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Pension Agency Faces a New Front
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<blockquote data-quote="ok2bclever" data-source="post: 54912"><p>p-man, </p><p></p><p>Well in the main you could view it as an conglomeration of individual plans, although that is a extreme simplification.</p><p></p><p>You had it right the first time in that it's intention was to act as an insurance policy where the total is banked beyond any one company's ability to access and abuse the funds if they found themselves in financial dire straights.</p><p></p><p>This is what happens virtually every time in a single employer fund when a company gets in financial trouble.</p><p></p><p>They raid (we would call it steal, but corporate language is different) all sources of accessible money in an attempt to stay afloat including at the expense of their workforce.</p><p></p><p>The multi-employer fund prevents this.</p><p></p><p>So you are right in the fact that it takes direct control away from any one company as each company is at most only one trustee out of a bunch (one of twelve in the case of the Central States Pension Fund).</p><p></p><p><strong>IF</strong> the financial equations that the fund is based on were sound (contributions level, average investment results of those contributions beyond what must be immediately paid out in benefits, and promised benefits) your scenario would be true, UPS or any other company could pull out with their employees and it would not seriously impact the fund.</p><p></p><p>In such as situation it would be a warning bell to that company's workforce that their company was making a suspicious move (the most likely reason would be because of that specific company being in financial trouble and looking to raid funds.</p><p></p><p>So the multi-employer plan has financial stipulations to discourage this type of move and individual company solution.</p><p></p><p><strong>However</strong>, that was a big IF (financially secure underpinnings) and isn't the case and we all know it.</p><p></p><p>The financial underpinnings (ratio of money in, added investment interest versus benefit payout) of the fund is a pie in the sky equation that simply isn't close to reality and functions strictly on a "works as long as the workforce is young and not actually calling in the promises".</p><p></p><p>Now that the baby boom generation is aging to the retirement point the jig is up.</p><p></p><p>Excessive company failures and multiple bad years in the stock market has just hastened and intensified the problem. </p><p></p><p>(Message edited by ok2bclever on May 28, 2005)</p></blockquote><p></p>
[QUOTE="ok2bclever, post: 54912"] p-man, Well in the main you could view it as an conglomeration of individual plans, although that is a extreme simplification. You had it right the first time in that it's intention was to act as an insurance policy where the total is banked beyond any one company's ability to access and abuse the funds if they found themselves in financial dire straights. This is what happens virtually every time in a single employer fund when a company gets in financial trouble. They raid (we would call it steal, but corporate language is different) all sources of accessible money in an attempt to stay afloat including at the expense of their workforce. The multi-employer fund prevents this. So you are right in the fact that it takes direct control away from any one company as each company is at most only one trustee out of a bunch (one of twelve in the case of the Central States Pension Fund). [B]IF[/B] the financial equations that the fund is based on were sound (contributions level, average investment results of those contributions beyond what must be immediately paid out in benefits, and promised benefits) your scenario would be true, UPS or any other company could pull out with their employees and it would not seriously impact the fund. In such as situation it would be a warning bell to that company's workforce that their company was making a suspicious move (the most likely reason would be because of that specific company being in financial trouble and looking to raid funds. So the multi-employer plan has financial stipulations to discourage this type of move and individual company solution. [B]However[/B], that was a big IF (financially secure underpinnings) and isn't the case and we all know it. The financial underpinnings (ratio of money in, added investment interest versus benefit payout) of the fund is a pie in the sky equation that simply isn't close to reality and functions strictly on a "works as long as the workforce is young and not actually calling in the promises". Now that the baby boom generation is aging to the retirement point the jig is up. Excessive company failures and multiple bad years in the stock market has just hastened and intensified the problem. (Message edited by ok2bclever on May 28, 2005) [/QUOTE]
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