Posted on 01/06/2006 8:36:36 AM PST by Libertarian444
IBM signalled the accelerating demise of guaranteed pensions on Thursday by freezing its defined benefit scheme and forcing all 125,000 US employees into a system based on defined contributions.
(Excerpt) Read more at news.moneycentral.msn.com ...
Defined benefit plans should be outlawed in the public sector. They are killing taxpayers who have to fund all the promises that politicians have made to the rank and file and unions for votes.
Agreed.No government employee...Federal,State,County or Municipal...should be allowed to unionize.
Also,the cushy scheme that Congress crafted for itself long ago should be dismantled and replaced with something that more closely resembles what their constituents get.
Depends. If you have two or three million in financial assets at age 60, you should be OK.
Too bad for all those IBM employees.
Federal unions have no impact upon pensions. That doesn't mean they are worthwhile but irrelevent wrt this issue.
HAHHAHAHAHAH...no doubt about that.
Those employees should be rejoicing. Defined benefit plans are inferior to the defined contribution contracts, because of inflexibility and high administration costs.
You won't ever see millionaires in defined benefit plans, but millions in defined contributions.
Defined benefit plans have been converting into defined contribution plans for at least 20 years. I've wondered if the percentage of conversions has gone up suddenly because I'm hearing more about it now.
If the assets are all in stocks they will be in trouble. As the boomers start retiring in the millions, they will have to sell stocks and that will cause the market to go down on a sustained basis. Unless the 401 K lawas are changed retiress are required to withdraw a certain portion of their holdings every year and there will be more sellers than buyers starting about 2012.
2-3 million. Well here I start, 1 penny, 2 pennies, 3 pennies. Man that is a lot of dough. I can't imagine too many people having that much even with the house. I still have 25 years or so but so many who were hoping for the pensions are going to be in such trouble.
It depends on the age of the employee. DC are great for younger workers. But for the older worker who does not have long to build up the accounts when the conversion is made as they near retirement, it often works out to be a smaller pension. I do feel for these older workers who have been told for years that they would have such and such an amount based on the DB formula. Everyone will be better off as a whole eventually with DC plans.
The mass of defined benefits are in the public sector. The private secotr has been abolishing them over the past decade because they know they are a financial anchor, look at GM.
The laws are just fine as they are.
You do not have a mandatory minimum withdrawal until age 70. Then it is based on expected mortality. I see no problem.
When I worked for our local government, we had a DB plan and great benefits. That's why people work for the government. The pay is much lower than they could have gotten in private industry. While I believe that there's a lot of waste in government, good employees are needed. They need a good pension plan, whatever that may be. Since defined contributions are often based on profits, public sector managers need to develop a fair way to configure pension plans.
The laws are just fine as they are.
You do not have a mandatory minimum withdrawal until age 70. Then it is based on expected mortality. I see no problem.
Yes, I used to administrate those conversions. After ERISA was passed in 1984, we began to see a lot of them.
I actually thought defined benefit was already a thing of the past in the private sector.
-Eric
I just read that a new law was passed that is similar to 401Ks, but used after-tax money. Another feature was that there were no requirements to begin withdrawing at a certain time. I forget the other features of it.
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