I think they can change how the benefit amount is calculated, but can the pension be eliminated. What could happen if someone is already receiving their pension benefit; could it be reduced?
6 replies (most recent on top)
Of course the 401K program is 'bad'. It's because we get a pension. Pensions are rare these days. They still offer up to 1200 bucks/year and subsidized costs. As a total package, it's a pretty good deal.
Sure you can probably do better with a 401k using riskier investments, but the beauty of the pension is the security. The pension may not look as nice as 401k in the past several years...but during the dot com bust, it was nice to know it was there
@SDLhKig-1jpg - if a company goes belly up, the federal pension protection plan steps in. The down side is that there is a limit on how much they cover. I think us peons would be ok, but I think above TM would be hurt. Boo hoo.
A simplified overview how a better 401k would help without consideration for market fluctuations. If there were a $6000 per year matching. You would put in 6 and company matches it with another 6 so $12000 per yr. Over 10 years that's $120,000. At Sf you put in $6000, SF matches say $1500. Thats, $7500 per year. Over same 10 yrs that's only $75,000. Plus your contribution and match are guaranteed money...yours..to pass on to family. Pension dies with you and spouse typically. IN THIS EXAMPLE SF SAVES $4500 PER YEAR PER EMPLOYEE BY NOT DOING A FULL MATCH. TIMES 10 YRS AND THAT'S A $45,000 SAVINGS PER EMPLOYEE.
Yes, last comment assumes protection laws don't change. What happens when company goes belly up then everyone's screwed.
I'm no pension expert but I agree. Pension is one of the few times federal government stepped in to protect a benefit. Here's how I understand it. If you are vested with say 25 yrs of service and they decide to change or eliminate pension. You get your 25 yrs of service pension. You may work another 5 years but only 25 years count. Employees would have been better served with a stronger 401k matching program...SF has the worst 40k matching of any major company. Disgraceful really. Who knew...wait, I did...put all my money into my wife's employers 401 k for the $6000 annual matching program....pray she don't divorce me...yikes, buying flowers on way home...
The pension can only be eliminated, reduced, or the calculations changed for future retirees. If they were to mame a change now, they would have to grandfather in existing employees with a retirement date long into the future.
They cannot say "anyone retiring in the next year, we've cut your benefits so now you can't afford to live". Although nothing this current MT does would surprise me.