Another pension plan bites the dust

[Jhhnn]

Fortunately my job has a pension system and 401K, both of which are pretty good. We also have a union though. Since it's federal the pension should still be there when I am ready for it, but who knows anymore. They are going away though, after August this year no more pension for new highers, just the 401K.

You're being screwed. That's what's happened to pension funds in general driving insolvency- Reduced contributions because of fewer contributing plan participants. It's part & parcel of deregulation, privatization, outsourcing & greater returns for the investment class.

401K? What happens if you outlive your money? Will you get a complimentary cyanide pill?

 

[brianmanahan]

You're being screwed.

you say that about everything.

It's part & parcel of deregulation, privatization, outsourcing & greater returns for the investment class.

guess what? if you put money in your 401k, you too can be part of the investment class.

401K? What happens if you outlive your money? Will you get a complimentary cyanide pill?

no, he'll get SS and the pension.

 

[theeedude]

Time to replace Social Security with private pensions, amirite?

 

[master_shake_]

the government will just go ahead with operation: thin the herd.

can i have your guys stuff?

 

[Jhhnn]

you say that about everything.

If you actually read the link & watched the vid you wouldn't disagree with that.

guess what? if you put money in your 401k, you too can be part of the investment class.

The investment class makes their livings by investing, not by working. If you're not doing that, you're not a member of that class.

no, he'll get SS and the pension.

He'll only get the full pension if the plan remains solvent. Otherwise, he'll receive a vastly reduced amount.

Anybody who has a 401K should contribute what it takes to get the matching funds from the employer. Otherwise, they're passing up free money. Even if they cash it in as fast as they get it & pay the tax penalty they'll probably come out ahead.

 

[Jhhnn]

Time to replace Social Security with private pensions, amirite?

Be sure to do that when the market is at an all time high for maximum cornholio down the road.

 

[theeedude]

Yellen is really out to hose pensioners and insurers to pump up the "wealth effect." Your house is "worth" more, but you will have no pension. And the Fed wonders why people aren't in a hurry to go spend.

 

[Ackmed]

You're being screwed. That's what's happened to pension funds in general driving insolvency- Reduced contributions because of fewer contributing plan participants. It's part & parcel of deregulation, privatization, outsourcing & greater returns for the investment class.

401K? What happens if you outlive your money? Will you get a complimentary cyanide pill?

How am I being screwed?

 

[TeeJay1952]

Yeah, retired 14 years
35 g a year
490,000 + healthcare
Bankers want everyone to play stock markets.

 

[Ackmed]

If you actually read the link & watched the vid you wouldn't disagree with that.



The investment class makes their livings by investing, not by working. If you're not doing that, you're not a member of that class.



He'll only get the full pension if the plan remains solvent. Otherwise, he'll receive a vastly reduced amount.

Anybody who has a 401K should contribute what it takes to get the matching funds from the employer. Otherwise, they're passing up free money. Even if they cash it in as fast as they get it & pay the tax penalty they'll probably come out ahead.

I didn't read all posts before replying. My pension is 100% paid for by the government. I pay nothing to contribute. It's pretty good too, it'll be a good bit over 2k a month till I die each month, probably closer to 3k because of yearly 4% raises. For free to me. With free Healthcare, which I already have through the VA. Sure anything can happen, but I'm already vested and I think it'll be around. I do match my company's 6% to my 401k. So a total of 12% of each weeks check goes into my 401k. I'm also in the IRR in the Marine Corps, after over a dozen years in. I can finish out the 20 years for another decent retirement. I'm far from wealthy, but not bad off for retirement either.

 

[piasabird]

What makes you think the banking system will not collapse and the federal government will not go into default?

 

[pcgeek11]

We could all end up like Venezuela.

 

[Exterous]

4) Control= Income! You don't even have control of your own damn money when you put it into a 401k. Why would I want to give some bozo my money that I can't even get too for the next 30 years?

Ignoring the various ways to get access to that money - its the carrot approach to saving for retirement. People already raid 401ks to pay for things like weddings so I can only imagine it would be worse if there weren't penalties.

And if you don't want to adhere to those rules you can always invest your money however you want with after tax contributions.

Bankers want everyone to play stock markets.

Well, it might be a good idea to have at least some wealth diversification. A lot of people have too much in a single asset class (real estate)

 

[PricklyPete]

I've never understood the allure of pensions. You are giving up control of your retirement income and career to a single company/corporate entity. I would be in a much worse career place right now if I had stuck with my original company for its pension benefits.

 

[overst33r]

Be sure to do that when the market is at an all time high for maximum cornholio down the road.

You're alluding to timing the market, the exact opposite of what you should do. Look how many "all time highs" there were.

"Time in the market beats timing the market"

 

[zinfamous]

You're alluding to timing the market, the exact opposite of what you should do. Look how many "all time highs" there were.

"Time in the market beats timing the market"

this.


I've been debating whether or not to pull out/roll over my current lump vested in a previous employer's pension (University of CA).

It's a small amount over a small number of years: $10k, a few years above the minimum year requirement for being vested. The monthly annuity if I claim that at 65 or so is rather peanuty (~$550, iirc...but hell that could maybe pay for all my food). But this is using their internal estimator, and obviously I have no idea where these numbers are coming from because I don't know where the money is.

It also tells me that in 20 years, that 10k is estimated to be worth ~$87k if I choose a lump withdrawal at that time. I'm thinking...wtf? I know funds like this do exist and that I certainly wouldn't be able to earn those returns on my own with the tiny knowledge that I have, but I remain entirely skeptical of both the solvency of the pension and the certainty of the market to make that kind of return over that period of time.

...would it make more sense to just roll that $10k into my own personal Vanguard IRA now?

 

[fskimospy]

this.


I've been debating whether or not to pull out/roll over my current lump vested in a previous employer's pension (University of CA).

It's a small amount over a small number of years: $10k, a few years above the minimum year requirement for being vested. The monthly annuity if I claim that at 65 or so is rather peanuty (~$550, iirc...but hell that could maybe pay for all my food). But this is using their internal estimator, and obviously I have no idea where these numbers are coming from because I don't know where the money is.

It also tells me that in 20 years, that 10k is estimated to be worth ~$87k if I choose a lump withdrawal at that time. I'm thinking...wtf? I know funds like this do exist and that I certainly wouldn't be able to earn those returns on my own with the tiny knowledge that I have, but I remain entirely skeptical of both the solvency of the pension and the certainty of the market to make that kind of return over that period of time.

...would it make more sense to just roll that $10k into my own personal Vanguard IRA now?

If their calculations say your $10k will be $87k in 20 years without any additional contributions on your part that would indicate an average of somewhere around 11%-12% annual rate of return, which seems impossible to sustain over a 20 year period and way above the projected returns used by any pension fund I know of. Are you sure they are assuming no additional contributions?

 

[zinfamous]

If their calculations say your $10k will be $87k in 20 years without any additional contributions on your part that would indicate an average of somewhere around 11%-12% annual rate of return, which seems impossible to sustain over a 20 year period and way above the projected returns used by any pension fund I know of. Are you sure they are assuming no additional contributions?

Yes, at least I think so. I have the option to withdraw only because I am no longer an employee. That being said, the calculation may simply assume otherwise without having access to the other info.

I haven't looked at it in a month, but I seem to recall confirming the same question because I thought the same thing.

 

[Jhhnn]

I didn't read all posts before replying. My pension is 100% paid for by the government. I pay nothing to contribute. It's pretty good too, it'll be a good bit over 2k a month till I die each month, probably closer to 3k because of yearly 4% raises. For free to me. With free Healthcare, which I already have through the VA. Sure anything can happen, but I'm already vested and I think it'll be around. I do match my company's 6% to my 401k. So a total of 12% of each weeks check goes into my 401k. I'm also in the IRR in the Marine Corps, after over a dozen years in. I can finish out the 20 years for another decent retirement. I'm far from wealthy, but not bad off for retirement either.

Your overall situation isn't what I was talking about, which is your pension plan & pension plans in general.

Pensions are a commitment to generational transfer of funds. All funds depend on continuing contributions from working members to remain solvent. Period. When working, my contributions helped pay the pensions of retirees. Now that I'm retired, younger plan members help to pay mine.

What happens when there are no younger plan members?

 

[Jhhnn]

this.


I've been debating whether or not to pull out/roll over my current lump vested in a previous employer's pension (University of CA).

It's a small amount over a small number of years: $10k, a few years above the minimum year requirement for being vested. The monthly annuity if I claim that at 65 or so is rather peanuty (~$550, iirc...but hell that could maybe pay for all my food). But this is using their internal estimator, and obviously I have no idea where these numbers are coming from because I don't know where the money is.

It also tells me that in 20 years, that 10k is estimated to be worth ~$87k if I choose a lump withdrawal at that time. I'm thinking...wtf? I know funds like this do exist and that I certainly wouldn't be able to earn those returns on my own with the tiny knowledge that I have, but I remain entirely skeptical of both the solvency of the pension and the certainty of the market to make that kind of return over that period of time.

...would it make more sense to just roll that $10k into my own personal Vanguard IRA now?

AFAIK, being vested in a pension plan means you can't take the money until certain conditions are met. Generally speaking, that means age 65 if you don't have the years to draw a retirement at a younger age.

Let's say your plan allows you to draw a pension at 55 with 20 years' service. That's true even if you quit participating 15 years earlier. OTOH, if you only have 19 years you wait until 65 to get any of it.

 

[zinfamous]

AFAIK, being vested in a pension plan means you can't take the money until certain conditions are met. Generally speaking, that means age 65 if you don't have the years to draw a retirement at a younger age.

Let's say your plan allows you to draw a pension at 55 with 20 years' service. That's true even if you quit participating 15 years earlier. OTOH, if you only have 19 years you wait until 65 to get any of it.

right, but in many cases, some will offer withdrawal options if you are no longer employed and have employment elsewhere. That option is available to me, but I haven't looked into the details.

I do have a vague message in my portal: "Your status indicates that you may be eligible for certain types of early withdrawal." Obviously, that's pretty vague and could certainly mean some unavoidable fees even if I try to initiate a rollover. It could simply mean that the system assumes I have retired at normal retirement age and simply haven't claimed distributions (kinda doubt it because my age and expected retirement year is part of their estimate).

Thing is, without even considering the details of that, I'm only wondering if it makes sense to withdraw that sum now and invest it myself or just let it ride with the assumption that those absurd returns they are estimating are accurate.

 

[Ackmed]

Your overall situation isn't what I was talking about, which is your pension plan & pension plans in general.

Pensions are a commitment to generational transfer of funds. All funds depend on continuing contributions from working members to remain solvent. Period. When working, my contributions helped pay the pensions of retirees. Now that I'm retired, younger plan members help to pay mine.

What happens when there are no younger plan members?

My last job had a pension like that. It was $84 each two week check. This job does not. It is paid 100% in full by the company. I do not contribute at all to the pension. It's free to me, so I don't really understand how it can be a bad thing. If it bellies up and I get nothing, it'll suck but I didn't put any money into it.

 

[Fern]

Your overall situation isn't what I was talking about, which is your pension plan & pension plans in general.

Pensions are a commitment to generational transfer of funds. All funds depend on continuing contributions from working members to remain solvent. Period. When working, my contributions helped pay the pensions of retirees. Now that I'm retired, younger plan members help to pay mine.

What happens when there are no younger plan members?

We've discussed this before. Your assertions, if about defined benefit plans, are simply not true.

You're describing SS which is most definitely a different animal than defined benefit plans.

Fern

 

[Fern]

AFAIK, being vested in a pension plan means you can't take the money until certain conditions are met.
-snip-

No.

Being "vested" means one has legally/contractually and irrevocably earned a pension benefit.

Simple defined benefit plan example:

- Salary is $50k. Retirement benefit is 100% of salary.

- An employee with 5 yrs of service is 25% vested

- An employee with 10 yrs of service is 50% vested

- An employee with 15 yrs service is 75% vested

- An employee with 20 yrs service is 100% vested.

If the employee retires/quits or is terminated after 7 yrs they will receive 25% of their salary as a pension benefit upon retirement. They were 25% vested because they worked more than 5 yrs but less than 10.

The rules regarding when that benefit can be paid out to the employee are generally covered under law (ERISA etc.)

Under defined contribution plans amounts in an employee's account are generally 100% vested immediately. When benefits can be withdrawn are generally listed in the (tax) code section authorizing such qualified retirement plan (e.g., IRA or 401k). Premature withdrawals generally result in a 10% penalty.

Fern

 

[Jhhnn]

We've discussed this before. Your assertions, if about defined benefit plans, are simply not true.

You're describing SS which is most definitely a different animal than defined benefit plans.

Fern

You believe in falsehood. Click the link & listen to what the man has to say about the pension plan in question, particularly at the halfway point.

No pension plan can survive with more money going out than coming in & no plan makes enough from investment to meet future obligations. Contributions of current members are required for ongoing plan viability. Otherwise, the money runs out long before the last retiree passes on.