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Keep in mind this comes on the heels of the Madoff whistleblower saying GE is a fraud: https://www.barrons.com/articles/ge-insurance-fraud-madoff-whistleblower

• lotsofpulp 7y ago
  I doubt it, defined benefit pension plans don't make financial sense in the current climate. Who is able to predict which company will be around in 30 to 60 years in the future, and what the economic climate will be? And much of the pension fund investments are going to the same place as 401k money anyway. Why not directly invest in VTI and skip paying all the pension fund managers and staff? It's not like they have some secret investment return recipe, and it shows in their performance.
  • chrisseaton 7y ago
    I wouldn’t even agree to getting a defined benefit pension these days - why wouldn’t you want to invest your own money instead of letting one company you happened to work for control your pension? I have a defined benefit pension from a previous employer and frankly I count it as zero in my financial planning since I have no idea if it’s actually coming or not.
    • mikepurvis 7y ago
      Americans love having the one company they happened to work for control their healthcare, though.
      • deleted 7y ago
        [deleted]
    • SketchySeaBeast 7y ago
      It still has value, assuming you're intending on working until you retire and the company has no signs of failling - why wouldn't you want a (nearly) guaranteed income for the rest of your life? That doesn't preclude you from investing your own extra cash into investments. I understand the dynamics have changed, but my boomer parents and in-laws are both enjoying retirement with the fruits of a defined benefit pension, and both are quite comfortable.
      • lotsofpulp 7y ago
        30 years ago, if you said GE might be failing in 2019, you would have been considered crazy. There are no guarantees in life, even if the law says there are. The only reason your elders are enjoying the fruits of a defined benefit pension is because the costs of their pensions was hidden by an assumption of ever growing populations and economic growth. Additionally, why give control of your retirement funds to someone else when you can have control of your money? They're investing it in the same place as you would, and not getting any better returns.
        • SketchySeaBeast 7y ago
          Because when I retire they continue pumping money into the same funds - I can't do that, my contributions stop and I enter "withdraw" mode - the company doesn't. Yes, the plan can have problems, but I'm just saying why I think people still like it, and it does have definite advantages over your own savings.
          • chrisseaton 7y ago
            > when I retire they continue pumping money into the same funds Lol you hope.
            • SketchySeaBeast 7y ago
              It's not without it's own faults, I get that.
      • 7y ago
    • eternalny1 7y ago
      On the flip side I know people who have completely squandered their 401k due to poor financial habits, and others who are getting a check, monthly, for life. Guess which one of those two is happier? Sure, you may say the first group was foolish, but we are talking your average American workers here not an investor-savvy class. Perhaps make it an option, if you want to gamble go for it, if you lose don't come crying for your retirement checks.
    • ghaff 7y ago
      Paying out defined benefit plans aren't totally at the whim of the company. For example, there are protections through the Pension Benefit Guaranty Corporation and you could probably arrange for your own insurance as well. Having some savings as defined benefit does give you predictability. Even if you don't have a defined benefit plan through a company, it may make sense to convert some savings into an annuity of some sort.
      • lotsofpulp 7y ago
        >For example, there are protections through the Pension Benefit Guaranty Corporation and you could probably arrange for your own insurance as well. The PBGC is just for show. They can't even guarantee the pensions of the multi employer defined pension plans that are about to fail, so there is a bill in congress to bail them out currently: https://burypensions.wordpress.com/2019/01/09/butch-lewis-act-re-introduced/ https://burypensions.wordpress.com/2019/01/09/butch-lewis-ac...
      • cannonedhamster 7y ago
        Companies just suckle up to the public teat when they make a bad business decision and it's always the employees that take it in the shorts. The executives get paid big bucks for making decisions but bear no responsibility for the results. It's all upside for them. That's a gamed system in need of being broken.
    • walshemj 7y ago
      Don't take this the wrong way but you need to take some serious advice, DB pensions are far far better than a DC. Look at the transfer values of some DB pensions they can be worth multiple millions and no way would an individual be able to build up an equivalent amount in a DC scheame
      • chrisseaton 7y ago
        > no way would an individual be able to build up an equivalent amount in a DC scheame Well if you put millions in you get millions out.
      • nguoi 7y ago
        There's no magic financial effect that makes the money going into a DB scheme worth more. The money has to come from somewhere and, in these cases, it's from companies that underestimated or ignored what the future costs would be.
        • walshemj 7y ago
          You do understand that DB is a collective scheme and DC its not just you. Your DB pension is funded by those that came before you and those coming after.
          • deleted 7y ago
            [deleted]
          • nguoi 7y ago
            I'd love to hear how someone would intonate a statement beginning with 'you do understand' if they said it to me in meatspace.
            • walshemj 7y ago
              Sorry I should have phrased that better for those whose first language isn't English. Its phrasing in that sense would be similar to "Dude your making a big mistake"
  • rileymat2 7y ago
    The simple answer is that group mortality is easier to estimate and plan for than individual mortality. At 65, you do not know if you are going to live to 70 or 101, so you need to plan your 401k accordingly, pessimistic. Couple that with the fact that many many americans could not save enough to last to 101, but could last until 72. So they are left with the choice of living more poorly than they should or running out of money. Defined benefit makes way more sense, some people "win" by living longer, others lose. But there is much less stress in the meantime.
    • lotsofpulp 7y ago
      Defined benefit might make sense on a societal level, aka Social Security benefits in the US. On an employer level, it does not make sense as they have no idea if they will exist in the next 10, 20, 30 years, especially with automation and globalization changing the economic environment very quickly. Which is exactly what real life shows, as companies are jettisoning defined benefit pensions to stay competitive. On an individual level, a pension plan also doesn't make sense, as you can do what pension fund managers do via target date funds and save the money spent on paying the pension fund managers. And avoiding the corruption risk of employers underfunding and fund managers malinvesting. If you want protection that you will have income until you die, one should purchase an annuity. However, a much cheaper and better idea in my opinion, is raising a family that will support you in your old age, because it's prohibitively expensive to purchase the kind of care that comes from loving relationships in your old age.
      • rileymat2 7y ago
        At an individual level, You can invest the same way, the problem is, you don't know how long you will live. Which was my main point. There are annuities, but my research into those has come up with very high costs with lots of fees.
        • lotsofpulp 7y ago
          >There are annuities, but my research into those has come up with very high costs with lots of fees. Yes, as most non taxpayer funded employers have found out, and reduced their offering of defined benefit pensions accordingly. My point is that no one has the ability to protect and afford against the kind of long term risk that you are talking about, and the best model I've seen to address it is when children and grandchildren take care of their elders.
  • walshemj 7y ago
    1 DB schemes are much better for the employee than DC 2 Pensions funds are different to investing for individuals (with small portfolios) DB schemes have very long lifetimes and have to invest for multiple generations and cant just invest in a tracker - they have to have a suitable investments in bonds and guilts for example./
  • froindt 7y ago
    I agree. It was interesting to see this all come up with union negotiations. The union's push against switching to a 401k was that it puts them at risk when the market performs poorly. Unfortunately from a company standpoint, when the market goes down, their required pension contributions go up, a real bind in cash when you need it most. There's more politics involved - like the automotive unions giving up numerous raises for better pensions, companies refusing to fully fund pensions in good years leading to them being woefully underfunded in bad, etc. Personally I'm glad to not have a pension hanging over my head. I could leave tomorrow and have the full value of my 401k. I know people who are miserable and hate their jobs, but if they leave before hitting 30 years, they get barely anything. At my company, leaving at 29 years would yield less than half the monthly payout compared to 30 years. The pension and social security is the retirement plan for those who live paycheck to paycheck. I do really wish everyone had the same access to tax advantaged accounts. The administration costs of 401k's make it more challenging for small companies to offer. All else equal, having a 401k available versus unavailable is with a few thousand dollars per year to me because of the tax deferral.
    • lotsofpulp 7y ago
      >There's more politics involved - like the automotive unions giving up numerous raises for better pensions, companies refusing to fully fund pensions in good years leading to them being woefully underfunded in bad, etc. This is the inherent agency risk in defined benefits. The people at the beginning can make off like bandits while screwing those down the line, whether intentionally or not (due to global economic environmental changes). >I do really wish everyone had the same access to tax advantaged accounts. The administration costs of 401k's make it more challenging for small companies to offer. All else equal, having a 401k available versus unavailable is with a few thousand dollars per year to me because of the tax deferral. 401k are extremely easy to administer, or at least much, much easier than defined benefit pensions. However, it would be ideal if the US government stopped giving large companies subsidies (via the 401k tax deduction), and simply gave an IRA deduction to everyone, regardless of employer or whatnot. There is no need for employers to be involved.
      • froindt 7y ago
• lightedman 7y ago
  GE is probably a bit more than fraud given my experience with some of their LED products. I'd say they're outright liars. The UV Blacklight they advertise at 7W - you think that's getting 7W of UVLED. Nope, instead you get a single 1W UV LED surrounded by 4 1.5W LEDs. And you pay almost $20 for this rip-off of false advertising.
• Traster 7y ago
  It's worth noting here, that nothing in this new news indicates any sort of fraud, merely that GE is struggling - as everyone already knew.
• rayiner 7y ago
  Yes, GE lost a bunch of money in purpose so it could screw over workers.
  • throwaway926 7y ago
    Usually companies cut compensation as a last resort, as it's damaging to morale. They don't do it for fun. Some people are obsessed to see employment relations as a zero sum game.
• seren 7y ago
  For what it is worth, the website that was launched alongside the fraud allegations has already been removed. http://web.archive.org/web/20190929121126/https://www.gefraud.com/ http://web.archive.org/web/20190929121126/https://www.gefrau... So basically, there was some media orchestration, GE stock dipped somewhat, potentially the hedge fund paying Markopolos made some benefits and there was not really any follow up (so far) from the SEC. And the website disappeared a month later. I felt that the reactions from analysts were that most long term care insurances are problematic, GE possibly a bit more but not spectacularly worse than competition, and that the "fraud" part was a bit overblown. We'll see if the SEC will open an investigation, but so far not a lot happened. Still even without being a fraud, this might be an issue in the years to come for GE to be able to generate enough cash to pay for its long term care business...
  • guardiangod 7y ago
    >the website that was launched alongside the fraud allegations has already been removed. Maybe the SEC is starting the case and asked the tipsters to remove all relevant documents online to prevent prejury?
• sailfast 7y ago
  For what it's worth, shareholders are also getting slammed, but they can always sell to get away. Not always an option for folks that are employed at the organization.
• harryh 7y ago
  It's not just the workers, GE shareholders have gotten slammed as well. GE's stock is down about 70% in the last 3 years. This is what happens when a business underperforms.