Pension problems loom for boomers

[deadparrot]

The trend by companies to freeze or end their employee pension plans may have a big impact on baby boomers now on the cusp of retirement.

Boomers with pension plans have counted on monthly retirement checks at the end of their career, but more employers are ending their plans or halting future benefit accruals. Those at greatest risk include boomers in their late 40s and early 50s, who are still at least a decade from retirement but too old to save enough to make up the difference in their pension benefits.

An August survey by PricewaterhouseCoopers showed that nearly half of companies that expect to change their pension plans in the next year are considering freezing benefits for all employees. More than a third that offered pensions have already pared back these benefits over the past three years.

"This will definitely be a problem for baby boomers," says Karen Friedman at the Pension Rights Center. "You've been at a company under the plan and worked for years with that expectation, and then it's taken away."

http://news.yahoo.com/s/usatoday/pensionproblemsloomforboomers

[AngryAmish]

1. A company would be insane to have a pension plan nowadays

Life expectancy is too long and retirement age too low.

[antigop]

8. Workers worked at those companies for less money

Employees worked for less money for years because part of their "total compensation" was a retirement pension and medical plan. Now companies don't want to hold up their end of the deal.

Funny how they don't seem to have enough funds for employee pensions and medical, but the they can afford billions of dollars of stock buybacks and golden retirement packages for the executives.

[SoCalDem]

28. Yes-sir-ee.. Those ghouls stole their wages AND their futures

and of course during that same time period, the people who voted most and paid the closest attention to details were the then-elderly.. The boomers were too busy raising families, and lots of us actually still trusted that the extra money we paid in for our whole lives would secure OUR retirement, just as it had BOLSTERED our parents' & grandparents' retirements.

I heard a guy on tv last week who said something very jarring.. The "greatest generation" were the generation MOST "on the government dime". From the time most of them were 20 somethings they got the GI BILL, subsidized mortgages (when prices were still cheap)..as they aged, they got medicare (when it was still new and shiny)..through the years we have always made sure that THEY got what they needed (as a generation).. we glorified them.. It might just be that their payback for doing what ANY American would have done in the same circumstances, is the bankrupting of their grandchildren and children.

Add to that fact, lots of boomers are raising grandchildren, caring for elderly parents, trying to save for their own retirement, and hosting boomerang children who cannot afford $1k rents and $40K student debt..

Ohhh Happy Day :cry:

[Mr. Peanut]

30. What About Government Retirees?

The Republicans have been plotting to destroy the middle class ever since Ronald Reagan. Dubya, Rove, and Cheney are still at it.

Are government workers in danger of losing their supposedly guaranteed pensions?

[AngryAmish]

35. Yes

Most state and local governments pay less now to workers but give generous pensions (and future medical care). We as a people are going to be paying many workers who retire after 30 years (that could be 48-60 years old) 80% of salaries for 30 or more years. Plus subsidized health care. We do it because it cost less now and it keeps taxes low. For now.

Many government pension funds do not have the cash. they are starting to make very risky investments (with hedge funds - which is another huge source of white collar graft) and you are going to see many scandals in the future as governments try to raise enough cash to pay for thousands of retired workers who do nothing.

We bought this problem with our votes. Now we have to pay. Or should I say us younger than the boomers will pay because they got theirs and they are willing to stick it to their children.

[GrumpyGreg]

2. My daughter,a Verizon manager,just found out she won't get

one. She has 18 years of service and when she was hired a pension was part of the deal,or so they all thought.

[antigop]

7. But I'll bet the union still has their pension plan

Doesn't it?

[GrumpyGreg]

21. It certainly does,thank God.

[MaineDem]

11. But they are increasing the company matching in the 401k program

Verizon will match 150% of employee's contribution going forward. It may not completely make up for the loss of the pension but I certainly hope your daughter is taking full advantage of that.

[bobbieinok]

14. simplistic question: aren't stocks a gamble and pension/retirement

supposedly not?????

[Psephos]

34. Simple answer: what makes companies more bulletproof than stocks?

After all, stocks are instruments of ownership in a company. If the company thrives, the stock value increases; if the company tanks, so does the stock. Stocks and defined-benefit pensions both rely on the company staying profitable.

:-)

Peace

[Debi]

18. Doesn't she need to have the $$ to contribute to the 401k?

Most people agree to a lower salary knowing that they'll have a pension that makes up for it in the end. Now that pensions are going by the way-side companies are touting their matching 401k contributions (but the companies didn't raise salaries after they got rid of the pensions)...so where is the money that the employee has to contribute to the 401k in order to receive the company match come from?

[GrumpyGreg]

20. She certainly is,but it was a shock to me. I'm a Verizon retiree,

non-management, and I thank God for my pension.

[Dyedinthewoolliberal]

3. This will also be a problem

for everyone should this transpire. And when you think about it, what's to stop any company, organization, schoool district etc, from freezing pensions or deciding to not pay what was agreed? There will be a lot of PISSED OFF people if this crap comes to pass...........

[Dr.Phool]

5. The only thing that can stop them is a Union Contract.

And even that's not fail-safe anymore. Congress has been allowing companies to underfund their plans for years, so the dividends can be higher, and the CEO's salary bigger. Even in bankruptcy, the bigwigs get their pensions in a untouchable trust fund, and everybody else gets screwed.

[Debi]

19. Union contracts do not safe-guard pensions

Didn't United Airlines just dump their pension payments? I wish I knew exactly, but I thought that all the retired United employees just lost everything and of course the current employees have nothing to rely on in the future.

[TallahasseeGrannie]

4. This is why I am putting my son in law through

medical school. Completely. Totally.

I told him I get a room in the back of the house and he has to bring me my dinner on a tray. With a flower.

If the State of Florida goes belly up, I'm safe.

[Lars39]

10. That's not a sure thing. Your daughter could divorce him.

Or visa versa.

[TallahasseeGrannie]

12. I go with HIM

and he knows it. It's safe. He's afraid of me.

[Lars39]

16. I guess docs are welcome in the witness protection program. :^)

[TallahasseeGrannie]

17. heheheh

Oh, I'll FIND HIM and he knows it!

[lovuian]

29. Baby Boomers Screwed again... but I have to say the

control of workers money will be over at least... and the necessity for a worker staying for the pension gone too...

Heres the reality for the Worker cause their underattack...
GO FOR THE MOST MONEY...

thats going to be the reality...and learn to be savers...

and fight back with getting pensions back... Its funny how government workers have fine pensions... but not the regular taxpayer...

The other REALITY is that the only pensions Republicans can rob will be the government workers and teachers... I expect more Enrons in the future for those guys....

Baby Boomers are going to have to work longer if they didn't save...

[antigop]

6. HR2830 -- passed in the House -- legalizes cash balance pension plans

HR2830 was recently passed by the House. It includes NO PROTECTIONS for older workers. It will legalize cash balance pension plans, allowing companies to screw employees BIG TIME.

The conference bill could even retroactively legalize cash balance pension plans, so that current lawsuits that employees have filed could be thrown out.

[Indykatie]

13. Switches from Defined to Cash Balance Plans

have been going on for a while. The companies convert the defined plans by making a lump sum into the new CB plan. I know quite a few people who do not have an adequate or in some cases any pension plan and have not managed to save for retirement and from what I read that's not uncommon.

[antigop]

24. Switch to CB was ruled illegal by a district court judge

The judge found the IBM plan switch violated age discrimination rules.

Now there is concerted effort to change the law (perhaps retroactively even) to make cb plans exempt from age discrimination rules.

[antigop]

25. And just because there are people with inadequate/no pensions

doesn't mean that companies should be allowed to screw their employees.

[gulfcoastliberal]

32. Fucking Orwellian repukes call it the "Pension Protection Act"

Guess they're only protecting the pnesions of those in the top of the executive suite! Only 1 dem voted for it - Case. Case should leave office in disgrace.

http://clerk.house.gov/evs/2005/roll636.xml

[alarimer]

9. Screw the workers

That's what this is all about and what happens withough union protection and sometimes not even then. I swear I HATE these corporations who make a shitload of money on the backs of their employees and then refuse to keep their damn promises. It ought to be against the law to renege like this. Take away thier charters or tax the crap out of them to pay for the pensions.

[Lars39]

15. The program to cover pensions when a company goes under

is broke,iirc.

[antigop]

26. Yes, take away the tax breaks they get

Why should the US taxpayers subsidize the screwing of employees?

Companies get huge tax breaks from their plans -- the investment income is NOT TAXED.

If they switch to cash balance, they should lose their tax exemption. The tax break is supposed to be provided for doing something good for the employees, not screwing them.

[librechik]

22. isn't it more than an expectation, but a legal contract?

I remember signing forms from my employer promising to hold up my end of our contract. How do they intend to break the contract on their side and leave us out? surely that's illegal?

surely???

[HockeyMom]

23. I have a Pension Plan

I work for a non profit (mental health). Fully vested after 5 years of employment. Of course, the WAGES SUCK, but I do have wonderful medical benefits, and cheap too.

Who stays here? Married women with spouses with good salaries who only work here for the ABOVE. Yes, I also have 401K too, which I opted out of because I cannot AFFORD that.

[KamaAina]

27. Welcome to the Cram-Down Decade

http://www.slate.com/id/2119327/

And so Moneybox hereby declares the zeros (the oughts?) the Decade of the Cram Down.

In corporate finance, a "cram-down deal" is defined as a transaction "in which stockholders are forced to accept undesirable terms, such as junk bonds instead of cash or equity, due to the absence of any better alternatives." More broadly, it's what happens when stakeholders who have met their obligations are nonetheless forced to accept returns or compensation that are far less than they were promised. Frequently, cram downs occur because the entity charged with managing the investment has screwed up—it frittered away cash or went bankrupt. And this is the theme that is defining personal, corporate, and government finances this decade.

The cram-down trend started with defined-benefit pension plans, the kind that are prevalent in unionized, old-economy industries. When the 1990s boom ended, many companies with large pension plans began to fail, especially in the steel and airline industries. Not surprisingly, many of these failed companies didn't bother to fully fund their pension plans.

In many instances, bankrupt companies turn over their plans to the Pension Benefit Guaranty Corp. But if you're entitled to more than the maximum that the PBGC insures, tough. For example, the PBGC recently took over the pension plan of bankrupt United Airlines, which was underfunded by $9.8 billion. Since the PBGC would guarantee only $6.6 billion of those benefits, the workers—who had met all their obligations to United—took a $3.2 billion cram down.

At this rate, we'll soon be back to the good old days of impoverished senior citizens having to choose between food, heat and medicine. Um, wait a minute... :sarcasm:

[Daphne08]

31. This is outrageous! Utterly outrageous! n/t

[Trillo]

33. Crappola? Or shudda bin expected?

Who else was naive enough to actually believe that corporations that promised a future benefit weren't, at least possibly, deliberately lying?

Is Truth for suckers?