M
Monte_RCMS
Guest
Another illustration of why government is untrustworthy.
If the individuals had been given control over their own pensions, they could have kept an eye on this “stuff”.
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If the individuals had been given control over their own pensions, they could have kept an eye on this “stuff”.
T
Trader
Guest
A big part of the killing of private pensions came from government regulations. When I began working in 1972 our pensions did not vest until you had 10 years with the company. Our company hired a lot of new college graduates and very few of them stayed that long. It was also a cyclical industry that had layoffs during recessions, although my particular company was family owned and never laid off anyone.
While I was there, we had quite a few employees who had been with the company for 25 years, and one for 50 years. The old timers got pretty nice pensions, but the company was able to pay them because so many workers got no pensions at all when they left after less than ten years.
Then pension reform laws changed vesting dramatically. It was perfectly understandable that the average person who worked at a first job only two years would want to keep credit for the time he worked, but Congress had no solution for where the additional cost of those pensions would come from. It was an unfunded mandate and many employers changed to the present 401(k) defined contribution programs where they knew the cost of system rather than the defined benefit style where they could only estimate what the future cost would be. They were also forced to contribute to the Federal Pension Benefit Guarantee Program, which was another cost.
In 1982 IRA’s became available for workers even if they were covered by a company pension, although there were limits on the deductibility of worker contributions based on income that were fairly low. An average couple would be limited if both spouses worked full time. Some people, like me, saved $2000 every year even when contributions were not deductible. Many of my co-workers spent $2000 per year on cigarettes and beer instead. My 19 years of regular contributions totalling $38,000 are now worth more than $400,000. The people who spent the money on cigarettes and beer have coughs, if they are still alive.
While I was there, we had quite a few employees who had been with the company for 25 years, and one for 50 years. The old timers got pretty nice pensions, but the company was able to pay them because so many workers got no pensions at all when they left after less than ten years.
Then pension reform laws changed vesting dramatically. It was perfectly understandable that the average person who worked at a first job only two years would want to keep credit for the time he worked, but Congress had no solution for where the additional cost of those pensions would come from. It was an unfunded mandate and many employers changed to the present 401(k) defined contribution programs where they knew the cost of system rather than the defined benefit style where they could only estimate what the future cost would be. They were also forced to contribute to the Federal Pension Benefit Guarantee Program, which was another cost.
In 1982 IRA’s became available for workers even if they were covered by a company pension, although there were limits on the deductibility of worker contributions based on income that were fairly low. An average couple would be limited if both spouses worked full time. Some people, like me, saved $2000 every year even when contributions were not deductible. Many of my co-workers spent $2000 per year on cigarettes and beer instead. My 19 years of regular contributions totalling $38,000 are now worth more than $400,000. The people who spent the money on cigarettes and beer have coughs, if they are still alive.
M
Monte_RCMS
Guest
Good summary!!!A big part of the killing of private pensions came from government regulations. When I began working in 1972 our pensions did not vest until you had 10 years with the company. Our company hired a lot of new college graduates and very few of them stayed that long. It was also a cyclical industry that had layoffs during recessions, although my particular company was family owned and never laid off anyone.
While I was there, we had quite a few employees who had been with the company for 25 years, and one for 50 years. The old timers got pretty nice pensions, but the company was able to pay them because so many workers got no pensions at all when they left after less than ten years.
Then pension reform laws changed vesting dramatically. It was perfectly understandable that the average person who worked at a first job only two years would want to keep credit for the time he worked, but Congress had no solution for where the additional cost of those pensions would come from. It was an unfunded mandate and many employers changed to the present 401(k) defined contribution programs where they knew the cost of system rather than the defined benefit style where they could only estimate what the future cost would be. They were also forced to contribute to the Federal Pension Benefit Guarantee Program, which was another cost.
In 1982 IRA’s became available for workers even if they were covered by a company pension, although there were limits on the deductibility of worker contributions based on income that were fairly low. An average couple would be limited if both spouses worked full time. Some people, like me, saved $2000 every year even when contributions were not deductible. Many of my co-workers spent $2000 per year on cigarettes and beer instead. My 19 years of regular contributions totalling $38,000 are now worth more than $400,000. The people who spent the money on cigarettes and beer have coughs, if they are still alive.
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