zlacker

Pensions are absolutely crippling to a company long term.

>>bright+(OP)
Nah, Boeing management and shareholder comp crippled the org on its own just fine. Getting rid of pensions is what enabled more comp to go to these folks. "401k experiment failure" are the keywords you can search for on the topic.

Are we going to claw back all the comp and shareholder returns from the folks who stole from Boeing while it went down the drain? No, we'll just say that's the cost, even though it is obvious that is what crippled the org. "Pensions are absolutely crippling" while orgs are strip mined in plain site, with a noticeable lack of hand ringing over said strip mining.

https://www.epi.org/publication/retirement-in-america/

https://www.pionline.com/defined-contribution/401k-experimen...

https://www.nytimes.com/2024/05/08/magazine/401k-retirement-...

https://www.nbcnews.com/business/retirement/great-401-k-expe...

>>bright+(OP)
Pensions are fine if you actually pay for them by purchasing guaranteed annuities to offload the liability. Except nobody wants to do that because they’re insanely expensive. Even more so if they’re going to be inflation adjusted.

In reality if workers want pensions, the company should give them a fix annual amount that the worker can use to purchase an annuity.

>>bright+(OP)
some public transit agencies spend over half of their operating budget on pensions

>>bright+(OP)
If it's so obvious, why offer them? Why do deferred compensation? Why promise to pay in the future for anything?

>>bright+(OP)
The unstated implication is that retirement is not economically feasible except to a privileged few. Our healthcare system has a similar implication. Cannot afford universal healthcare, meaning the system only works if we can allow some people to go without.

>>rootus+K4
yes, this is what happens when you dont work on the next generation

>>koolba+f1
Guaranteed annuities have the same problem: who's paying workers in their old age, and what happens when that entity becomes insolvent? Nothing is truly guaranteed in finance, especially when life expectancies rise faster than the pension scheme assumed.

>>doctor+O2
Hedging your bets some will die before they get it/all of it? Keeping your employees sustained while also not giving them enough immediate overhead for creating any kind of wealth?

I'm not serious, these are just the first cynical thoughts that came to mind, but I feel like this question should be one we can actually answer? We've had both pensions and time to see varying degrees of successes and failures regarding them.

>>ranges+i1
And?

>>bright+(OP)
If a company can't calculate something like this, you should not work there.

Otherwise absolutly not. You just have a company doing the pension plan for you and thats it.

>>doctor+O2
Because of the principal-agent problem and the fact that there is no structure to reward future success reliably? If the Chicago parking meter plan is so outrageous, why do it? It's obviously bad. So why do it? You know why. There's a guy with controls over a lot of money. He's going to find a way to access some of it.

>>renewi+G6
> So why do it? You know why.

I don't get it. Maybe every single S&P500 CEO has a deferred compensation plan, but when a union asks for it, it's always corruption?

>>bright+(OP)
And to governments, not just companies. Public sector pensions in America are basically scamming and stealing from taxpayers.

>>mrmeta+z5
No, you're right about the death thing. That's how all life insurance works. They bet on the statistics that most people will die by Y, so the retirement age of X means they will make money if (Y-X) is positive. Pensions are basically just "rest of your life" insurance before the real life insuarance kicks in for your family.

And you see why they died out. Y-X consistently became negative as people lived longer, especially when we moved to a service industry. So they ended it and front-loaded the money. There's probably a lieu of tax codes and other benefit they get from matching 401ks as well that I do not know of without researching.

>>bright+(OP)
Pensions only hurt companies long term if they are lying about the long-term cost. If the pension is funded, how can it hurt a firm? A fully-funded pension attracts employees, and encourages retention in a competitive market.

Unless your argument is that management will always lie about the cost, and under-fund. Which is more of a comment about American management and the regulators than about pensions.

Normally I'd say corporate pensions are a terrible idea because no firm around today can credibly promise to be good for its debts in 40 years. But Boeing really is TBTF, so a pension from Boeing might actually be worth something.

>>Manuel+65
Longevity is not what did them in. It was regulators allowing them to PAYGO on medical costs. Only cash pensions were required to be actuarially sound. Medical benefits were yolo.

>>Eisens+I5
It’s problematic, it means a politician can offer pensions to make themselves look better and kick the can down the road

>>rootus+K4
The resolution seems to be for governments, not random private companies, to look after our people in their old age.

>>toomuc+L
> Boeing management and shareholder comp crippled the org on its own just fine

Don’t get me wrong, I think the private equity model of financially oriented management is a problem. Employees and unions do share blame though. Remember, an IAM worker forgot bolts on the door plug. And SPEEA workers (the other union) designed MCAS poorly and didn’t build redundancy on dirt cheap sensors where there was no reason to avoid it. Boeing’s floor is inefficient and a shock to anyone who works with Boeing, due to union territorial issues and frankly a lazy culture. All these things have contributed significantly to Boeing’s decline, in addition to bad leadership.

>>michae+Li
A "fully funded" pension requires ongoing contributions made into the fund by the company to make sure returns are high enough, especially during a market downturn, when the company can least afford to make such top-up contributions.

>>michae+Vi
Longevity is absolutely a big factor in underfunded pensions. "Actuarially sound" is based on projections of how long retirees will draw from pension funds. When retirees start consistently outliving those projections, a sound pension rapidly becomes unsound.

>>ranges+El
What does that have to do with their budget?