I apologize for yet another OT posting, but this is an update of an earlier thread about IBM's efforts to "welsh" on the pension agreement it had with its long term employees.
For a while this had been blocked because of age discrimination claims as the long-term employees were older. IBM found a judge [what this cost was not announced] to rule that the discrimination was not age related, which is prohibited, but rather length-of service related, which is allowed. In other words, because IBM would treat employees that started working for IBM when they were 10 years old, the same as they were treating workers that started when they were 25 or 30 years old, there was no age discrimination.
This is a unilateral revision of explicit written agreement changing the pension plan from a defined benefit plan based on years of service with IBM to a cash-balance plan, and there was no offer by IBM to refund the wages foregone by the affected employees on the assumption of later pension payments.
In total this will result in cutting the long-term IBM employee pensions by 20 to 50%, which is the other way of saying it will save IBM 1.4 billion dollars. It is not at all clear what will happen to the 1.4 billion dollars hijacked from the pension funds.
It should be noted under this latest decision, there is nothing to stop IBM and the other corporations from reducing or eliminating their pension plans, as long as they screw all the employees equally.
This yet another warning to our younger workers that a corporation's or company's (or government's) promises mean nothing, even if these are in writing and signed by an officer of the corporation. As in the old joke, you will *NOT* be respected in the morning. Get the money up front, keep it in your name and under your control. Attaboys and certificates of appreciation do not put beans on the table or gas in the tank.
Unka George (George McDuffee)
...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?
Rudyard Kipling The Naulahka, ch. 5, heading (1892).
no problem, I think everyone knows by now that this is not a metalworking newsgroup, it's a political newsgroup whose contributors are primarily metalworking folk
If we any leadership worth a dang we wouldn't have to even consider it.
GEEZ people we've GOT to take our country back !!!
Forget Republicans and Democrats.....they've sold us down the river.
By the way I notice on this new construction site I'm on...a big distribution center for a big well known clothing business....the contractor that is putting together the conveyor lines....they're crew is nearly all Mexican, don't speaky a word of english.
These are good paying jobs ! Not "jobs Americans won't do".......the biggest lie of the decade.
Just for interesting reading, I went back and read several FDR speeches from the 1930's. One common theme concerned manipulators like Lay as well as a variety of "schemes" where large corporations and investment firms made mountains of profit on the backs of the rest of us...it's not fair profits we're speaking of, it's gigantic profits by misleading people similar to Enron, large companies dumping their pensions on the public dole, manipulating commodity supplies, etc. History does repeat itself.
Yea, I know that most on the right see FDR as the devil himself and want all that happened during his time erased. However, even a "righty" might be interested in reading some of those old texts to see the kinds of things that corporatism and politicians in bed with each other caused. You may not agree with Roosevelt, but much of what is happening now is a repeat of what happened then with the result of a massive depression...a handful came out like bandits while the public generally had to scrape by.
I believe even Gunner would agree with much of the philosophy expressed by FDR (read it and decide for yourself), although not the implimention of policies.
Any idea if the installer is also the conveyor supplier? I'd be curious to know what company that is (we do some conveyors also so just poking my nose in).
And you are right..anyone who says "jobs that Americans won't do" actually means "jobs that Americans won't do for depressed wages".
But wait a minute, that is exactly what a cash-balance plan normally does, it gives you some cash today rather than a promise of (much more) cash later.
Defined contribution (cash balance) plans are a raw deal for the worker. It is a plan that transfers all future financial risk from the company to the worker.
I don't have an opinion on cash-balance plans, but not all defined-contribution plans are cash-balance plans. And I doubt that all cash-balance plans are the same.
What is happening quite rapidly is that traditional pensions (a form of defined-benefit plan) are rapidly being replaced by various kinds of defined-contribution plan (including but not limited to cash-balance plans and 401Ks).
Leaving aside for the moment issues of evil companies, this is still a good idea. Why? Because a traditional pension plan (and anything similar) is a very shaky bet, a bet that my company will remain healthy and able to fund my dotage for the next twenty or thirty or even forty years, no matter what. This is a very brave bet.
Well, even if the management is evil, they usually don't want the company to die, but it happens all the time, for many different reasons.
If management is stupid, the company fails all the sooner, but evil versus saintly isn't the issue. If the world changes and causes the fundamental business model to fail, so will the company, and the management can do nothing about it.
And the management of failing companies often loots the pension plan, out of desperation, often with the best of intentions. But the pension plan is nonetheless broke, a ward of the state.
So, what to do? First of all, the money for my dotage must be out of the reach of desperate managers, be they evil or well-meaning. If they are evil, the ancient games to deny long-term employees their pensions often appear, but even if this isn't the case, the company may come into hard times. All this means that the money must be held by a third party, an independent fiduciary of some kind
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Second, if I force the fiduciary (or my company) to bear the financial risk of the stock and bond markets, the fiduciary will extract a very large price from my hide. The fiduciary will *not* lose money. That's a given. In fact, a fiduciary is almost forbidden by law to lose money. Think insurance companies and trust departments in banks. Not a good deal. So, I want to bear the risk myself, and be paid for it. After all, this is a retirement account, I have a time horizon in the decades, and compound interest is *very* powerful.
The advantage of 401K plans is *immense*, because the interest on the interest is not taxed until many years later. The explanation is quite mathematical, but even if the tax rate when the money is taken out is the same as while it was in the 401K plan (and thus not taxed), the deferral yields far more after-tax dollars that one would have if the tax were paid each year.
There needs to be competition, or we will reinvent Social Security, which is rapidly failing for two reasons. First, the demographics no longer work -- too many geezers, too few kids to support them. This will not change (unless we let many tens of millions of new immigrants in, which doesn't seem likely). Second, there is no way a government agency like SSA will ever be good at investing, and they will get far too much "help" from Congress -- choices will be political, not investment based.
This all means that the money is held in what amounts to 401K brokerage accounts, and is invested in some combination of stocks and bonds. I'm too busy to manage the details myself, so it'll have to be some kind of low-fee mutual fund, a fiduciary. And many people are just terrible at investment, so there would need to be a core that was managed by the fiduciary and not by me, to ensure that I don't blow it all on Enron futures.
Third, the most effective long-term investing strategy is called "dollar averaging", where one adds a fixed amount of money (typically a fixed percentage of income) to the retirement accounts month after month, year after year, without regard to the always varying states of the stock and bond markets. If one does this for oneself, it's called an investment plan. If a company does this for you, it's called a defined-contribution retirement plan.
So, to summarize, if I were King, Social Security and all pension plans would be replaced with 401K plans held by third-party fiduciaries, into which employees and employers would both tithe. The money would vest (belong to) the employee immediately upon payment, and could not be taken back by the company for any reason. One could move your account to another fiduciary or fiduciaries for any reason or for no reason, so the fiduciaries would be very motivated.
I can sort of relate to this nastyness because I worked for IBM in the
60's and 70's. Back then there was this whole gestalt that you are part of a family. Do good work and behave as a family member, and your IBM family will take care of you.
I should mention that, back then, I did hear good stories about how IBM went out of their way during the depression in the 30's to treat all their employees as good as possible and not drop or selectively penalize anyone because of the horrible economics.
For my own reasons, I left the fold and joined others who were writing off long-term promises for short term possibilities. It turned out to be a good time to go it alone, and after some years with great satisfaction from accomplishments, more than one job, I eventually got lucky and am pretty well set.
Now, pretty much all the companies treat, or want to treat, their employees as disposable assets. If IBM can do it, expect pretty much all companies to do the same. Ethics and long term promises to employees seems to be volatile and disposible.
Trust the long-term promises from your employer with similar odds that your marriage will be existant and happy after 10's of years.
It could happen, but the odds are more and more against it.
Yes, I don't think 401K funds are in jeporady. The whole 401K thing is just a way to defer taxes. I can't see any way even the most greedy politician could or would rape these tax benefits. They are more likely to continue to rape and mismanage your alleged SS benefits.
Of course a 401K is a personal investment. It has the same risks as any other investment. Employers frequently offer stock bonuses for their own stock. This can be great but if you leave all, or a lot, of your eggs in one basket you are exposed. No one prevents you from being stupid with your money and if your program doesn't have sufficient good investment options, you could get into trouble.
I'm not sure, but I think, you should be able to move your assets from a company-managed 401K into your own 401K if you are nervous.
The 401K is fine with its tax deferral, but suffers the same risks as any other investment. Lots of foolish people get in trouble by removing a big chunk of money from a 401K early without understanding the tax issues.
============================== It is a truism but never the less true that desperate situations demand desperate remedies (which is one of the best arguments for avoiding desperate situations in the first place).
A major part of the problem is that the "desperate remedies" soon become SOP, and then the preferred solution for everything.
Note: in most cases what is being "treated" is *NOT* "THE" problem but rather one symptom of possibly several concurrent problems. An analogy is giving a patent with cancer a shot of morphine. The morphine does nothing to treat a metastasized cancer, which most likely has take several years to develop, but does make the patient feel better, at least until they need another injection. [Did "savings and loans," and "pension funds" just happen to pop into your mind?]
This soon degenerates into the creation of "desperate situations" in order to justify the continuation or imposition of the "desperate remedies," which tend to be of the quack or charlatan verity. The insidious thing is this generally is not a fully conscience decision by the executive, president or manager, but a collective, tacit, largely unconscious effort by them and the staffs they created to help them apply the "desperate remedies." [Did "Alaskan oil" and "balance of trade" just pop into your mind?]
While the implementation would have been "home grown," in 1930, from the best historical records of the times, there was a real danger of the imposition of a totalitarian "solution" of either the left or right of the socio-economic "meltdown." People were battling in the streets, singing the "Internationale" and "Horst Wessel," and Huey P. Long was making serious national inroads into the Democratic party base with "Every man a King." See:
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FDR managed to pump enough "morphine" into the American body politic to sedate it to the point that revolution was not an immediate threat, the problem then being he [and his staff] did not know when to stop [but then does anyone? - hey, I'm on a roll!]
As soon as FDR had suppressed the threat of imminent revolution (and asset confiscation), the market manipulators, and financial "masters of the universe," that largely created the problems/mess in the first place, expected to resume "business as usual."
They were "shocked - shocked" and outraged to discover: (1) They were going to have to pay for the FDR "morphine" (largely because no one else had any money), and (2) not only were their more profitable financial casinos and bucket-shops in some cases heavily damaged or destroyed by the "implosion," the ones they did reopen were now lightly regulated [no more loaded dice or marked cards], and worst of all, the suckers [er... investors] were staying away in droves. Naturally this was the fault of the President?
If you missed it the first time, not to worry. "They" are working on a remake of this classic and it's scheduled for release in the near future.
Unka George (George McDuffee)
...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?
Rudyard Kipling The Naulahka, ch. 5, heading (1892).
Maybe so small businesses, say maybe a tool shop with assets of 5-6 million, can be transfered to the kids without a huge death tax that forces them to liquidate. Kinda sucks to work for Joe and his kid for years and now you are working for Fred that figures you get to start over with zero senority and a brand new payscale (lower).
How about a family farm that is big enough to actually survive on the farms income vs the farmer having to have second job to stay farming. From what I've read, it takes about 640 acres to be big enough to survive as a family farm. With the prices of land going up, having to sell acrerage to pay death taxes hurts by reducing the size of the farm to a non-sustainable amount of acreage.
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