5 ms·

407,000 Workers Stunned as Pension Fund Proposes 60% Cuts

25 points by randomname2 10y ago

liveoneggs 10y ago
as long as the management company was able to steal that 40% of the money then it will all work out.
- MrTonyD 10y ago
  What really bothers me is that the top .1% in the US have such an incredible amount of wealth. I used to believe the propaganda that they "earned" it -- until I worked with multi-billionaires and multi-millionaires in Silicon Valley. Then I saw how little they did to get those huge sums - most of which they hid offshore without paying any US taxes and usually avoiding any US accounting of the money at all. Now we are fighting over the scraps they have left us.
  - charlesdm 10y ago
    Do you consider building (and possibly selling) a business "not to have earned it"?
    - hinkley 10y ago
      Have you worked at any of those businesses? They are built largely on convincing the day-to-day workers to sacrifice for a vision, a vision whose benefits will only come back to them in a small way. And most of what they're selling, when they sell the company, is the employees. You're being traded for big stacks of cash. Which you will never see, no matter how many late nights and weekends you put in (btw, the owner will never be there on those weekends)
      - gregatragenet3 10y ago
        It's a free country. If you feel like you are not compensated adequately for those nights and weekends, then refuse to work them.
        setpatchaddress 10y ago
        Then you get fired. Then you sue the company. Then you won't get hired by another company, regardless of the outcome of that lawsuit. I personally am very well compensated by the company I work for; my work is meaningful to a large population; I don't mind working weekends when the managers fuck up the schedule planning. But not everyone is that lucky.
        argonaut 10y ago
        Firstly, gregatragenet is saying you should leave a company if you don't feel like you're being paid enough (with the implication being you asked for a raise and were denied), or feel like too much is demanded of you. Which is correct. Not sure why you would disagree there. Also not sure why you would sue the company over that.
    - MrTonyD 10y ago
      Have you actually looked into the background of the tens of thousands of Senior VP's at companies? Their background is usually Harvard or Yale or Stanford and studying Finance or Business so that they would get executive positions where they would use the fruit of others labors to enrich themselves - just as the rich have always done. All the innovators I've ever met or worked with were getting a salary and grateful for stock that rarely passed a million or two. (Or are you unaware that the United States now has less innovation than many other advanced countries? It is entrenched wealth and market power that enables these companies to control sales and distribution.)
    - EliRivers 10y ago
      The system governing the creation of new super-rich is effectively a lottery. It runs on exactly this hope; that it's possible to get back vastly, incredibly disproportionately more than you put in, stupefyingly out of all proportion to the risks and commitment that you made, and that if you're the right person in the right place at the right time, and you get lucky, you'll be one of the lottery winners. The whole point is not to "earn" these winnings; it's to win them. There's a big difference between the 0.1% winners, and people who spend thirty years painstakingly building a business.
  - todd8 10y ago
    This comment bothers me. I happen to know a number of .1% people quite well and your characterization of them is not accurate. I myself quit a really good job and gambled my life savings on starting a company at the age of 38. This company made a lot of money for all of its hundreds of employees, but naturally more for me and the senior engineers and executives that were there the longest. I didn't hide any sums offshore (and of course I know no one that has done so--why would they confide in anyone that they had done so). How does one go about hiding income from the sale of a publicly traded company? Every bit of it is reported to the IRS. If you really do know of people hiding money off-shore just report it to the IRS and reap the rewards for turning in tax-cheats. I'm not saying that everyone who has made money deserves it, by whatever definition one uses for the word "deserve", but I am saying that it is unfair to characterize everyone that has become successful as not having "earned" it. I can think of only one employee in my company that may have started with inherited money (I really don't know). What I do know is that he went to a top-notch, very hard to get into, university, was very smart, and totally pulled his weight. Everyone else in the company took a chance with their careers and joined us as a startup. We didn't hire recent graduates out of school, instead hiring really top talent from a number of companies (IBM, Sun, etc.). These people were extremely talented and already had very good jobs that they chose to give up to come work with us. They worked really hard, and we were very successful. After years of being one of the countries fastest growing companies we sold. How is this success not earned? We all ended up paying what I consider to be ridiculous taxes. I don't really understand how these uninformed threads are sustained so frequently on HN.
    - MrTonyD 10y ago
      I'm talking about a system where it is legal to collect vast sums of money and hide it using opaque financial instruments (offshores, derivatives, charities, fake accounting). Most people reading this blog - probably all - are not the people who are doing that. The fact that I didn't do it, or you didn't do it, does not justify such a system or a failure to recognize that the system exists. That would be illogical.
cloudjacker 10y ago
the kind of insolvency that zerohedge would have a field day over
- yoshamano 10y ago
  The kind of insolvency that zerohedge is having a field day over :P http://www.zerohedge.com/news/2016-05-21/407000-workers-stunned-pension-fund-proposes-60-cuts-treasury-says-not-enough http://www.zerohedge.com/news/2016-05-21/407000-workers-stun...
dzdt 10y ago
This is just the tip of the iceberg. Many state, municipal, and private pension funds are badly underfunded according to the accounting formulas. In negotiations with workers, particularly unions, it has always been easier for managers to make promises of pension payments down the line butnever so easy to put aside the noney needed to fund that. But also the accounting formulas are unrealistically optimistic. They assume that money put aside will earn returns at 7% annually or higher. The economy just isn't growing that fast anymore, and probably will not in the coming decades. So even pensions which are supposedly "fully funded" now are likely to come up short in the coming years.
- IOT_Apprentice 10y ago
  How did they not see this 10 or 5 years ago? Who audits this fund?
  - dzdt 10y ago
    Here's what the NY Times was saying 9 years ago : "The Central States pension plan ... was notorious for corruption in the 1960s and 1970s, but is now known for being underfunded." http://nytimes.com/2007/10/01/us/01labor.html http://nytimes.com/2007/10/01/us/01labor.html
    - hga 10y ago
      Exactly; those of us who were politically aware in the '70s heard "Central States pension plan" and had absolutely no surprise that the nation's worst managed big pension fund is again in big trouble. Per Wikipedia, matching my memory, it took the Fed 5 years to wrest control of it from the Teamsters, AKA Jimmy Hoffa Sr. and the Mob. A big thing back in those days, made even bigger when he disappeared in 1975.
- pkaye 10y ago
  I think pension funds are prone to abuse in many ways (underfunding, unrealistic expectations, over-promise.) Best to give everyone tax deferred investment accounts where they can invest in mutual funds or something diversified for the long term.
slr555 10y ago
I'm not much of a finance guy so please tell me how this is different than a Ponzi scheme.
- slededit 10y ago
  Generally pensions operate similar to a 401(k) except for entire companies instead of individuals. Companies are supposed to fund them with the assistance of actuarial models. The problem is a lot of companies either under-funded or the pensions themselves invested poorly. Ultimately the future cannot be predicted so its likely at least some would fail even if everyone were blameless. This is really a double failure of both the pension plan itself and the insurance that's supposed to provide the public with trust in the system.
m0llusk 10y ago
This is just another reason why some form of basic income is essentially inevitable.

25 points by randomname2 10y ago

liveoneggs 10y ago

as long as the management company was able to steal that 40% of the money then it will all work out.

MrTonyD 10y ago
What really bothers me is that the top .1% in the US have such an incredible amount of wealth. I used to believe the propaganda that they "earned" it -- until I worked with multi-billionaires and multi-millionaires in Silicon Valley. Then I saw how little they did to get those huge sums - most of which they hid offshore without paying any US taxes and usually avoiding any US accounting of the money at all. Now we are fighting over the scraps they have left us.
- charlesdm 10y ago
  Do you consider building (and possibly selling) a business "not to have earned it"?
  - hinkley 10y ago
    Have you worked at any of those businesses? They are built largely on convincing the day-to-day workers to sacrifice for a vision, a vision whose benefits will only come back to them in a small way. And most of what they're selling, when they sell the company, is the employees. You're being traded for big stacks of cash. Which you will never see, no matter how many late nights and weekends you put in (btw, the owner will never be there on those weekends)
    - gregatragenet3 10y ago
      It's a free country. If you feel like you are not compensated adequately for those nights and weekends, then refuse to work them.
      - setpatchaddress 10y ago
        Then you get fired. Then you sue the company. Then you won't get hired by another company, regardless of the outcome of that lawsuit. I personally am very well compensated by the company I work for; my work is meaningful to a large population; I don't mind working weekends when the managers fuck up the schedule planning. But not everyone is that lucky.
        argonaut 10y ago
        Firstly, gregatragenet is saying you should leave a company if you don't feel like you're being paid enough (with the implication being you asked for a raise and were denied), or feel like too much is demanded of you. Which is correct. Not sure why you would disagree there. Also not sure why you would sue the company over that.
  - MrTonyD 10y ago
    Have you actually looked into the background of the tens of thousands of Senior VP's at companies? Their background is usually Harvard or Yale or Stanford and studying Finance or Business so that they would get executive positions where they would use the fruit of others labors to enrich themselves - just as the rich have always done. All the innovators I've ever met or worked with were getting a salary and grateful for stock that rarely passed a million or two. (Or are you unaware that the United States now has less innovation than many other advanced countries? It is entrenched wealth and market power that enables these companies to control sales and distribution.)
  - EliRivers 10y ago
    The system governing the creation of new super-rich is effectively a lottery. It runs on exactly this hope; that it's possible to get back vastly, incredibly disproportionately more than you put in, stupefyingly out of all proportion to the risks and commitment that you made, and that if you're the right person in the right place at the right time, and you get lucky, you'll be one of the lottery winners. The whole point is not to "earn" these winnings; it's to win them. There's a big difference between the 0.1% winners, and people who spend thirty years painstakingly building a business.
- todd8 10y ago
  This comment bothers me. I happen to know a number of .1% people quite well and your characterization of them is not accurate. I myself quit a really good job and gambled my life savings on starting a company at the age of 38. This company made a lot of money for all of its hundreds of employees, but naturally more for me and the senior engineers and executives that were there the longest. I didn't hide any sums offshore (and of course I know no one that has done so--why would they confide in anyone that they had done so). How does one go about hiding income from the sale of a publicly traded company? Every bit of it is reported to the IRS. If you really do know of people hiding money off-shore just report it to the IRS and reap the rewards for turning in tax-cheats. I'm not saying that everyone who has made money deserves it, by whatever definition one uses for the word "deserve", but I am saying that it is unfair to characterize everyone that has become successful as not having "earned" it. I can think of only one employee in my company that may have started with inherited money (I really don't know). What I do know is that he went to a top-notch, very hard to get into, university, was very smart, and totally pulled his weight. Everyone else in the company took a chance with their careers and joined us as a startup. We didn't hire recent graduates out of school, instead hiring really top talent from a number of companies (IBM, Sun, etc.). These people were extremely talented and already had very good jobs that they chose to give up to come work with us. They worked really hard, and we were very successful. After years of being one of the countries fastest growing companies we sold. How is this success not earned? We all ended up paying what I consider to be ridiculous taxes. I don't really understand how these uninformed threads are sustained so frequently on HN.
  - MrTonyD 10y ago
    I'm talking about a system where it is legal to collect vast sums of money and hide it using opaque financial instruments (offshores, derivatives, charities, fake accounting). Most people reading this blog - probably all - are not the people who are doing that. The fact that I didn't do it, or you didn't do it, does not justify such a system or a failure to recognize that the system exists. That would be illogical.

cloudjacker 10y ago

the kind of insolvency that zerohedge would have a field day over

yoshamano 10y ago
The kind of insolvency that zerohedge is having a field day over :P http://www.zerohedge.com/news/2016-05-21/407000-workers-stunned-pension-fund-proposes-60-cuts-treasury-says-not-enough http://www.zerohedge.com/news/2016-05-21/407000-workers-stun...

dzdt 10y ago

This is just the tip of the iceberg. Many state, municipal, and private pension funds are badly underfunded according to the accounting formulas. In negotiations with workers, particularly unions, it has always been easier for managers to make promises of pension payments down the line butnever so easy to put aside the noney needed to fund that. But also the accounting formulas are unrealistically optimistic. They assume that money put aside will earn returns at 7% annually or higher. The economy just isn't growing that fast anymore, and probably will not in the coming decades. So even pensions which are supposedly "fully funded" now are likely to come up short in the coming years.

IOT_Apprentice 10y ago
How did they not see this 10 or 5 years ago? Who audits this fund?
- dzdt 10y ago
  Here's what the NY Times was saying 9 years ago : "The Central States pension plan ... was notorious for corruption in the 1960s and 1970s, but is now known for being underfunded." http://nytimes.com/2007/10/01/us/01labor.html http://nytimes.com/2007/10/01/us/01labor.html
  - hga 10y ago
    Exactly; those of us who were politically aware in the '70s heard "Central States pension plan" and had absolutely no surprise that the nation's worst managed big pension fund is again in big trouble. Per Wikipedia, matching my memory, it took the Fed 5 years to wrest control of it from the Teamsters, AKA Jimmy Hoffa Sr. and the Mob. A big thing back in those days, made even bigger when he disappeared in 1975.
pkaye 10y ago
I think pension funds are prone to abuse in many ways (underfunding, unrealistic expectations, over-promise.) Best to give everyone tax deferred investment accounts where they can invest in mutual funds or something diversified for the long term.

slr555 10y ago

I'm not much of a finance guy so please tell me how this is different than a Ponzi scheme.

slededit 10y ago
Generally pensions operate similar to a 401(k) except for entire companies instead of individuals. Companies are supposed to fund them with the assistance of actuarial models. The problem is a lot of companies either under-funded or the pensions themselves invested poorly. Ultimately the future cannot be predicted so its likely at least some would fail even if everyone were blameless. This is really a double failure of both the pension plan itself and the insurance that's supposed to provide the public with trust in the system.

m0llusk 10y ago

This is just another reason why some form of basic income is essentially inevitable.