Day: July 4, 2011

http://www.americamagazine.org/blog/entry.cfm?blog_id=2&entry_id=4342

GE, Coal Operators Latest to Eliminate Pensions
POSTED AT: SUNDAY, JUNE 26, 2011 03:26:14 PM
AUTHOR: CLAYTON SINYAI

*** begin quote ***

The pension was a good fit for the dominant business model of the postwar era. Blue-chip firms like GM and IBM assumed long-term employment relationships. They competed less by downsizing than by drawing more value out of their existing workforce – by upgrading their skills and improving productivity. Corporations could afford to invest more in worker training and development only if they knew the worker would be around long enough for that investment to pay off. Hence the pension, a benefit that was more valuable the longer one stayed with the company.

Today’s firms don’t want a long relationship with their workers; they want to show stockholders that they are cutting payrolls NOW, not developing human capital for some future decade. Holdouts who tried to preserve the old model became goats in the market, panned as stagnant and inflexible. High labor costs put them at a disadvantage against competitors who declined to offer an expensive pension benefit. IBM began a controversial pullout from the defined benefit pension in 1999; GM shifted new hires into a 401k beginning in 2007.

The disappearance of the pension is a catastrophe for working families whose full effects won’t be felt for years; many of the boomers are retiring with a pension benefit, but few of their successors will. But the past few decades have already shown that personal retirement accounts are no substitute for pensions. Hard-pressed workers are seldom able to put enough into a retirement account for reasonable security in old age. And while a properly funded defined-benefit pension plan can spread risks across decades, an individual retiree needs to cash in when he retires – whether the market is up or down.

*** end quote ***

For the “clueless”, that need a memo to tell them that the “gold watch” era is over, then let this serve the purpose.

An AT&T actuary in the mid Seventies disabused me of the value of the pension and the purposes of it. Wow, was that I an eye opener! I was stunned at how little the Biz put aside for “my” pension. Pennies! I was ever stunned further when the rationale for pensions was explained; the concept “involuntary servitude” came to mind! In my MBA Accounting classes, I learned about diversification and “sinking funds”.

And, have you ever wondered why folks get “fired” before the five-year vesting period?

Social Security is the mandatory Ponzi scheme. Pensions are cut from the same bolt of cloth.

One thing that “workers” need to learn quickly is that “There’s no one to depend upon but oneself”.

Pensions are history.

The Social Security fraud pays off at the pleasure of the Congress. Not something I’d recommend to depend upon.

401Ks and IRAs are systematically “looted” by Wall Street and their accomplices in Congress. Either blatantly by outright theft or surreptitiously by “fees”, commissions, or compromised fiduciaries.

So what does this translate to for today’s workers?

(1) ruthless financial discipline — no bad debt;

(2) save big bux; it’s your version of a pension or Social Security;

(3) a blue collar skill for hard times — never saw a poor plumber;

(4) one or more internet based businesses — your store is always open; and

(5) a free time hobby that generates income.

Fore warned is fore armed!

# # # # #