What are some of the opinions out there on the future of our pension plans? This includes both the UPS funded (p/ters) and friend/ters plans. Does anyone believe these plans will be around in the next 10-20-30 years? This is of course assuming the economy turns around sometime in the near future.
Pension plans debate
- Thread starter kmjs14
- Start date
Catatonic
Nine Lives
My personal feeling is that pension plans are a fading asset to the American worker in the Globalized economy. The American economy is driven more and more by huge publicly-owned companies and every analyst hates companies that are weighed down with pension liabilities. Not only that but American workers want more mobile investment engines.
Pensions are the leftovers of the old American "cradle to grave" relationship between the company and it's employees. You should not have any doubt as to whether that is the plans of the UPS of the future.
disgruntled
Member
I like to look at the pension plan just like my Social security, by the time we retire there might not be any money in either fund so we all have to plan accordingly by investing in stock, 401k, real estate and savings. if you diversify now you will be better off later, can't put all your eggs in one basket hoping that your pension will support you when you retire.
UpstateNYUPSer(Ret)
Well-Known Member
This is excellent advice, pension or not.
Just be aware that your private investments will be invested in the same markets as your pension fund, so when the fund looses 10 to 40 % or so in market crashes, so will your private investments. The real advantage to having private investments is that they are additional monies earmarked for retirement. The more money you have in all your retirement accounts, the more money you'll have after the crashes.
UpstateNYUPSer(Ret)
Well-Known Member
This may be true but the difference is that we have control over our private investments whereas we have no control over how our pension funds are invested.
tieguy
Banned
i think there is a significant difference. Private investors can pull out of investments much quicker then large pension plans. If I see the market turning sour I can pull out of the investment options I have and either move the money into the bond indexs which tend to do better during a market crash or convert everything to cash and wait for the bottom. large pension plans can never move their money that quickly.
should I mention that I will be the only one drawing from my 401 K plan?
brownmonster
Man of Great Wisdom
The problem with switching over to a 401K is the company is basically off the hook for your reteriment. Right now the company contributes almost $300 a week to my Teamster Plan. With a 401K I would be lucky to get a 3% match. Give me the whole $300 a week and that would build a nice pile.
That's what I'm thinking as well. I was planning on building a private investment account and then when retirement arrives with SS and the pension are still around, well then that is just an added bonus. There are no guarantees in life but it would be nice to have both in old age. What I have seen from one other large corporation that had a pension plan, was that it stopped contributing to its current employees and there was no pension for new hires. So its employees would have something when they retired, just not as much as they would have hoped.
Catatonic
Nine Lives
I should have started my post with "Unfortunately" because you are probably close to what would transpire and worse than that, the Teamsters would be involved in managing your 401k.
And the reason companies are ditching pension plans is because they want to be "basically off the hook for your retirement". Public traded companies, in the eyes of investors, are hurt by long-term debt. UPS would be a much better investment now if UPS had not spent $6 billion plus to bail out the Central States pension plan.
Upstate, professional money managers do the investing in a defined benefit pension plan. It's very doubtful that you could do better than them. I know it's tempting to think you could do better, but only a relative handful of individuals beat the pros. That's been the historical record.
I'm not saying the pros are all that good, just that they are better than almost all individual investors. They have the research departments, and the computer programs, and they do this for a living all day long.
Hoaxter, Teamster officers are 50% of the Trustees of our 401(k) plan, but they, and the UPS Trustees, have little influence beyond setting up the fund initially and adjusting a few rules from time to time. Investing decisions are made by the individual investors. (And most accounts have the losses to prove it.)
UPS didn't spend $6.1 billion to bail out Central States. UPS bailed out of Central States by paying Central States the $6.1 billion it owed all along, by making all UPSers who already retired or seperated "orphans," and by spending an additional $1.7 billion to set up the new plan. At the time UPS said it was an "investment" that would have "minimal cost impact in 2009," and would be "cost beneficial in 2010 and beyond."
The reality is . . .
"United Parcel Service Inc., the world’s largest package-delivery business, sold $2 billion of bonds to pay for pension-fund contributions . . .
UPS’s U.S. pensions were underfunded by $2.41 billion on Dec. 31, 2009, and by $3.49 billion a year earlier, according to its most recent annual report.
The numbers compare with overfunding of $2.49 billion in December 2007, according to the company’s 2008 annual report. UPS has pension funding commitments of about $1 billion a year through 2012. The amount declines to $509 million in 2013, it said in the 2009 report."
http://www.bloomberg.com/news/2010-...-as-u-s-corporate-volume-hits-1-trillion.html
I'm not saying the pros are all that good, just that they are better than almost all individual investors. They have the research departments, and the computer programs, and they do this for a living all day long.
Hoaxter, Teamster officers are 50% of the Trustees of our 401(k) plan, but they, and the UPS Trustees, have little influence beyond setting up the fund initially and adjusting a few rules from time to time. Investing decisions are made by the individual investors. (And most accounts have the losses to prove it.)
UPS didn't spend $6.1 billion to bail out Central States. UPS bailed out of Central States by paying Central States the $6.1 billion it owed all along, by making all UPSers who already retired or seperated "orphans," and by spending an additional $1.7 billion to set up the new plan. At the time UPS said it was an "investment" that would have "minimal cost impact in 2009," and would be "cost beneficial in 2010 and beyond."
The reality is . . .
"United Parcel Service Inc., the world’s largest package-delivery business, sold $2 billion of bonds to pay for pension-fund contributions . . .
UPS’s U.S. pensions were underfunded by $2.41 billion on Dec. 31, 2009, and by $3.49 billion a year earlier, according to its most recent annual report.
The numbers compare with overfunding of $2.49 billion in December 2007, according to the company’s 2008 annual report. UPS has pension funding commitments of about $1 billion a year through 2012. The amount declines to $509 million in 2013, it said in the 2009 report."
http://www.bloomberg.com/news/2010-...-as-u-s-corporate-volume-hits-1-trillion.html
UpstateNYUPSer(Ret)
Well-Known Member
Jon, I never said I could do better but, and as Tie concurred, private investors have the ability to more freely move their money in response to changes in the market.
I don't have the time nor the expertise to manage an investment portfolio. My 401k is 40% S&P 500, 46% Russell 2000 and 14% Self Managed, which is 5,000 shares of SIRI, up about 50% from my purchase price.
I don't have the time nor the expertise to manage an investment portfolio. My 401k is 40% S&P 500, 46% Russell 2000 and 14% Self Managed, which is 5,000 shares of SIRI, up about 50% from my purchase price.
helenofcalifornia
Well-Known Member
Reading the paper that came with the year end 401k statement, profits were definitely up. They paid out about $330 million to retirees, and took in about $1.1 billion. Of that input, about $240 million was from our weekly check deductions and $750 million in stock investments. 401k did pretty well as a whole for the plan.
Being a single parent and raising kids by myself, I was never able to put much away or invest in anything but my house. Now that the kids are almost all independent, I can put some away. Maybe too late for me to retire in leisure, but at least with the 401k, pension and SS, I will be able to retire in comfort. I feel for those that only have SS to rely on in their "golden" years. Because it's going to be anything but golden for them. JMHO
Being a single parent and raising kids by myself, I was never able to put much away or invest in anything but my house. Now that the kids are almost all independent, I can put some away. Maybe too late for me to retire in leisure, but at least with the 401k, pension and SS, I will be able to retire in comfort. I feel for those that only have SS to rely on in their "golden" years. Because it's going to be anything but golden for them. JMHO
I GOT ONE MORE
Well-Known Member
The real bottom line is to be free of all debt.
IF any negative pension or social security issues become reality, then you could probably collect aluminum cans to cover your expenses.
And if your smart enough to be debt free, you would likely have a nice little nest egg saved up, so the aluminum can collecting could be done at the beach.
IF any negative pension or social security issues become reality, then you could probably collect aluminum cans to cover your expenses.
And if your smart enough to be debt free, you would likely have a nice little nest egg saved up, so the aluminum can collecting could be done at the beach.
tieguy
Banned
curiousbrain
Well-Known Member
One practical problem that could arise from that is an issue of loyalty, as it were. A money manager, especially a successful one, probably has foreknowledge of financial transactions before they take place and can take advantage of them. Whether the money manager positions the pension to benefit from this is debatable, especially given the fraud made public over the last few years.
Does the money manager view the pension fund as a giant liquid cash flow he/she can use to move markets and make money for themselves and other financial institutions, or do they view it as the combined dreams of hundreds of thousands of employees?
If the former, what is to say all the other individuals/institutions out there capable of managing such a large pool of assets don't take the same view and it becomes a "lesser of all evils" scenario for the union in question?
I'm not necessarily disagreeing with you that a professional is better suited, but I don't think it's so cut and dry, is all.
Maybe you'd better explain how you think pension plan money is handled. I believe it's handled by the same kinds of top Wall Street investment firms that UPS and all the other plan sponsors employ.
Do you think the money is handled by a cigar-chompin' pinky-ring-wearin' wiseguy named Vinny "Fingers" Boomba?
- - - -
After you get home from work and finally realize you need to sell, you may be selling because the professionally managed pension fund already sold its holdings earlier in the day (or earlier in the week.)
brett636
Well-Known Member
One of the problems with pensions is that they have a growing number of people collecting them and fewer number of people paying into them. As the ratio gets tighter market dips cause fund assets to plummet with a longer road to recovery once the market does recover. For example I am covered under local 710s pension fund, and we had some representatives of the fund come down to explain how the fund was operating and what benefits we were entitled too once we retire. I left that meeting with an uneasy feeling about the pension fund I am supposed to draw upon mainly because the pension pays out more in benefits every year then in takes in from contributions. Its growth is largely staked on market gains, and as more people begin retiring under this plan I wouldn't be surprised if those normal market gains would be enough to sustain the plan. Its the same issue with Social Security where we have fewer people paying in right as baby boomers start to retire straining the system to insolvency.
The main benefit to a personal retirement savings is you are the only one who can draw from it so if you start early enough and save long enough you can have a hefty sum to retire with. Those savings can provide a good retirement income as well as something to leave to your heirs once you pass on. With a pension once you die your benefits end unless you have a surviving spouse who gets surviving spouse benefits. Nothing will go to your kids. Same with Social Security as once you are gone the benefits end regardless if you were able to reclaim all the money you put into the system.
I realize that not everyone can put a sufficient amount of money away for retirement, although my guess is this is largely due to lifestyle choices like having car payments as well as revolving credit card debt. Perhaps better education on the importance of saving for retirement is necessary, but in a world where the here and now matter more than future living requirements I have little faith it will do much good.
Personally I would rather withdraw from the pension fund if I had the option to get the contributions put into a retirement account that only I can draw from. That way I can retire comfortably without the fear that benefits I am supposed to get later will be used up by those retiring today.
