4 ms·

What is the role of the employer to provide any of these items, these are all archaic fringe benefits that obfuscate a wage and greatly enable large corporation

by Agustus 11y ago

What is the role of the employer to provide any of these items, these are all archaic fringe benefits that obfuscate a wage and greatly enable large corporations to keep talent from moving to a new start-up. * The pension based retirement defined benefit plan is a bonus item that originated because the government encouraged it in the 1921 Revenue Act [1] by exempting pensions from being taxed as income. Then when the National Labor Relations Board "interpreted" the law 27 years later to include it as a benefit that was inclusive of employment did it become a larger liability. Large companies were able to absorb the costs of pensions being paid into the Pension Benefit Guaranty Corporation [2] after the 1974 setting of requirements, hurting the ability of small companies to set up comparable benefits. The slow death march of private based pensions follows the incentive curve and the movement to defined contribution for companies enables smaller companies to be more competitive with the big companies [3]. * The medical coverage one vexes me financially, as I do not know how guaranteed this is, of all the things that would be eliminated in a bankruptcy, this is most probable and would save the receiving company a lot of money. My point here is that the 401k and retirement program free of the company means you create an employee who has more worries about retirement, but is not locked into an employer's retirement pension contribution system. [1] http://www.ebri.org/publications/facts/index.cfm?fa=0398afact http://www.ebri.org/publications/facts/index.cfm?fa=0398afac... [2] https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corpo... [3] http://20somethingfinance.com/defined-benefit-vs-defined-contribution-retirement-plans/ http://20somethingfinance.com/defined-benefit-vs-defined-con...

dredmorbius 11y ago
Accident of history or not, retirement and health benefits offered through employers have been how such systems are funded in the US. The total value of the system is on the order of $18 trillion dollars, slightly more than the ~$15 trillion annual GDP. https://www.ici.org/pressroom/news/ret_10_q4 https://www.ici.org/pressroom/news/ret_10_q4 Too, employees have far more at stake, and far less negotiating power, than employees, a fact quite openly recognised in Adam Smith's Wealth of Nations (Book 1, Chapter 8: https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...) There's further a great deal of other infrastructure which reinforces the existing system, from tax and other laws based on employer-provided benefits (including substantial advantages to both employers and employees participating in such plans), and of the services industries built around these (it's far more economical, and actuarially defensible, to deal with groups of people, particularly large aggregates, than one-on-one). Which means that: 1. You cannot simply turn this ship on a dime. It's quite literally larger than the economy. 2. Changes to present employee benefits represents a material change in compensation and risk profile to those employees, for which they're poorly equipped to either address or organise against.
- Agustus 11y ago
  Yes. The change in pension to defined contribution should be something that is phased in as those making decisions in the system were making them under existing conditions. However, once the change has been made, those not grandfathered in should expect the new infrastructure. That is why the social security system needs to start being changed for longer lifespans, not for those who operated under the current system, but so it can remain solvent for those entering the program now.
unethical_ban 11y ago
I didn't read anything else you posted after the first sentence. While I have a similar sentiment regarding the fact that employers should get out of the business of retirement, life insurance, medical, etc., that's the way it's been for the older generation. Phase it out, don't just cut everyone over and cut benefits in one moment. Same with Social security, for that matter.
- Agustus 11y ago
  The benefits were not cut, they were frozen. Those benefits currently earned are guaranteed through the aforementioned Pension Benefit Guaranty Corporation. The article does not mention it, but there are a variety of freezes that could occur: * Plan freeze: All currently earned benefits are given to the employee without any future opportunity to earn further benefit. In this case, the earned benefits are still there, just now one needs to find another retirement system. * New freeze / Grandfather Freeze: All current employees are allowed to fill out the vesting period, but new employees are not allowed onto the pension. Aside: nice handle.

by Agustus 11y ago

dredmorbius 11y ago

Accident of history or not, retirement and health benefits offered through employers have been how such systems are funded in the US. The total value of the system is on the order of $18 trillion dollars, slightly more than the ~$15 trillion annual GDP. https://www.ici.org/pressroom/news/ret_10_q4 https://www.ici.org/pressroom/news/ret_10_q4 Too, employees have far more at stake, and far less negotiating power, than employees, a fact quite openly recognised in Adam Smith's Wealth of Nations (Book 1, Chapter 8: https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...) There's further a great deal of other infrastructure which reinforces the existing system, from tax and other laws based on employer-provided benefits (including substantial advantages to both employers and employees participating in such plans), and of the services industries built around these (it's far more economical, and actuarially defensible, to deal with groups of people, particularly large aggregates, than one-on-one). Which means that: 1. You cannot simply turn this ship on a dime. It's quite literally larger than the economy. 2. Changes to present employee benefits represents a material change in compensation and risk profile to those employees, for which they're poorly equipped to either address or organise against.

Agustus 11y ago
Yes. The change in pension to defined contribution should be something that is phased in as those making decisions in the system were making them under existing conditions. However, once the change has been made, those not grandfathered in should expect the new infrastructure. That is why the social security system needs to start being changed for longer lifespans, not for those who operated under the current system, but so it can remain solvent for those entering the program now.

unethical_ban 11y ago

I didn't read anything else you posted after the first sentence. While I have a similar sentiment regarding the fact that employers should get out of the business of retirement, life insurance, medical, etc., that's the way it's been for the older generation. Phase it out, don't just cut everyone over and cut benefits in one moment. Same with Social security, for that matter.

Agustus 11y ago
The benefits were not cut, they were frozen. Those benefits currently earned are guaranteed through the aforementioned Pension Benefit Guaranty Corporation. The article does not mention it, but there are a variety of freezes that could occur: * Plan freeze: All currently earned benefits are given to the employee without any future opportunity to earn further benefit. In this case, the earned benefits are still there, just now one needs to find another retirement system. * New freeze / Grandfather Freeze: All current employees are allowed to fill out the vesting period, but new employees are not allowed onto the pension. Aside: nice handle.