Traditional Pensions Gold Standard of Lifetime Employee

[luckytohaveajob]

Traditional pensions are the gold standard of lifetime employees. Airline management maintains their pensions as secured bonds which even pay in bankruptcy proceedings.

Union workers who think they are over rated because they are not in your name and won't get them don't get it.

Guaranteed benefit is what is so important. And employee groups which sacrifice guaranteed payable benefits to keep the company in business are losers. UAL/US Air/ NWA/DAL/CAL sacrificing benefit to keep a paycheck is obsurd!

And companies who never offered such are inferior and short term thinkers concerning their employee's futures creating haves and have nots when the growth stops- SWA. SWA new pilots will all be the have nots while the old timers screwing everyone over will be the have it and pull up the ladder types.

http://finance.yahoo.com/focus-reti...raditional-pensions?mod=fidelity-changingjobs

 

[Raoul Duke]

oh yes, the newly hired southwest pilots are so mistreated. . .

 

[CitationLover]

good luck they are gone, bye bye. too expensive to maintain versus a 401k.

if interest rates skyrocket pensions will swing to vastly overfunded in no time after the asset beatings they took this year. the traditional pension is just that: traditional. management has fallen out of favor with them due to it's budgeting unpredictability versus dc plans, too expensive to maintain (actuaries, auditors, attorneys, etc.), etc.

 

[Yuppyguppy]

I lost my pension...GLenn TIlton still has his. What's wrong w/ this picture.

 

[luckytohaveajob]

good luck they are gone, bye bye. too expensive to maintain versus a 401k.

because line pilots are towing management lines and believing it

 

[snow-back]

Pension plans have to be managed properly...just like a 401k. Pension plans managed and administered by competent responsible people should have no problem remaining intact. Are they more expensive than a 401k? Absolutely, but they are a much better benefit. If certain managements would have spent half the effort properly managing their pension obligations as they did managing their own "retirement" packages, thousands of employees would NOT have received retro-active pay cuts going back to their dates of hire.

 

[CitationLover]

because line pilots are towing management lines and believing it

please look at facts. when you can understand SFAS 87/132 and how it applies to the bottom line versus x% of compensation (a typical DC plan) you will understand. this isn't a management "line" it's reality. pensions are dying from ALL industries due to their increased complexities and massive overregulation versus 401k's and DC plans. don't believe me, ask your alpa r&i committee chairman.

tilton doesn't have a pension, he has an employment contract: as do all senior managers at most corporate companies. the "pension" portion of their contracts are all not funded (if they were funded they would be subjected to tax qualification rules and be deemed discriminatory). unfortunately the golden parachute mentality lives well. look at stephen wolf: made a killing at republic, made a REAL killing at united, then fooled them all again at US Airways and made a killing. It's no different than coaching in professional sports: it's hard to get in the club, but once in you'll bounce around awhile.

 

[CitationLover]

Pension plans have to be managed properly...just like a 401k. Pension plans managed and administered by competent responsible people should have no problem remaining intact. Are they more expensive than a 401k? Absolutely, but they are a much better benefit. If certain managements would have spent half the effort properly managing their pension obligations as they did managing their own "retirement" packages, thousands of employees would NOT have received retro-active pay cuts going back to their dates of hire.

Please understand how "pensions" work before stating this. Plan's, by law - 1973 ERISA, have to be created as a separate and legal entity. The plan also has documents detailing how the plan's assets are to be invested. A lot of these decisions are outside of management's everyday hands. Now management can easily control benefit improvements and freezes, etc (amendments to the plan), but the -40% return from last year and the lowering of interest rates over the last 10 years is a little past their egomaniacal control.

It is questionable what is a "better" benefit. Typically for older people, a traditional pension is much better. The younger workforce demands portability these days and a 401k fits nicely into that equation. Add to that the transfer of risk from the company to the plan participant and walla. These plan's are all administered via outsourcing companies: Fidelity, Hewitt, etc and not from your internal HR department.

 

[CitationLover]

A small example regarding the vast differences between a DC plan and a pension plan (DB - defined benefit plan):

Once you quit from a company with a DC plan:
- You can take your money and roll it over or take a tax hit if not 59 1/2.
- You can take your money after 59 1/2 and be subject to taxation
- Either way both are lump sum distributions after which the plan owes you nothing.

Once you quite from a company with a DB plan:
- You can only take your money if not early retirement eligible if the actuarial equivalence of your monthly benefit is less than $5,000 otherwise you are entitled to an annuity starting at age 65 (60 if an airline pilot unless the plan amended its definition of normal retirement age to 65 after 65 passed two years ago). If you quit at age 30 you are responsible for informing the company for the next 30/35 years where you live.
- If retirement eligible you must elect what type of payment form you want for your annuity or a lump sum if your plan allows large lump sum cashouts. The annuity forms are all subject to various regulations (ie if married you must offer at least a 50% joint and survivor annuity, of which if you decline it, your spouse must consent and sign a notarized form). In addition there are various minimum distribution rules (MDIB) that must be checked. If the participant dies before retirement but has a surviving spouse there are insurance rules that must be met.
- In addition to all of the above all of this information must be transmitted to the plan's trustee, which will then start sending monthly paychecks until you die.

DB plans are way more expensive not due to the benefits involved, but due to the administration of the plans. In theory the benefits are equivalent in a lot of ways. Once you typically meet early retirement eligibility a DB plan becomes more expensive than a DC plan, and vice versa if not early retirement eligible.

Hope this makes sense. Any questions, call your local r&i committee.

 

[Mike man]

good luck they are gone, bye bye. too expensive to maintain versus a 401k.

True, but a company must match the 401(k) (if it is matched)...they are supposed to fund a pension, but are there any pensions that are correctly funded? Other than the pension for Congress?