" that they might not agree with.

Re: GE freezes pension benefits for 20k employees

#180

Post by undersuit »

matthewaveryusa wrote: post #4
dannykwells wrote: post #2

Can someone explain what this means, and how its not illegal? Arent pensions a contract?

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.

Highly compensated employees in Amazon can't contribute the total yearly amount to their 401ks.

>In the simplest terms, contributions made by HCE’s can’t be excessive when compared to those of non-HCE’s. For example, if the average plan contribution by non-HCE’s is 4%, then the most an HCE can contribute is 6%.

Not that I hear much complaining about the compensation, they're rolling in after-tax dollars and RSUs.

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