4 ms·

Most of the time it's seen by management as an expense with no positive business value (they pay out to people that are no longer useful to the company)... Ther

Most of the time it's seen by management as an expense with no positive business value (they pay out to people that are no longer useful to the company)... Therefore it's a major target for elimination if possible. Bankruptcy is a great way to do this. If you remember that the "best" leaders from a stock investor (or greedy owner) perspective are psychopaths (lack empathy), and these people actually look really great on paper (lower costs, no/little immediate impact on profits), it's not surprising.

mcv 7y ago
That's exactly why it shouldn't even be on the company's budget. They should pay for it to an insurance company while the employee works there, and once the employee doesn't, the insurance takes care of it. Take the employer out of the equation once they're no longer relevant.
- asdf21 7y ago
  >Take the employer out of the equation once they're no longer relevant. Not exactly, if the company is willing to go so far as bankruptcy / reincorporation... how will any previous contracts with whatever insurance company last through that?
  - Retric 7y ago
    The idea is an employee’s pension must be fully funded before they leave and then handled by a 3rd party. At that point the company could dissolve without impacting retired workers.
    - deleted 7y ago
      [deleted]
    - philwelch 7y ago
      Yes, that's how 401(k)s work and why most employers have switched to them.
      - Retric 7y ago
        I am specifically referring to pensions. It’s true that 401(k)s also have this feature, however many employees prefer the defined benefit a pension provides over managing their own returns and the temptations associated with managing money. The core issue is really poor US regulation over any specific issue with pensions. PS: The swap to 401k’s in the US is mostly about cost savings. Companies can simply reduce their contributions without much if any backlash. Meanwhile, third parties profit from managing 401k’s and therefore market them heavily.
  - alistairSH 7y ago
    The insurance company is effectively acting as a giant escrow account on behalf of the employees/retirees. The employer pays into the account at whatever rate is required to fully fund retirements. The insurance company manages those funds. If the employer goes bankrupt, the funds are not accessible by raiders/PE firms.
    - eldavido 7y ago
      This already exists. It's called a 401(k).
      - thatfrenchguy 7y ago
        Except 401(k)s are crazy underfunded: https://www.marketwatch.com/story/this-is-the-average-401k-savings-by-age-2019-01-31 https://www.marketwatch.com/story/this-is-the-average-401k-s... (look at the median)
      - alistairSH 7y ago
        Not sure if serious.meme A defined benefit plan is (nominally) funded by the employer with little or no input from the employee at time of investment or distribution. A 401k is funded by the employee, with the employee managing contribution level, fund investment, and eventually distributions. They're only the same, if by same you mean "retirement plans". The details are substantially different.
        eldavido 7y ago
        A 401k is an account, funded by a mix of employer and employee contributions, that's beyond reach of bankruptcy. That part is the same. The only bit that's different is the self-management of assets, of which many companies are happy to do, increasingly for lower and lower fees. 0.2-0.3% being common which I bet goes toe-to-toe with good pension managers. They really aren't that different.
        alistairSH 7y ago
  - rsynnott 7y ago
    The way it works at least here generally is that the pension fund is held in trust, on a per employee basis, by an insurance company (usually) employed by the company to do that. So it's (in principle) immune to bankruptcy of both the employer and third party insurance company.

mcv 7y ago

That's exactly why it shouldn't even be on the company's budget. They should pay for it to an insurance company while the employee works there, and once the employee doesn't, the insurance takes care of it. Take the employer out of the equation once they're no longer relevant.

asdf21 7y ago
>Take the employer out of the equation once they're no longer relevant. Not exactly, if the company is willing to go so far as bankruptcy / reincorporation... how will any previous contracts with whatever insurance company last through that?
- Retric 7y ago
  The idea is an employee’s pension must be fully funded before they leave and then handled by a 3rd party. At that point the company could dissolve without impacting retired workers.
  - deleted 7y ago
    [deleted]
  - philwelch 7y ago
    Yes, that's how 401(k)s work and why most employers have switched to them.
    - Retric 7y ago
      I am specifically referring to pensions. It’s true that 401(k)s also have this feature, however many employees prefer the defined benefit a pension provides over managing their own returns and the temptations associated with managing money. The core issue is really poor US regulation over any specific issue with pensions. PS: The swap to 401k’s in the US is mostly about cost savings. Companies can simply reduce their contributions without much if any backlash. Meanwhile, third parties profit from managing 401k’s and therefore market them heavily.
- alistairSH 7y ago
  The insurance company is effectively acting as a giant escrow account on behalf of the employees/retirees. The employer pays into the account at whatever rate is required to fully fund retirements. The insurance company manages those funds. If the employer goes bankrupt, the funds are not accessible by raiders/PE firms.
  - eldavido 7y ago
    This already exists. It's called a 401(k).
    - thatfrenchguy 7y ago
      Except 401(k)s are crazy underfunded: https://www.marketwatch.com/story/this-is-the-average-401k-savings-by-age-2019-01-31 https://www.marketwatch.com/story/this-is-the-average-401k-s... (look at the median)
    - alistairSH 7y ago
      Not sure if serious.meme A defined benefit plan is (nominally) funded by the employer with little or no input from the employee at time of investment or distribution. A 401k is funded by the employee, with the employee managing contribution level, fund investment, and eventually distributions. They're only the same, if by same you mean "retirement plans". The details are substantially different.
      - eldavido 7y ago
        A 401k is an account, funded by a mix of employer and employee contributions, that's beyond reach of bankruptcy. That part is the same. The only bit that's different is the self-management of assets, of which many companies are happy to do, increasingly for lower and lower fees. 0.2-0.3% being common which I bet goes toe-to-toe with good pension managers. They really aren't that different.
        alistairSH 7y ago
- rsynnott 7y ago
  The way it works at least here generally is that the pension fund is held in trust, on a per employee basis, by an insurance company (usually) employed by the company to do that. So it's (in principle) immune to bankruptcy of both the employer and third party insurance company.