The younger workforce.

[KennyG]

I guess there were a number of companies that had vesting limitations that could hurt the employees when the plans were terminated. In general, it doesn't make sense for a private company to have a defined benefit program rather than a defined contribution (401K) program. You can make a case that it's better for the retirees to have a pension but it really sucks for the current employees if it causes the company to go bankrupt.

We switched years ago to protect the company. We had boomed from 1000 employees to over 5000 employees and then dropped back to less than 2000. We fully vested the pension at 5 years but a lot of people got laid off and had little benefit. The potential large number of retirees threatened the future viability of the company. At the point we terminated the pension plan the employees earned benefit was calculated and an insurance company annuity was purchased in their name. From that point forward, the company put an annual contribution of 6% of salary into the 401K. I think people are uniformly happy with the way it worked out.

My understanding was that it had to be done that way to be legal and the earned benefit had to be fully vested at that time, independent of vesting rules.

 

[300UGUY]

I guess there were a number of companies that had vesting limitations that could hurt the employees when the plans were terminated. In general, it doesn't make sense for a private company to have a defined benefit program rather than a defined contribution (401K) program. You can make a case that it's better for the retirees to have a pension but it really sucks for the current employees if it causes the company to go bankrupt.

We switched years ago to protect the company. We had boomed from 1000 employees to over 5000 employees and then dropped back to less than 2000. We fully vested the pension at 5 years but a lot of people got laid off and had little benefit. The potential large number of retirees threatened the future viability of the company. At the point we terminated the pension plan the employees earned benefit was calculated and an insurance company annuity was purchased in their name. From that point forward, the company put an annual contribution of 6% of salary into the 401K. I think people are uniformly happy with the way it worked out.

My understanding was that it had to be done that way to be legal and the earned benefit had to be fully vested at that time, independent of vesting rules.

Going from memory, ERISA of 1974 requires vesting after 5 years. As far as protecting the company? I guess that's a call that I would be very suspicious of. A lot of companies have eliminated pensions. A lot of them had executive pay packages go way up. One thing that is not in doubt, a 401K plan is far cheaper than a pension. I set one up for my wife, at her business, a dog grooming shop. Fidelity charges nothing to the employer for the administration. I suspect a large employer, they might even pay a little bit to get the business. So all the 401K program cost is the match. Most places will only put in a percentage, based on what the employee puts in. No employee contribution, no company contribution. One thing about 401K money, it is up to the employee to make the investment decisions. Few folks are really good at it....

 

[300UGUY]

I guess there were a number of companies that had vesting limitations that could hurt the employees when the plans were terminated. In general, it doesn't make sense for a private company to have a defined benefit program rather than a defined contribution (401K) program. You can make a case that it's better for the retirees to have a pension but it really sucks for the current employees if it causes the company to go bankrupt.

We switched years ago to protect the company. We had boomed from 1000 employees to over 5000 employees and then dropped back to less than 2000. We fully vested the pension at 5 years but a lot of people got laid off and had little benefit. The potential large number of retirees threatened the future viability of the company. At the point we terminated the pension plan the employees earned benefit was calculated and an insurance company annuity was purchased in their name. From that point forward, the company put an annual contribution of 6% of salary into the 401K. I think people are uniformly happy with the way it worked out.

My understanding was that it had to be done that way to be legal and the earned benefit had to be fully vested at that time, independent of vesting rules.

Going from memory, ERISA of 1974 requires vesting after 5 years. As far as protecting the company? I guess that's a call that I would be very suspicious of. A lot of companies have eliminated pensions. A lot of them had executive pay packages go way up. One thing that is not in doubt, a 401K plan is far cheaper than a pension. I set one up for my wife, at her business, a dog grooming shop. Fidelity charges nothing to the employer for the administration. I suspect a large employer, they might even pay a little bit to get the business. So all the 401K program cost is the match. Most places will only put in a percentage, based on what the employee puts in. No employee contribution, no company contribution. One thing about 401K money, it is up to the employee to make the investment decisions. Few folks are really good at it....

 

[300UGUY]

For new hires/future earning of benefits, yes. For existing benefits, no. Court cases have pretty consistently said that a promise is a promise and about the only way to cut back on existing earned pensions is through bankruptcy. That was the whole basis of the GM "bailout". Bankruptcy would not have destroyed GM, only reorganized it. It was characterized as a bailout rather than bankruptcy to allow the union and pension benefits to be untouched while the bondholders and stockholders took the hit.

Same thing with governments. The state of Illinois tried to modify pensions and the court would not allow it. Unless they declare bankruptcy (which remains a real possibility) the pensions survive.

Uh.... I hate to tell you this, but GM ( and Chrysler ) went bankrupt. In bankruptcy, common shareholders always get zeroed out. Always. Bondholders, it depends on the bond. Preferred stock, which is a type of bond, did not get zeroed out. Guess which kind of stock insiders usually hold? Some bonds, depending on the type, did not get zeroed. GO, or General Obligation, did. Bonds backing specific assets, survived. I think in Europe, the rules were somewhat different. The thing that never got much press was that GM had assets, maybe as much as 100B, but due to the financial panic, had no access to cash to run the day to day business. Nobody would loan money to anybody at that point.

20K employees lost their jobs in the bankruptcy. In 1980, I think the number was something 600K employees. After bankruptcy, it was about 60K.

No joy for anyone.

 

[ultrarunner]

When I started in 1991 it was a small private for profit community Hospital with a great reputation and top Doctors... we had a terrific Employee Stock Plan which enabled employees to have ownership interest.

In 1993 I was eligible for ESOP starting January 1994 and in December 1993 the company merged with national Columbia HCA as their first foray into California... along with that came big Hospital Benefits... I was enrolled and then when nothing came of it I learned that corporate back east had classified me as part time... even though I was working 2000+ hours annually.

That was straightened out in 1995 and I took a dollar an hour pay cut in exchange for all the benefits including profit sharing, stock and 401k match.

In 1998 we bought ourselves back from HCA and I was 20% vested... this was just as the vesting schedule was changed by congress... even contacted my congressman who said I had missed the effective date.

So not only did I take a pay cut for benefits... I lost 80% of the money in my account accumulated over 3 years.

In 1999 we had a new program with a very small match... and 4 funds to choose from... the 401k had very high fees and mentioned this to the board and was told employees don't pay any fees...

Of course the fund fees were buried in the disclosure and one was almost 3%

In 2005 everything was temporarily frozen and remains so... we were to be merged again and already had new health cards and an injunction was filed stopping the merger cold...

Two years ago it was announced a merger was just around the corner and it would come with all more benefits than ever.

Now we are on the eve of the merger and I've been officially told they have not found a spot for me...

My advice to someone young is not to put all your eggs in one basket... things change and they change alot...

I'm glad to have income property that I started buying at age 22... so, sink or swim... my job is only a part of my income...

It is strange when friends from High School and such that came out smelling like a rose from pure dumb luck... like working for Apple, Genentech and many other Bay Area companies...

One took a part time summer job with Apple back in 1979 on the switchboard and her dad told her to buy all the company stock she could... she is very well set and quit years ago... her stock was worth millions after having sold some to pay cash for her Bay Area home...

What's the old saying... I would rather be lucky than smart.

 

[Industrial Toys]

I barely have a nickle devoted for my old age. But, I also don't owe any money, and in that context, maybe I am ahead of many.

I don't understand so many high income earners that spend every dollar they make (and then some) rather then putting money away for a rainy day.

 

[MossRoad]

What's the old saying... I would rather be lucky than smart.

And.... Its not what you know its who you know.

 

[300UGUY]

When I started in 1991 it was a small private for profit community Hospital with a great reputation and top Doctors... we had a terrific Employee Stock Plan which enabled employees to have ownership interest.

In 1993 I was eligible for ESOP starting January 1994 and in December 1993 the company merged with national Columbia HCA as their first foray into California... along with that came big Hospital Benefits... I was enrolled and then when nothing came of it I learned that corporate back east had classified me as part time... even though I was working 2000+ hours annually.

That was straightened out in 1995 and I took a dollar an hour pay cut in exchange for all the benefits including profit sharing, stock and 401k match.

In 1998 we bought ourselves back from HCA and I was 20% vested... this was just as the vesting schedule was changed by congress... even contacted my congressman who said I had missed the effective date.

So not only did I take a pay cut for benefits... I lost 80% of the money in my account accumulated over 3 years.

In 1999 we had a new program with a very small match... and 4 funds to choose from... the 401k had very high fees and mentioned this to the board and was told employees don't pay any fees...

Of course the fund fees were buried in the disclosure and one was almost 3%

In 2005 everything was temporarily frozen and remains so... we were to be merged again and already had new health cards and an injunction was filed stopping the merger cold...

Two years ago it was announced a merger was just around the corner and it would come with all more benefits than ever.

Now we are on the eve of the merger and I've been officially told they have not found a spot for me...

My advice to someone young is not to put all your eggs in one basket... things change and they change alot...

I'm glad to have income property that I started buying at age 22... so, sink or swim... my job is only a part of my income...

It is strange when friends from High School and such that came out smelling like a rose from pure dumb luck... like working for Apple, Genentech and many other Bay Area companies...

One took a part time summer job with Apple back in 1979 on the switchboard and her dad told her to buy all the company stock she could... she is very well set and quit years ago... her stock was worth millions after having sold some to pay cash for her Bay Area home...

What's the old saying... I would rather be lucky than smart.

When I was young, starting out working in the shops, old timers would ask me if I would rather be lucky or smart? I was pretty confident, and said smart. Now that I am old, lucky is the real deal.

We have a local company that had a reputation for screwing over it's engineers. The owner was quoted in a lawsuit as saying "brains are the cheapest cut of meat". Btw, the guy ended up a billionaire. He got rid of his company's pension also.

 

[Industrial Toys]

It MAY simply be a case of what your purpose of (this) life is. Hence, you can't possibly compare one person to the next. Luck probably has nothng to do with it. I will NEVER win anything. It's simply not part of my program.

 

[ultrarunner]

A long time ago I worked in a Union Shop... lots of very talented older guys with amazing tool and die skills... we could fabricate anything and the project I was hired for was the Space Shuttle.

When Challenger exploded the work was stopped... a few items that were nearly complete were finished... anything not at least 2/3 done was stopped.

I had two years in with the Union... not enough time for anything other than for my employer to make the pension contributions on my behalf...

It would be easy to say if it weren't for bad luck I wouldn't have any luck... the truth is it only applies to pensions/benefits.

On the flip side, every job I have ever held was a job where I was recruited or asked to come onboard...

It really happened a lot in my younger days... I would be standing at the parts counter at Peterson Tractor overhauling the steering clutches on my Dozer... a customer gave me his card and asked if I was looking for work... so did Peterson Tractor... Heck, I can have my landscape trailer out doing landscape work at the rentals and people stop and ask me to give them a quote for a job... I tell them I only work on my own property... my first High School job was stocking shelves after hearing the store owner complain that kids don't want to work... they only want to make enough money for concert tickets or buy a car... then they are gone... I was 12 and said I can stock shelves... he said to come back with my mom and he would give me a try... worked that job even into college... was closing the store on occasion at age 16...

The Tool and Die, Office Machines, Oakland A's and Hospital Jobs are all jobs I never applied.

Speaking of younger generations... work was hard to get in the early 80's... I was a fresh engineering grad and none of my fellow graduates were finding work... so I decided to take my savings and sell my car to buy a single family home that was to be condemned... it work so well, I bought another and then one or two every year, move in, repair and rent it out and repeat...

The folks were a little disappointed... especially my Dad... he said I worked so hard earning my degree and now I doing construction remodels and rentals... having people call when the toilet backed up.

When Dad learned I had been approached by the CEO of the local Hospital about an opening in Engineering he could not have been happier... I mean he was really over the top happy... I would have a job with benefits, pension, vacation... etc. I had helped the Hospital out of a bind a few months back...

In a moment of weakness and seeing how pleased the folks were... I accepted.

In retrospect or knowing then what I know now... simply buying a rental every year or two in the SF Bay Area would have been many, many times more lucrative and that is not counting all the benefits that are no more on the job...

I'm not kidding when I say accepting the job at the Hospital was the happiest I have ever made my parents/grandparents as far as career and stability... so it wasn't a total loss.