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Read somewhere that they get 12% match on 401k. No pensions, but there’s almost none of that in today’s world.
by pixelatedindex 2y ago
Read somewhere that they get 12% match on 401k. No pensions, but there’s almost none of that in today’s world.
- brightball 2y agoPensions are absolutely crippling to a company long term.
- toomuchtodo 2y agoNah, 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.epi.org/publication/retirement-in-america/ https://www.pionline.com/defined-contribution/401k-experiment-has-failed-fueled-us-retirement-crisis-labor-economist-says https://www.pionline.com/defined-contribution/401k-experimen... https://www.nytimes.com/2024/05/08/magazine/401k-retirement-crisis.html https://www.nytimes.com/2024/05/08/magazine/401k-retirement-... https://www.nbcnews.com/business/retirement/great-401-k-experiment-has-failed-many-americans-n327321 https://www.nbcnews.com/business/retirement/great-401-k-expe...
- blackeyeblitzar 2y ago> 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.
- koolba 2y agoPensions 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.
- Manuel_D 2y agoGuaranteed 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.
- michael1999 2y agoLongevity 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.
- Manuel_D 2y agoLongevity 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.
- rangestransform 2y agosome public transit agencies spend over half of their operating budget on pensions
- Eisenstein 2y agoAnd?
- rangestransform 2y agoIt’s problematic, it means a politician can offer pensions to make themselves look better and kick the can down the road
- Eisenstein 2y agoWhat does that have to do with their budget?
- doctorpangloss 2y agoIf it's so obvious, why offer them? Why do deferred compensation? Why promise to pay in the future for anything?
- mrmetanoia 2y agoHedging 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.
- johnnyanmac 2y agoNo, 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.
- renewiltord 2y agoBecause 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.
- doctorpangloss 2y ago> 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?
- rootusrootus 2y agoThe 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.
- asdasdsddd 2y agoyes, this is what happens when you dont work on the next generation
- ImPostingOnHN 2y agoThe resolution seems to be for governments, not random private companies, to look after our people in their old age.
- Steuerheaven 2y agoIf 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.
- blackeyeblitzar 2y agoAnd to governments, not just companies. Public sector pensions in America are basically scamming and stealing from taxpayers.
- michael1999 2y agoPensions 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.
- ImPostingOnHN 2y agoA "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.
- toast0 2y agoPensions seem nice to have, but IMHO, it's generally better for employer and employee when compensation is paid immediately. The accounting is simpler, accountability is easier, and there's no long term entanglements.
- plussed_reader 2y agoSo it's better to assume my current employer is insolvent and to just follow that old conservative truism, "Fuck you, got mine."?
- spywaregorilla 2y agoIt's better to not gamble your retirement on the assumption that your company will be solvent in 40 years. That's not really antagonistic in any way.
- toomuchtodo 2y agoYou require the company to fund a pension held at a custodian. If the company goes bust, your pension benefits are not impacted. Importantly, the retirement contributions are on top of your wages, versus being expected to find the cash for retirement exposure out of your own wages such that a 401k requires. Australia's system is a model: https://en.wikipedia.org/wiki/Superannuation_in_Australia https://en.wikipedia.org/wiki/Superannuation_in_Australia
- MajimasEyepatch 2y agoEmployers match employee contributions to a 401(k), so it's not purely out of one's own wages. In this case, Boeing is matching up to 12% of the employee's income, which is very high.
- toomuchtodo 2y agoBased on a preponderance of the evidence, how successful has that token match been in achieving successful outcomes? It is a match, if you don't contribute, there is no match. That is not how pension contributions and benefits work.
- bluedino 2y agoThat's crazy. 4% is a pretty common match.
- vundercind 2y agoWhich sucks absolute ass because 401ks working as a replacement for pensions requires employer contributions more like this 12%. The plans are clearly structured on the assumption that’s what would happen—there are separate limits for how much an employee can contribute, and how much an employer can, and the employer limit is significantly higher. Even if an employee wants to max out the plan, they can’t, because their contribution level is capped way under the hypothetical max. The idea was plainly that employers would contribute heavily to these. Instead they barely do, making them better than nothing, but kinda shit considering how they were supposed to work. [edit] to put some numbers on it, for 2025 an employee maxes out at $23,500 contribution. Meanwhile, the overall max is $70,000. An employee isn’t allowed to contribute more than 1/3 of the max allowed. In fact, with straight matching only and no fixed or multiplier-based matching from the employer, you can still only hit about 2/3 of the max. It’s hard to overstate how entirely the 401k has failed to achieve its apparent purpose in practice.
- buildsjets 2y agoWow, that sucks! You should form a union and strike for more.
- blackeyeblitzar 2y agoPensions are very rare in private industry because they’re incredibly expensive and amount to a Ponzi scheme due to chronic underfunding. In the US everyone has moved onto 401k, except government jobs. But almost all state pensions are in a bad shape. Taxpayers are wasting tons of money paying out pensions that simply never made sense and were never deserved - after all offering up something that is “risk free” would be insanely expensive in theory. Unfortunately some states like California make it impossible for states to get out of those of obligations. Private companies can go bankrupt, but the state will keep taking from taxpayers
- carabiner 2y agohttps://www.boeingbenefits.com/employee/emp-retirement.html https://www.boeingbenefits.com/employee/emp-retirement.html Regular nonunion employees get 10% match, immediately vested.