Congress could soon allow pension plans to cut benefits for current retirees

[annabanana]

http://www.washingtonpost.com/business/economy/congress-could-soon-allow-pension-plans-to-cut-benefits-for-current-retirees/2014/12/03/62e5112a-7b0c-11e4-9a27-6fdbc612bff8_story.html

Congress could soon allow pension plans to cut benefits for current retirees

Congress could soon allow the benefits of current retirees to be cut as part of an agreement to address the fiscal distress confronting some of the nation’s 1,400 multi-employer pension plans.

Several unions and pension advocates opposing the move, which would be unprecedented, say that permitting financially strapped plans to cut retiree benefits would violate the central promise of traditional pensions: that they would provide a defined benefit for life.

“This proposal would devastate retirees and their surviving spouses,” said Karen Friedman, executive vice president of the Pension Rights Center, a nonprofit group. “The proposal would also torpedo basic protections of the federal private pension law . . . that states that once benefits are earned, they can’t be cut back.”

Several of the nation’s large multi-employer pension plans are on a course that would leave them insolvent within a decade. If that occurred, the federal insurance fund that protects the retirement benefits of more than 10 million Americans in multi-employer plans could collapse.

Of course, all us old pensioners could cooperate, die off, and decrease the surplus population.......

[LeftInTX]

1. Awful

[yeoman6987]

5. This is horrible!

[kelly1mm]

2. This is why, despite all the drawbacks, I fully support 401k/IRA plans over

traditional pensions. That and the ability to retire early with 401k/IRA which does not really exist with a traditional pension.

[antigop]

8. What in the world are you talking about? I know a lot of people who retired early with a

"traditional pension."

[kelly1mm]

12. My wife and I just retiured this past June. She was a school teacher for 22 years and retired at 46

She cannot draw on her pension till 55 at the earliest (and they with a 42% reduction). I was in the accounting/legal field and am 44. I also have a small (like less than $300 per month) pension coming at 62.

If it was not for the 401k/IRA and the compounding nature of the matches and well as out contributions, coupled with favorable withdraw rules (basically IRA to Roth IRA transfer streams to avoid 10% early withdraw penalties) we would not have been able to retire in out 40's.

That and the ACA!

[antigop]

13. that's just because you and your wife's pension was set up that way. There is nothing LEGALLY

against having earlier payouts.

As I stated, I know a lot of people who retired early with good "traditional" defined benefit pensions.

eta: And ask any actuary...he/she will tell you the most efficient way of providing retirement benefits is through a defined benefit pension.

So stop pushing Wall Street's agenda.

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

[kelly1mm]

15. Besides public safety and military pensions, I know of no other defined benefit

pension plans that let you draw funds before your mid- 50's at all and only if you take a SIGNIFICANT permanent reduction in benefits to do so. For example, my wife's pension will be $1600 per month (inflation adjusted) when she begins to draw out at 62. If she took 'early' retirement at 55 (which is STILL 9 years from now) it would be $976 per month.


Not saying that the law or the plans could not be set up to allow it, it is just that I know of none that do.

However, none of this is my point anyway. My point is that by having the account (IRA/401k) be something I control, I can make the decisions on how to draw it down. And, just like the GM/Delphi salaried employees and Detroit retirees are learning, that 'promised' benefit is not so rock solid as they believed.

[antigop]

17. There are plans that do...you just don't know about them.

Just stop already. Stop pushing the Wall Street agenda.

[kelly1mm]

18. I am pushing my agenda. What I am saying is that I am very glad that I control the majority

of my retirement funds rather than having just a pension where (as the OP is showing and recent history shows) the true 'owners' of the pension can reduce the 'promised' payout with little trouble.

Or, I suppose I could just decide I have no agency and just let the waves of life flow over me.

I choose however to be a bit more engaged and (hopefully) influence the outcome a bit.

And as for 'Wall Street", I seriously doubt Wall Street is happy with my wife and I getting even further off the consumer spending treadmill that they need us Americans on to continue their profits.

[antigop]

29. GO watch the PBS Frontline link I posted. And how did those ENRON 401(k)'s work out?

Stop pushing rightwing talking points.

[kelly1mm]

20. Where do you think definded benefit pension money is invested? Wall Street! Look at CALPERS,

the Teamsters Pension Fund, etc.

So, who is pushing the Wall Street agenda?

[antigop]

28. You are...why do you think Wall Street loves 401(k)'s over defined benefit pensions? Why would

Wall Street LOVE to decimate the defined benefit Social Security and privatize it?

GEEZ.

[kelly1mm]

34. Do you deny that defined benefit pension plans like CALPERS and the Teamsters invest in Wall Street?

If so, you are delusional.

I will agree that you have a point about Social Security. That is an insurance plan that, by law, does not invest in Wall Street. Wall Street would LOVE to get it's hands on that.

However, that is not what we were discussing. We were discussing traditional pension plans. The kind that the OP says may be even easier in the future for the pensions 'promised' to be reduced. Those assets are ALREADY in the stock market to a very significant extent.

[antigop]

35. WATCH. THE. PBS. FRONTLINE. VIDEO. I. POSTED. AND. STOP. PUSHING. RW. TALKING. POINTS. nt

[kelly1mm]

40. No. You will not answer a simple question so I will not comply with your shouted demand. nt

[antigop]

41. No, what? You won't watch the video I posted? Watch it. And learn. nt

[kelly1mm]

43. Answer my question. Does CAPLPERS and or the Teamster's Pension Fund invest in Wall Street? nt

[antigop]

44. Why do you think Wall Street loves 401(k)'s over defined benefit pensions? Watch the video!

[antigop]

45. thanks for the opportunity to post the video -- the one you won't watch. nt

[Omaha Steve]

47. Yes they do

I don't understand how you get $ out of the 401K before age 59 1/2 without the penalty.

[kelly1mm]

49. Short answer is to convert to ROTH IRA and wait 5 years. It takes planning

and 5 years worth of living expenses saved up at the time of retirement but that is the way you do it.

Basically, we will spend about 22k per year in retirement.

we have over $100k now in non-retirement accounts.

So, in 2015, we will transfer 30k from IRA to Roth IRA. We will have no penalty on that transfer but will pay income tax. The income tax bill will be a total of just under $1000, after the standard deductions for MFJ. We will be repeating this each year till we start drawing pensions (2030 for my wife, 2032 for myself).

Once your money from the IRA to ROTH IRA transfer has been in the account 5 years (in this example 2020) you can withdraw the funds tax fee (like any regular roth distribution). At that point my wife will be 51. No penalty, way less tax (3% as opposed to 30% state and federal total) than when working.

In financial planning literature this is sometimes called a 'roth ira pipeline'.

[Omaha Steve]

51. ok

Marta and I have Roths at Ameritrade. So we are simulating some of what you are doing.

[antigop]

42. Why do you think Wall Street loves 401(k)'s over defined benefit pensions? Watch the video!

nt

[Calista241]

59. Wall street already has their hands on pensioners and pensioner investment funds.

Wall Street would love to have more people invest in 401k's and IRA / Roth IRA's as well. For those banks, there is more potential for growth in the 401k and IRA market than their is in public and private pensions. More investors = more investment capital = more money for investment banks.

What kelly is saying is that you have more personal control over what happens with your money in 401k's and IRA's, and you have ceded away all of your control away if you are invested in a pension.

Essentially, future pensioners are relying on their union / pension firm / government to make decisions in their personal best interest, and to manage the money to ensure that there is enough funds to cover all their future obligations.

Both pensions and 401k / IRA's have positive and negative aspects, and both are valid investment options for people to depend upon for their retirement.

[antigop]

61. Nice rightwing talking points there. WATCH THE VIDEO! nt

[Omaha Steve]

46. I retired traditional and early a week ago today

I won't be 58 until Jan 23rd, 2015.

[kelly1mm]

48. My wife could retire "early" at 55 and draw her teachers pension (at a 42% discount from 'full'

retirement age of 62). However, I am speaking about, I guess, really early retirement. My wife just retired at 46 and I was 44. That would be impossible with a traditional retirement plan (except military/public safety). It is possible with 401k/IRA's with IRA to Roth IRA conversions to avoid the 10% penalty coupled with low expenses and the ACA for healthcare.

[Omaha Steve]

50. Since I retired early I can withdraw from my 457 without a penalty

You two must have really stuck a good percentage of income (up to the annual limit?) for years?

[kelly1mm]

52. yes - that is exactly what we did. Along with some (by todays standards) pretty amazing

matching from our employers. That and no kids. Not that no kids was exactly the plan, it just worked out that way.

[Omaha Steve]

55. Marta and I both have Roths at Ameritrade

Marta has an 18 year phone company pension and a small pension that was shut down to go 401K.

She also gets 75% of my pension after I'm gone for life as long as she doesn't remarry by union contract.

This won't touch me since I left before the first of next year: City of Omaha civilian union agrees to big changes in employee pension plan: http://www.omaha.com/news/metro/city-of-omaha-civilian-union-agrees-to-big-changes-in/article_4d00879c-7006-11e4-a7cc-236c649d1e0a.html

[Marrah_G]

57. I know lots of people retired early on pensions

Some even working at new careers. I also know people who have had retirement savings gutted from the market crashing.

I think everyone should have pensions, but I don't personally have any skin in the game. At 44 I have no savings nor will I have any in the forseeable future. I'll just work until I can't and then I'll die. That's my retirement plan and the retirement plan of a lot of people these days.

[kelly1mm]

58. I am sorry that at 44 you have no savings/retirement plan. Way too many americans in this position.

While I certainly could have been more precise in my wording, what I meant was that except for military/public safety pensions, I know of no pensions that allow people to retire and draw benefits in their mid 40's. My wife's pension allows her to retire 'early' at 55 and get pension payments at a 42% discount from her regular pension payments if she started at 62.

[Marrah_G]

62. I hope they plan on building a lot more sec 8 elderly housing

BBecause we are going to need more and more of it.

[NaturalHigh]

3. Is anyone surprised by this?

[NBachers]

4. "Gee, I wonder where all the money went!"

[Johonny]

24. exactly-companies are having record profits and the stock market has doubled in 6 years

My company has to follow the laws and so needed to pour money hand and foot into the fund when the market crashed. Now its fund has gained so much money the past few years as the stock market explodes that it hasn't needed to put money in and is out pacing demands. Why isn't every fund doing this... well a lot of companies delay putting money in the fund, owe millions to their funds, get corporate raided and the raiders steal the fund... there is no excuse for this as companies are having record profits. If the funds are in danger of going bankrupt and companies have more money than they can possibly need then the solution would be for congress to make more rigid laws on pension funds, not to decrease them. Where would the savings from decreasing them go, to more bonuses for upper management. How does that help the economy?

[BrotherIvan]

6. I'm sure while they're starving they'll be glad we can afford all those bombs!

What is wrong with this country??????????

And why can't we take it out of Congress' pension?

[onethatcares]

22. it's not just the bombs

the most efficient way for the corporate overlords to increase the value of THEIR OWN wealth is to buy a company, shed employees, go bankrupt listing the pension plans as being an anchor to growth, and then collapsing the entire corporation, laying off all.

Kinda like the mittster and his buds in bain capital.

[BrotherIvan]

32. Yes and now cities are doing it as well

Declaring "bankruptcy" or fiscal troubles while they privatize everything and shed pensions. It's horrible. And the fact that Mitt got so many votes even though that was his serial MO says so much about the US.

[bl968]

7. Limit it.

The law needs to come with a requirement prohibiting it's use if the company has paid executive bonuses any time in the last 10 fiscal years.

[cstanleytech]

11. Executive bonuses are ok imo as long as its not an exorbitant amount and as long as its not given

because they saved the company x amount by firing people or cutting their hours and or benefits.

[woo me with science]

9. There's a new one (or two, or three, or four) every day.

We are the livestock on a farm for profit.

Wall Street Demands Derivatives Deregulation In Government Shutdown Bill
http://www.democraticunderground.com/10025919984

One casualty of the House budget talks to avert a government shutdown may be a proposed rule requiring investment advisers to act in the best interests of their clients
http://www.democraticunderground.com/?com=view_post&forum=1002&pid=5921777

Obama Ready to Defy Base in Order to Advance Trans-Pacific Partnership
http://www.democraticunderground.com/10025911398

Wall Street to Workers: Give Us Your Retirement Savings and Stop Asking Questions
http://www.democraticunderground.com/1016108511

[LiberalLoner]

21. +1

[martigras]

10. And one of the two sponsors is a Democrat

Can't believe even a retiring Democrat would do this to the retired community.
The "remedy" is being crafted by Committee Chairman John Kline, R-Minn., and its ranking member, California's Rep. George Miller, D-Martinez. Shame on both of them.

[DeSwiss]

14. For the life of me......

...I can't see why everyone is still so enthralled with a system that is clearly trying to knock you off.

- K&R

[Tierra_y_Libertad]

16. Will Obama veto it or "compromise"?

[liberal_at_heart]

19. This is why Democrats are losing seats. Stand up for the people damn it.

Either stand up for the people or the people will not stand up for you at election time.

[belzabubba333]

23. this is funny, theyre losing seats now cause dems are not standing up for them at election time

that's what's driving them to the right you want them to pull to the left you have to vote for them or gets someone else elected in the primary for whom you can vote

[liberal_at_heart]

38. I don't vote for people who actively vote against mine and my family's best interest.

I decided that the moment Democrats decided to go along with the privatization of education. I will not vote for someone who takes my son's education away. If they in their infinite wisdom take that as a sign they should go more right well then they will not get votes. That is pretty evident from both 2010 and 2014. Eventually we will get candidates that get it. We will get candidates that know there is a huge vacuum on the left and a huge opportunity for someone who is willing to go to the left.

[99Forever]

25. And what are our Democratic Party "serious people" doing to stop it?

Funny how many issues this basic question is pertinent to.

Perhaps if the Democratic Party wants to fare better in the coming elections, it's time they take a STRONG stand BEFORE it happens.

[DustyJoe]

26. why the surprise

Govt has been telling SS recipients for years the countdown to the reduction of benefits due to unfunded liability. It's going to happen in this time of about 90 million, almost 1/3rd of the country not looking for work anymore. The old adage of 'someday we'll run out of other peoples money' will become an actuality. It seems coincidental that the 10yr private pension liability will overrun their plans about the same time that SS will be insolvent.

[Thinkingabout]

27. Well, Congress can show how much they are behind this idea and step up to the plate and say

They will be the first to cut their pensions since the debt is so large. They could also cut their pay and allotment for their staffs and office cost.

[cyberswede]

54. Yes, indeed.

But they won't. Assholes.

[yuiyoshida]

30. Right wingers would dance in the street...

After they cut off money to Veterans and close down VA Hospitals, which is, I am sure on Republican's agenda eventually.

[kimbutgar]

31. A lot of fox loving republican voters get those pensions that are going to get cut

Then fox will spin it, the fault is Obama's. The stupids won't realize those they support are the ones who are responsible. But they'll be lead away by lies once again.

My 92 year old mother gets my Dad's generous pension, luckily it's Calpers and we are a solid blue state. But I don't feel sorry for any retiree with a pension who votes republican. The rethugs are going to go after their social security and Medicare benefits also but they are too neuro linguistically brained washed to realize they have been duped.

If I was younger I would sell everything and move to another country. Because there is going to be a lot of pain in this country in the next few years. And fox will blame the President and not the tea rethug congress.

[lonestarnot]

56. Fuck faux snooze. My puggie acquaintance at work will see who's making the cuts. He ain't gona

like it one bit. I hope he haz puke.

[spanone]

33. let's start with congressional pensions.

[onethatcares]

36. amen to that brother

pull it back. they don't work enough days for we the people to be worth $174,000.00 per year and free postage.

Our government is bought and paid for except for a few brave souls.

[Rex]

37. +1 billion

[onecent]

39. We can't let this happen..but how can we stop

anything anymore. I feel so helpless...and at the mercy of our government.
scarey feeling

[TDale313]

53. Words fail me.

Just so fucking tired of the greed and seeing people just trying to survive getting robbed blind over and over and over again. This shit needs to stop.

[on point]

60. Let's start with congress. Eliminate their pensions and move them to 80/20 401K's