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View Diary: The political underbelly of the pensions crisis: What broke the system, and how do we fix it? (84 comments)

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  •  Tell it like it is (10+ / 0-)

    As a financial officer and accountant who never even made $50,000 working for small cities, at least I was promised a defined-benefit pension. I contributed 6% of every paycheck, and I think my employers contributed 12%. If I had elected to do so, I could have quit my job and removed my own money from the pension fund, but my employers' contributions would remain.

    Those who rail against defined-benefit pensions have drunk the Kool-aid: it's 401Ks that are stupid. All pensions should be defined-benefit, and all workers should have them. With a 401K, each employee has to guess how long he will live and how the market will perform. In a defined-benefit pension, those calculations are done by actuaries; the fund knows how many will die at what ages, it doesn't matter who, and all are provided for in their old age.

    This switching of employees from pensions to 401Ks is the great rip-off of the 20th Century. Employees need to get their backbone back and take to the streets if necessary to get these back.

    As for the politicians who promised this to their underpaid workers and then reneged on their responsibilities: that's what hell is for, and may they all go there.

           

    "You can observe a lot just by watching." ~ Yogi Berra

    by dandy lion on Sat Mar 01, 2014 at 09:10:17 PM PST

    [ Parent ]

    •  when I left the state of MN (1+ / 0-)
      Recommended by:
      Darth Stateworker

      If I would have pulled my contributions I would have received 4% interest with the state retaining everything above that number.

      If I died before starting my annuity my heirs would have received a refund of contributions plus interest but not the annuity.

      What the antipensioners fail to understand is that pensions are like a mortgage. The unfunded portion of the liability has a 30 year time window for payment.

      The deck is stacked in favor of the house and against wall street with the pension plans. Low invest fees due to pooled funds plus its a forced savings vehicle with the benefit of time to grow due to compunding etc.

      The deferred compensation model just doesn't work as a plan. People wait to long to start saving, they don't save enough and they chase last years winners.

      If the DC model had mandatory employer match plus mandatory participation it might work. As it is employers often don't have a matching plan or defer making their matches until the end of the year or even worse fail to deposit the employees contributions on a payroll cycle basis. All of these are easy ways for employers to steal the long term savings and earnings of their employees.

      I don't like that my soon to be new not for profit employer has a DC plan but they have a 5% automatic match built into the plan with mandatory 3% of salary employee participation. As a highly skilled worker with a good salary this system works but lower skilled workers need even more systemic protections.

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