General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsLet's make retirement great again – by bringing back a pension system
https://www.theguardian.com/money/2016/jul/03/retirement-pensions-moneyWe’ve had a 30-year experiment with this idea, in some of the most robust bull markets for bonds and stocks ever recorded. The stock market has recovered since the financial crisis and bond investments did well; if 401k plans were working, Americans should have improved their retirement position, logic suggests. In fact, the opposite happened, according to the National Institute on Retirement Security: they were further behind in 2013 than they were not only in 2007, but also in 2010.
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(688 posts)
trc
(823 posts)This was an attempt to destroy the USPS by making it produce pension funding never before required. This attempt failed. The result is that the USPS pension system is being fully funded for workers that have not even been born. Damn those union workers anyway...
Travis_0004
(5,417 posts)And it is not funding pensions for people not yet born.
The post office is how we should do pensions.
I support pensions, but they should be fully funded. A bucnh of coal workers are getting cuts because the money was never there.
Cities need bail outs because pensions are underfunded by millions of dollars. If you are going to promise something you should be required to fund it. Otherwise its just an empty promise.
Hoyt
(54,770 posts)as possible will be most of our retirement plans until we have no choice but to live off Social Security and whatever we have saved.
yeoman6987
(14,449 posts)But that ship has sailed. No way any party is going to pass a law saying private businesses must give pensions. Many cities are drowning due to pensions. It's s wonderful idea but will never happen at least in the next 30 years.
awoke_in_2003
(34,582 posts)because we (collective we) allowed it to. We started thinking of ourselves, instead of as part of collective labor.
ret5hd
(20,499 posts)I am not a lawyer. That said, the following is what I remember from a labor law class I took (many many years ago) when I was a union official.
By federal law, if a company offers pensions to the executives they have to offer pensions to the hourly workers. For many years that worked great...tax rates were higher then, and many executives wanted to defer their income (which is essentially what a pension program does) to when they retired and had a lower taxable income so...voila!!! They had to give the employees a pension also.
Currently, with tax rates as low as they are, no right-minded executive wants to defer income...they want it now! "Tax me now while the rates are the lowest they have ever historically been rather than later when the tax rates might be higher!!!"
So now, because of low tax rates, they can dismantle the employees pension plan and it doesn't hurt them a bit.
lovuian
(19,362 posts)of your grandparents .....and I mean the government ..food stamps housing etc...
they will be voting too.....a poverty stricken elderly is reflective of a third world nation ....not a superpower
My parents lived very well on their pensions but the baby boomers experiment of 401 K has been a dismal failure
Adrahil
(13,340 posts)... That makes pensions a less viable option. At least old-fashioned pensions.
Major Nikon
(36,827 posts)They are bought and sold and/or declare bankruptcy which often sends pension plans into bankruptcy court where recipients are lucky to get pennies on the dollar.
Adrahil
(13,340 posts)A restructured Social Security which could serve as a national pension.
I'm doing fine with 401k's, but lots of folks don't take advantage of them either becuaase they can't, or becuase they don't understnad the importance of them.
mythology
(9,527 posts)I'm lucky in that my company automatically enrolls employees at the company matching and you have to manually go to change it.
They then also add an additional 4% that is not tied to me participating or not.
But too many companies make 401ks opt in rather than opt out.
Adrahil
(13,340 posts)With a 3% employee contribution and the company match, though they can opt-out, of course.
clarice
(5,504 posts)
REP
(21,691 posts)The company I worked for has lost a lot of value, and given their penchant for stealing from employees, I figured I was better off with cash in hand.
Adrahil
(13,340 posts)My sister's company is tettering on the edge, and we're weighingnth eoptions for her retirement before its too late. She is terrible with money, though.
karynnj
(59,504 posts)Adrahil
(13,340 posts)
Johnny2X2X
(19,066 posts)Pensions are a great idea, but they have to protect them from the raiders who will steal them.
Strengthening Social Security is more important right now. Take the cap off from paying, increase benefits and lower the age you can get them. Government needs to set the floor.
SheilaT
(23,156 posts)that even in the heyday of them, somewhat fewer than half of all workers were covered. Most people didn't work long enough for the same company to be covered. Unions often had arcane rules that made unions pensions somewhat iffy.
When I was 20 years old, back in 1969, I went to work for a company that had a pension plan. You had to be at least 25 and have worked for the company for 2 full years to be eligible to sign up. Needless to say, at age 20 I couldn't begin to imagine being 25, and didn't think much about it. A year or so later, the pension plan was revised. Suddenly, everyone was immediately eligible, and there was no employee donation. It was all company funded. That company merged a year or so later with another, I worked with them until 1979, and I now am the proud recipient of $172/month in pension money. Good think I never expected it to amount to much.
Here's something else that a lot of people aren't aware of: When ERISA, the Employee Retirement Income Security Act, was enacted in 1974, a lot of companies actually cancelled their pension plans as a result. They refunded anything the employees had ever paid in, and washed their hands of any pension obligations whatsoever. A few years later 401k plans came into being, which more or less filled in for pensions, but are of course very different.
I would love to see a return to defined benefit pensions for the younger generation, but perhaps a huge strengthening of Social Security is a better idea. Originally SS was intended to be one leg of a three legged stool: one leg would be social security, another leg a pension, and the third leg savings. It's also important to remember that back when social security was set up, the majority of women did not work outside the home. The man was the breadwinner. Survivor benefits were set up on that model. It's changed, of course, but the original assumptions about the non-working wife still show up. I'm a beneficiary of that. I was married for some 25 years, got divorced, never remarried, and I'm now collecting social security on my ex husband's account. It's half of what he'd get at age 66 (he's currently 63). When I turn 70, in just over two years, I'll collect on my own account, and get a few hundred dollars more. If he dies, I'll go back to collecting on his account, and get another few hundred dollars.
The big difference is that now these things are gender neutral. A husband collects on a wife's account as easily as a wife on her husband's. And now, with gay marriage, it's simply a spousal thing. As it should be.
roamer65
(36,745 posts)There's the pension system.
area51
(11,911 posts)
phylny
(8,380 posts)Pension, 401K, stocks, and our Social Security await us, along with company health insurance that will supplement Medicare. We can choose either an annuity or lump sum. There were many years where he wanted to quit and other years where I begged him to quit. Now we're glad he stuck it out.
I say this not to brag, but to point out that we will be secure in our old age, and every other person in this country deserves to be secure as well.
Lee-Lee
(6,324 posts)Unless you make it some sort of national pension system where it's transferable between any jobs they can have downsides.
One of the worst examples is in law enforcement. Requiring a person to stay on the job for 25-30 years or any other set amount means you end up keeping people who are burned out and want to leave on the job longer just so they can hit the magic date. And LE is a place where you do not want that burned out cop who just wants to survive 3 more years and is going to do the minimum it takes to get there.
It also discourages people from changing over into the job mid-career. A 38 year old is more mature and experienced and in many cases would make a much better new police recruit because they are more level headed, but when you tell them if they don't stay on the job 25-30 years they get a pittance back on their pensions payments they wisely will seek other opportunities.
The exact same thing can be said for teachers- you don't want the burned out ones just doing the minimum to make it 5 more years until they can retire, and you don't want a system that makes it unattractive for that biologist or engineer in her late 30's or early 40's to switch careers into the classroom.
I think you need a universal government run pension plan that employees take between jobs to fight this- so let's just bull Social Security up big time instead of hoping every employer does the right thing.
Recursion
(56,582 posts)Defined-benefit pensions just seem like an awful idea to me: you're already exposed to your employer's probity and competence by relying on them for wages; relying on them for retirement too just seems perverse.
I've kept my defined-contribution money that I've received through my multiple employers over the years. I'm much happier this way...
uawchild
(2,208 posts)The Canada Pension Plan
CPP program mandates all employed Canadians who are 18 years of age and over to contribute a prescribed portion of their earnings income to a nationally administered pension plan. The plan is administered by Human Resources and Social Development Canada on behalf of employees in all provinces and territories except Quebec, which operates an equivalent plan, the Quebec Pension Plan. Changes to the CPP require the approval of at least ⅔ of Canadian provinces representing at least ⅔ of the country's population.[2] In addition, under section 94A of the Canadian Constitution, pensions are a provincial responsibility, so any province may establish a plan anytime.
cbdo2007
(9,213 posts)uawchild
(2,208 posts)They seem more concerned about maintaining a living income in case it's all its recipients receive. Also it seems to be run as more of an actual retirement fund according to what I have read. Our social security money isn't in a separate fund is it? Don't we dip into it all the time? I can dig up more info.
meaculpa2011
(918 posts)monthly income than Social Security.
I haven't retired yet and I don't have to draw off the income for a few more years.
For me, my plan has been much more lucrative than SS, even with at least three crashes in the last 35 years.
And the biggest advantage: When I'm gone my kids inherit the principal.
taught_me_patience
(5,477 posts)There is no way I'm going to be tied down to a company for 30years. 401k is mine and I take it with me whatever i go.
Yavin4
(35,442 posts)Pay people more for work done today and encourage savings and investments for retirement through tax incentives. This way if the corporation or municipality declares BK in the future, your money is safe. Also, you incentivize people to develop new skills and change careers without losing out on a benefit.
Our problem is that people need to be paid more for what they do now, not some time in the future.
cbdo2007
(9,213 posts)And don't believe it.
I am doing far better in my 401K than I would be with a pension. I get to pick my own mutual funds if I want, or I can just pick some that cover broad sections of the market, and I can move it with me when I switch jobs, and don't have to worry as much if my company is going to be around in 10-20-30-40 years. I could find absolutely NO benefit by my company switching me to a pension.