3 ms·
Not many people - most get 401ks, which are a poor substitute (and incidentally, not originally intended to be used for retirement savings). As for why they ge
by JimmyL 17y ago
Not many people - most get 401ks, which are a poor substitute (and incidentally, not originally intended to be used for retirement savings).
As for why they get pensions and you don't, it's mostly due to them being organized and having been around for a while. One of the biggest things that unions, when doing collective bargaining, argue for is that all members be treated the same way, as opposed to workers being treated differently depending on how long they've been there. This isn't to say that unions don't like seniority - they love it - but that after X years of work Joe will have the same benefits that Jack, who's currently worked X years, has now. This is one of their main things they offer to their members: look at what we got Jack, in X years you'll have it too. As a result, every time they redo their contracts, all the new guys get pensions not because people in other jobs get them, but because the other guys in the bargaining unit have it.
As for why they got them in the first place, that's what being part of a large union in a blue-collar field does for you.
Why does the government care? Because most large unions have well-oiled political machines attached to them. Union members have a disproportionately high voting percentage, and are very loyal to what their union recommends. They can get 500 people to do anything political (run a phone bank, show up at a rally, write letters, etc.) very easily and efficiently, which comes in very handy if you're running for something.
From their point of view, the bottom line is that they worked for years with an understanding that part of their compensation would come in the form of pensions, and now (through no fault of their own) the company is dying and can't afford it, because they managed their money poorly. From the government's point of view, it's about a bunch of people that are very politically active and soon to become a lot poorer and on social security.
- eds 17y agoand now (through no fault of their own) the company is dying and can't afford it, because they managed their money poorly For example, by giving their workers pensions and other compensation far exceeding their market value.
- olefoo 17y agoYou do not understand a very basic fact about pensions; namely that they are an obligation that the company has. Your statement makes as much sense as saying that the company is in financial trouble because they have paid loans back in years past. For the company to default on the pensions that they owe is just as bad if not worse as if they were to default on their line of credit with a bank.
- mattmcknight 17y agoThey shouldn't be an obligation that the company has, that's what makes them suck. They should be separately held funds that can survive beyond the lifetime of the company (like 401k plans). To make them company obligations is to invite disaster. It's analogous to the situation at GM where each current worker covers the health care of 10 other people. If you want a pension plan because you trust and want to pay pension plan administrators to manage your assets, it needs to be a separate financial entity from the company itself.
- olefoo 17y agoThink of it this way, the fact that it's an obligation is interface; that it was not implemented as a stand-alone fund is the responsibility of the managers. And given what has happened in the financial world in recent years... it's quite possible that stand-alone funds would have been completely wiped out through mismanagement or outright theft.
- eds 17y agoThat's interesting, I was under the impression that pensions were an agreement between the company's management and the union. But it seems you're saying the company had no say in the matter? I know I've never had a pension anywhere I worked. Please explain.
- mattmcknight 17y agoThe union leadership and the management have to be faulted here- they created a benefit based on continuing growth that can't be financially supported in a downturn. Anything besides a pension program that is funded as it goes and has market driven payouts has a high risk of turning into a Ponzi scheme. The beauty of 401k is that the company gives you the money now, they don't just promise to give it to you in the future. As the pace of change continues to accelerate, it is a less and less likely that the company you work for today is going to exist in the same form at the time you retire. Think of all of the newspaper pensions- who's going to be paying those in 30 years? Even if the companies establish separate pension funds that that can survive beyond the life of the company, the payouts from that fund will be based on the performance of its investments and the lifespans of the people that receive funds from it. In short, I'd much rather have a 401k that can be rolled over into the investment freedom of an IRA (some place I can own short contracts) than be depending on a pension plan run by a company that may or may not exist at the time I retire.