What should be done with the autoworker pensions? - Tilted Forum Project Discussion Community

ASU2003 · 12-18-2008, 03:59 PM

It seems like a lot of the auto bailout talk centers around how the new economy companys with the 401k and less worker benefits are able to out compete the old economy companys. So, these workers paid into the pension system the entire time they were working there, but now they are living longer and having higher and higher expenses. Is it right for the companies who didn't save enough or borrowed too much from that pension account to be able to use that money for other purposes?

Bankruptcy will help the company out, but the retirees will lose out on a lot of their monthly checks from the company. When United Airlines went into bankruptcy, the pensions got cut by 1/3.

401k's might work, but I don't trust them, even when mine was doing ok, it just seems like a disaster in 20-40 years and will prevent the market from behaving naturally. But it made a lot of people a lot of money.

Social security will need to be bailed out or have taxes increased in order to cover them in a few years.

So, what is a person who wants to retire one day and never have to work again need to do? Are companies that offer fewer and fewer benefits to employees (because having any job is better than no job) going to cause a big problem in the next few years when people realize they don't have enough money saved for retirement? Or is it going to take 20-30 years before people realize that they need to save a lot more money for a normal retirement.

Tully Mars · 12-18-2008, 05:10 PM

Quote:

Originally Posted by ASU2003

Bankruptcy will help the company out, but the retirees will lose out on a lot of their monthly checks from the company. When United Airlines went into bankruptcy, the pensions got cut by 1/3.

I think that 1/3 figure is an average. I know a few retired UA pilots and they lost much closer to 50%. The way it was explained, in detail, to me was the max. pension you could get was 45K a year. So pilots who had been making 130K a year and contributing for 30 years into a plan that would pay them 90K woke up one day to find out they could only get 45K. Part of the kicker for pilots was they couldn't be pilots after age 60, that's been upped to 65 since. So couldn't just work a few more years and try to build up some saving to buffer the shock.

I think this type of thing is exactly what they're trying to do to the UAW workers.

Yakk · 12-19-2008, 09:59 AM

There are no guarantees in this world.

An investment plan requires that you invest in things that continue to make money and be worth others buying.

A pension plan requires that the pension plan make similar investments, or the company you work for continues to exist, and that the rules don't change via fiat.

Buying enough goods to survive your twilight years requires that property laws continue to be enforced, and that they aren't taxed out from under you.

Basically, when you are 80, you need enough people out there to feel an obligation to you to provide you with what you "feel you need", because you probably cannot trade on your current usefulness to keep your standard of living high enough.

One method would be to lower your current standard of living a bunch, and massively increase your own investments and savings, and aim for less risk (spread your assets geographically, over multiple industries, over multiple investment devices, etc). Then when things go bad, you are better off than you would be if you had saved less.

The fact is, if the economy isn't strong enough to support the number of retired people, if the workers don't feel that they owe it to the retired people to throw money at them, then you (the retired folk) won't have resources to spend.

Any attempts to deal with the aggregate retiring problem without taking that into account is likely to fail.

12-18-2008, 03:59 PM	#1 (permalink)
ASU2003 immoral minority Location: possibly ohio	What should be done with the autoworker pensions? It seems like a lot of the auto bailout talk centers around how the new economy companys with the 401k and less worker benefits are able to out compete the old economy companys. So, these workers paid into the pension system the entire time they were working there, but now they are living longer and having higher and higher expenses. Is it right for the companies who didn't save enough or borrowed too much from that pension account to be able to use that money for other purposes? Bankruptcy will help the company out, but the retirees will lose out on a lot of their monthly checks from the company. When United Airlines went into bankruptcy, the pensions got cut by 1/3. 401k's might work, but I don't trust them, even when mine was doing ok, it just seems like a disaster in 20-40 years and will prevent the market from behaving naturally. But it made a lot of people a lot of money. Social security will need to be bailed out or have taxes increased in order to cover them in a few years. So, what is a person who wants to retire one day and never have to work again need to do? Are companies that offer fewer and fewer benefits to employees (because having any job is better than no job) going to cause a big problem in the next few years when people realize they don't have enough money saved for retirement? Or is it going to take 20-30 years before people realize that they need to save a lot more money for a normal retirement.

12-19-2008, 09:59 AM	#3 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	There are no guarantees in this world. An investment plan requires that you invest in things that continue to make money and be worth others buying. A pension plan requires that the pension plan make similar investments, or the company you work for continues to exist, and that the rules don't change via fiat. Buying enough goods to survive your twilight years requires that property laws continue to be enforced, and that they aren't taxed out from under you. Basically, when you are 80, you need enough people out there to feel an obligation to you to provide you with what you "feel you need", because you probably cannot trade on your current usefulness to keep your standard of living high enough. One method would be to lower your current standard of living a bunch, and massively increase your own investments and savings, and aim for less risk (spread your assets geographically, over multiple industries, over multiple investment devices, etc). Then when things go bad, you are better off than you would be if you had saved less. The fact is, if the economy isn't strong enough to support the number of retired people, if the workers don't feel that they owe it to the retired people to throw money at them, then you (the retired folk) won't have resources to spend. Any attempts to deal with the aggregate retiring problem without taking that into account is likely to fail. __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.