carlfense Posted April 17, 2014 Share Posted April 17, 2014 They deserve the pensions because that's what they were promised. Too bad in many cases there isn't enough money to pay them. I agree. Unfortunately it's often not about not having money to pay the pensions. For example: It took me a long time to find an expert who could explain to me how these accounting rules worked, but when I finally pieced it together, it was enormously simple. Think of pensions as a debt. If a company can reverse a debt, it can record it as income. And that income is the same as if they got it from selling trucks or whatever it is the company sells. There were billions in promises to retirees for pensions and healthcare and death benefits and life insurance, and the companies figured out that if they cut or eliminated them altogether then they could get those billions in profit — and even use them for executive compensation. A striking example was Lucent, which inherited about 100,000 retirees when it was spun off from AT&T. From the beginning, Lucent kept saying, “We are crippled by these retirees,” but the truth is, they also received more than enough actual money from AT&T to pay every dime of benefits for all the current and future retirees. Bit by bit, they cannibalized these benefits. They eliminated a death benefit, which is a very simple thing that says, if you work for us for 25 or 30 years, and you die, your widow will get $50,000 dollars or whatever per year. Lucent said they couldn’t afford that. So they took it away and saved $400 million that had been set aside physically in the pension plan for these folks. At the same time, they awarded more than $400 million in bonuses to executives. http://www.salon.com/2011/09/17/retirement_heist_interview/ 1 Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 Yep, that makes up a significant portion of the population. You're really reaching now. Not reaching at all. You're trying really hard to ignore certain words impost #30. Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 the problem with social security is that it was borrowed from and never repaid. there are also many small changes to social security that could go a long way. also, the idea of a pension is that you pay into it and get back what you pay in. that was a benefit given to employees, like healthcare, because companies could not attract workers with just higher wages. this is now a distant memory, but there was a time when workers had leverage. But.....those millions of retired people still demanded those pensions. why the hell wouldn't they? that was the deal and owed income as far as they were concerned. The idea of a pension is that the employer pays into and funds the plan and (here's the really stupid part) they have complete control over the funds. THEN....that same idiotic employer goes and offers early retirement to thousands of workers as the market place shrinks for their products and the company needs to cut back. So, those workers retire at sometimes age 50-55. Those same workers are living longer to sometimes in the 70s to 90s. So....you end up with fewer workers in a company that is making less money so less cash flow funding the Pension. Meanwhile, you have sometimes more ex-workers retired living longer. Let's say someone starts working at GM when they are 25. They then worked there till they were 50 and were offered early retirement and he takes it. That same employee then lives till age 90. That employee worked 25 years to get a benefit of 40 years. There is NO WAY in hell that employee contributed enough to pay for his retirement. Pensions are INSANE to think they work on a large scale. Talk about a ponzi scheme. But, this thread isn't about pensions. Sorry to derail it. It's just a good example of fewer and fewer people paying for more and more people and the failure of the system. Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 They deserve the pensions because that's what they were promised. Too bad in many cases there isn't enough money to pay them. I agree. Unfortunately it's often not about not having money to pay the pensions. For example: It took me a long time to find an expert who could explain to me how these accounting rules worked, but when I finally pieced it together, it was enormously simple. Think of pensions as a debt. If a company can reverse a debt, it can record it as income. And that income is the same as if they got it from selling trucks or whatever it is the company sells. There were billions in promises to retirees for pensions and healthcare and death benefits and life insurance, and the companies figured out that if they cut or eliminated them altogether then they could get those billions in profit — and even use them for executive compensation. A striking example was Lucent, which inherited about 100,000 retirees when it was spun off from AT&T. From the beginning, Lucent kept saying, “We are crippled by these retirees,” but the truth is, they also received more than enough actual money from AT&T to pay every dime of benefits for all the current and future retirees. Bit by bit, they cannibalized these benefits. They eliminated a death benefit, which is a very simple thing that says, if you work for us for 25 or 30 years, and you die, your widow will get $50,000 dollars or whatever per year. Lucent said they couldn’t afford that. So they took it away and saved $400 million that had been set aside physically in the pension plan for these folks. At the same time, they awarded more than $400 million in bonuses to executives. http://www.salon.com...eist_interview/ Which pin points how stupid pensions are. How stupid is it that the employer has control over your retirement? Link to comment
carlfense Posted April 17, 2014 Share Posted April 17, 2014 Which pin points how stupid pensions are. How stupid is it that the employer has control over your retirement? Yeah! Who could expect an employer to keep a promise, right? 1 Link to comment
knapplc Posted April 17, 2014 Share Posted April 17, 2014 Let's not be casting aspersions at the Job Creators. Link to comment
sd'sker Posted April 17, 2014 Share Posted April 17, 2014 first, it seems all capitalism is a ponzi scheme. all indicators of a healthy economy involves growth, even though we live on a finite world. second, i think pensions actually make sense. at least they did when you worked at the same place your whole life. if the idea is that you put in some of your paycheck and they match it, then they invest that money in the market or where it could grow interest, what is wrong with that? the problem is when you borrow from pensions. they should be off-limits and always held in a trust, protected from liability. Link to comment
carlfense Posted April 17, 2014 Share Posted April 17, 2014 Let's not be casting aspersions at the Job Creators. Real Americans, all of them. Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 Which pin points how stupid pensions are. How stupid is it that the employer has control over your retirement? Yeah! Who could expect an employer to keep a promise, right? I wish you could. However, would you trust any employer to take care of you till the day you die? It's asinine to even think to expect that. Yes, if they promised it, then there is a reasonable expectation to expect it. However, there is no way in hell I want my livelihood dependent on anyone else after my ability to work is gone. What happens if that company goes completely bankrupt and out of business and there isn't enough money in the account to pay for everyone over the next 30-40 years? What I'm saying is, the employees have a right to be pissed. But, it's really a stupid plan to begin with and it is doomed to fail eventually. Link to comment
carlfense Posted April 17, 2014 Share Posted April 17, 2014 . . . held in a trust, protected from liability. Yes! Link to comment
carlfense Posted April 17, 2014 Share Posted April 17, 2014 What I'm saying is, the employees have a right to be pissed. But, it's really a stupid plan to begin with and it is doomed to fail eventually. Everything is doomed to fail eventually. Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 first, it seems all capitalism is a ponzi scheme. all indicators of a healthy economy involves growth, even though we live on a finite world. second, i think pensions actually make sense. at least they did when you worked at the same place your whole life. if the idea is that you put in some of your paycheck and they match it, then they invest that money in the market or where it could grow interest, what is wrong with that? the problem is when you borrow from pensions. they should be off-limits and always held in a trust, protected from liability. Or in a completely separate account that the employer has absolutely no ownership or control over. Hmmm.....I think we should call that a 401K. Link to comment
BigRedBuster Posted April 17, 2014 Share Posted April 17, 2014 What I'm saying is, the employees have a right to be pissed. But, it's really a stupid plan to begin with and it is doomed to fail eventually. Everything is doomed to fail eventually. No...not really. Link to comment
carlfense Posted April 17, 2014 Share Posted April 17, 2014 No...not really. Absent beliefs about the supernatural . . . what do you have in mind? Link to comment
deedsker Posted April 17, 2014 Share Posted April 17, 2014 first, it seems all capitalism is a ponzi scheme. all indicators of a healthy economy involves growth, even though we live on a finite world. second, i think pensions actually make sense. at least they did when you worked at the same place your whole life. if the idea is that you put in some of your paycheck and they match it, then they invest that money in the market or where it could grow interest, what is wrong with that? the problem is when you borrow from pensions. they should be off-limits and always held in a trust, protected from liability. Or in a completely separate account that the employer has absolutely no ownership or control over. Hmmm.....I think we should call that a 401K. 401k have their own problems but the burden falls on the employee to act responsibly and look out for his own future. Link to comment
Recommended Posts