Can you depend on company pension?
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
Simple answer...No. Always have other options. Mine is to buy other property to rent out as private income.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
There are a lot of reasons why a pension plan might not end up paying what you expect. Here[^] is a discussion of US auto company pension changes that are likely to happen. The bottom line is that it is not wise to depend on defined benefit (or even 401k plans - think Enron) for the entirety of your retirement livelihood, particularly if that is fairly far in the future. I would strongly recommend supplementing that plan with your own investments. In the US a self funded pre-tax IRA plus a Roth IRA would be a good idea.
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
Absolutely not. In this downturn, I've often read about companies failing to pay their pensions or negotiating payments that are cents on the dollar. The problem with all these companies is that there are ways for them to work around the (I believe) requirement to actually put the money into an account. And even if there is an account, companies play with your pension funds, making bad investments, etc. So, I'd ask them if they have a pension fund they deposit into, and how it's managed. Then again, since you don't have to contribute anything (that's very generous of them, BTW) there's no risk to you, but I also wouldn't bank on it. Marc
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Simple answer...No. Always have other options. Mine is to buy other property to rent out as private income.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
I'm half-way there. I've bought the properties, it's a question of getting in tennants. [And Guinness and Heineken, and and.]
Panic, Chaos, Destruction. My work here is done. or "Drink. Get drunk. Fall over." - P O'H
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
Short answer - Absolutely not! Years ago there was a major scandal in the US when it was discovered that companies with cash-fat retirement funds were using those reserves for current, unrelated expenses. The dam broke when enough people retired that the funds ran short. Like Congress, corporate execs can't resist the temptation to steal borrow funds earmarked for future purposes to cover their mismanagement of current finances. The primary reason the US Social Security program is near bankrupt is that Congress has been steling those funds to pay for pet programs we can't actually afford. You can't expect the company to treat your retirement any better. DD suggested one course that has worked well for many. I know of two people in my life who both came to the US from the Middle East as penniless immigrants, but retired wealthy by following one rule. That was to work hard and save all that one can, then buy rental properties to create an outside cash flow. That cash was always re-invested to buy more property, never touched for any other purpose. Both ended up owning hundreds of rentals in the Los Angeles area by the time they were 40. One of them I worked with actually got in trouble at work for neglecting to deposit 25 paychecks - almost a year of salary - because he forgot. It was his habit to toss them in a shoebox until he saw his accountant, then he forgot to give the accountant the box for a year. You know how it is with small change... One interesting difference between the two was striking. One of them, a friend of my Dad, insisted on personally managing all his rentals, while my friend hired a management company as soon as he had a half dozen or so properties. Dad's friend was a tired old man at 40; my friend was a young, active man who seemed never to have a care in the world. The 10 - 15% management fee charged by most rental managers seems a small price for that. :)
"A Journey of a Thousand Rest Stops Begins with a Single Movement"
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I'm half-way there. I've bought the properties, it's a question of getting in tennants. [And Guinness and Heineken, and and.]
Panic, Chaos, Destruction. My work here is done. or "Drink. Get drunk. Fall over." - P O'H
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
No. Never depend on someone to pay you to do nothing.
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double edged sword. If it nails, you can be rich (Wishing it happens to all of you). Otherwise you will be introuble
That almost, but not completely, makes no sense what so ever. Guessing what you meant to say, how can OWNING property be a bad thing? There's no mortgage on any of my properties and insurance is there against disasters. I just need people in to give me an income.
Panic, Chaos, Destruction. My work here is done. or "Drink. Get drunk. Fall over." - P O'H
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
If you and your employer are in the USA, then the pension plan is likely guaranteed by the US government insured PBGC (Pension Benefit Guarantee Company). PBGC pays if your employer's plan fails for some reason (underfunded, etc.). Your company pays a percentage of the retirement plan each year into the PBGC insurance fund. PBGC has limits to yearly payouts, IIRC capped about $48k/year. Do a google search on PBGC. -- Tom
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That almost, but not completely, makes no sense what so ever. Guessing what you meant to say, how can OWNING property be a bad thing? There's no mortgage on any of my properties and insurance is there against disasters. I just need people in to give me an income.
Panic, Chaos, Destruction. My work here is done. or "Drink. Get drunk. Fall over." - P O'H
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No. Never depend on someone to pay you to do nothing.
Could you forward this to Clegg, Brown, Camaron et al.
Panic, Chaos, Destruction. My work here is done. or "Drink. Get drunk. Fall over." - P O'H
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If you and your employer are in the USA, then the pension plan is likely guaranteed by the US government insured PBGC (Pension Benefit Guarantee Company). PBGC pays if your employer's plan fails for some reason (underfunded, etc.). Your company pays a percentage of the retirement plan each year into the PBGC insurance fund. PBGC has limits to yearly payouts, IIRC capped about $48k/year. Do a google search on PBGC. -- Tom
The PBGC is already running steep deficits[^] as a result of the pension collapses that have accompanied the recent financial troubles including the Madoff rip off. I wouldn't count on it being able to pay either...
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Short answer - Absolutely not! Years ago there was a major scandal in the US when it was discovered that companies with cash-fat retirement funds were using those reserves for current, unrelated expenses. The dam broke when enough people retired that the funds ran short. Like Congress, corporate execs can't resist the temptation to steal borrow funds earmarked for future purposes to cover their mismanagement of current finances. The primary reason the US Social Security program is near bankrupt is that Congress has been steling those funds to pay for pet programs we can't actually afford. You can't expect the company to treat your retirement any better. DD suggested one course that has worked well for many. I know of two people in my life who both came to the US from the Middle East as penniless immigrants, but retired wealthy by following one rule. That was to work hard and save all that one can, then buy rental properties to create an outside cash flow. That cash was always re-invested to buy more property, never touched for any other purpose. Both ended up owning hundreds of rentals in the Los Angeles area by the time they were 40. One of them I worked with actually got in trouble at work for neglecting to deposit 25 paychecks - almost a year of salary - because he forgot. It was his habit to toss them in a shoebox until he saw his accountant, then he forgot to give the accountant the box for a year. You know how it is with small change... One interesting difference between the two was striking. One of them, a friend of my Dad, insisted on personally managing all his rentals, while my friend hired a management company as soon as he had a half dozen or so properties. Dad's friend was a tired old man at 40; my friend was a young, active man who seemed never to have a care in the world. The 10 - 15% management fee charged by most rental managers seems a small price for that. :)
"A Journey of a Thousand Rest Stops Begins with a Single Movement"
Roger Wright wrote:
One of them I worked with actually got in trouble at work for neglecting to deposit 25 paychecks - almost a year of salary - because he forgot.
:laugh: Btw, great post :)
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Short answer - Absolutely not! Years ago there was a major scandal in the US when it was discovered that companies with cash-fat retirement funds were using those reserves for current, unrelated expenses. The dam broke when enough people retired that the funds ran short. Like Congress, corporate execs can't resist the temptation to steal borrow funds earmarked for future purposes to cover their mismanagement of current finances. The primary reason the US Social Security program is near bankrupt is that Congress has been steling those funds to pay for pet programs we can't actually afford. You can't expect the company to treat your retirement any better. DD suggested one course that has worked well for many. I know of two people in my life who both came to the US from the Middle East as penniless immigrants, but retired wealthy by following one rule. That was to work hard and save all that one can, then buy rental properties to create an outside cash flow. That cash was always re-invested to buy more property, never touched for any other purpose. Both ended up owning hundreds of rentals in the Los Angeles area by the time they were 40. One of them I worked with actually got in trouble at work for neglecting to deposit 25 paychecks - almost a year of salary - because he forgot. It was his habit to toss them in a shoebox until he saw his accountant, then he forgot to give the accountant the box for a year. You know how it is with small change... One interesting difference between the two was striking. One of them, a friend of my Dad, insisted on personally managing all his rentals, while my friend hired a management company as soon as he had a half dozen or so properties. Dad's friend was a tired old man at 40; my friend was a young, active man who seemed never to have a care in the world. The 10 - 15% management fee charged by most rental managers seems a small price for that. :)
"A Journey of a Thousand Rest Stops Begins with a Single Movement"
Roger Wright wrote:
Short answer - Absolutely not!
Roger, I was expecting something more uplifting from you, but thanks for the advice. :)
My .NET Business Application Framework My Younger Son & His "PET"
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Absolutely not. In this downturn, I've often read about companies failing to pay their pensions or negotiating payments that are cents on the dollar. The problem with all these companies is that there are ways for them to work around the (I believe) requirement to actually put the money into an account. And even if there is an account, companies play with your pension funds, making bad investments, etc. So, I'd ask them if they have a pension fund they deposit into, and how it's managed. Then again, since you don't have to contribute anything (that's very generous of them, BTW) there's no risk to you, but I also wouldn't bank on it. Marc
Marc Clifton wrote:
since you don't have to contribute anything
Well, I consider it is a big contribution on my part to keep working with some of the idiots in my company. :)
My .NET Business Application Framework My Younger Son & His "PET"
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
I can because of two reasons. 1. The money is put in an account that I own. 2. I work for a state funded University. Now if the plan is some account that they own or it's shares of the company ... then I'd be worried.
John
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
Xiangyang Liu 刘向阳 wrote:
Can you depend on company pension?
Please don't! Treat it as a nice to have, but don't rely on it.
Xiangyang Liu 刘向阳 wrote:
I am just wondering how likely for a pension plan to fail
Ever heard of a company called Polaroid? :) /ravi
My new year resolution: 2048 x 1536 Home | Articles | My .NET bits | Freeware ravib(at)ravib(dot)com
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My company has a pension plan, the kind that you don't have to contribute anything and you get a percentage of the average salary of your last 5 years of service when you retire. The actual percentage depends on years of service in the company. This is a very important factor for many employees to stay with this company and the pension plan is no longer availabe to new employees. I am just wondering how likely for a pension plan to fail (not enough money to pay when you retire)? I am still many years away from retirement, but that makes me more worried (a lot can happen within "many" years).
My .NET Business Application Framework My Younger Son & His "PET"
To echo the crowd: No. You can consider it a supplement to your real retirement money which should come from several elsewheres. Here's an example of a pension situation that turned into a lawsuit. http://www.plansponsor.com/Verizon\_Charged\_with\_Involuntary\_Transfer\_of\_Retiree\_Pension\_Accounts.aspx Not to say that anyone can say for sure that your money won't appear when you retire. But the question is really about spreading your risk. Simple idea; since you don't have to contribute, you could take the money you would have contributed and find another home for it.
_____________________________ _____________________________ It is better to hack the code than to curse the darkness.
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There are a lot of reasons why a pension plan might not end up paying what you expect. Here[^] is a discussion of US auto company pension changes that are likely to happen. The bottom line is that it is not wise to depend on defined benefit (or even 401k plans - think Enron) for the entirety of your retirement livelihood, particularly if that is fairly far in the future. I would strongly recommend supplementing that plan with your own investments. In the US a self funded pre-tax IRA plus a Roth IRA would be a good idea.
Rob Graham wrote:
The bottom line is that it is not wise to depend on defined benefit (or even 401k plans - think Enron)
The problem there wasn't the 401(k) or even that Enron went bust per se; it was that a fraction of Enron's employee's were stupid enough to have their account consist almost entirely of Enron stock. Dunno if it was an active decision on their part; or if Enron defaulted to making employer contributions in stock and they were too lazy to sell it for mutual funds; but either way the employee's who got wiped out were idiots.
3x12=36 2x12=24 1x12=12 0x12=18
