How will this affect Tulsa?

[Red Arrow]

I may not be much of a union guy, but a deal is a deal and if you spent the majority of your adult life at AA and expected a certain retirement, you should get that retirement, Ed.

I agree.  That retirement is part of your earnings of the past.  To take it away now is like saying that you need to give back part of you salary/wages from years ago.  Retirement benefits to date should be non-negotiable.  Future benefits are a different story.

This to me is not a union or non-union issue.

[heironymouspasparagus]

I agree.  That retirement is part of your earnings of the past.  To take it away now is like saying that you need to give back part of you salary/wages from years ago.  Retirement benefits to date should be non-negotiable.  Future benefits are a different story.

This to me is not a union or non-union issue.

Huge issue for everyone.  Goes hand in hand with the massive failure that 401k's have been, as compared to a defined benefit pension.

[Red Arrow]

Huge issue for everyone.  Goes hand in hand with the massive failure that 401k's have been, as compared to a defined benefit pension.

I believe the AA retirement is a defined benefit pension that is in potentially serious difficulty.

[Ed W]

You're right.  AA retirement is a defined benefit plan that was frozen on Nov 29, 2011.  Employees no longer accrue time toward it, and the amount it will pay out is likewise frozen.  For someone close to retirement, that's not a big issue, but for an employee who's perhaps in his mid-forties, it certainly is a concern.  AA wanted to dump all their pensions on the Pension Benefit Guarantee Corporation, which is funded through fees from corporations.  PBGC didn't want to take on the additional burden since they're already running a deficit.  Basically, they guarantee a pension up to about $50K/year, so that would cover the flight attendants and mechanics, but the pilots with their much richer plan would be screwed.  Long story short - they negotiated a deal.  We keep our AA pension at the frozen level.  Dunno about the pilots.

[heironymouspasparagus]

I believe the AA retirement is a defined benefit pension that is in potentially serious difficulty.

Pretty much any defined benefit plan has been allowed to be used as a "personal playground" of the corporation for many years now.  Unlike the previous "arms length" that was required.

When the company goes under, they take the pension down with them way too often in this country.  Another shame on Congress's for the last 30+ years - that they allowed this.  But then, they have been bought and paid for lo these many years....

[Conan71]

Huge issue for everyone.  Goes hand in hand with the massive failure that 401k's have been, as compared to a defined benefit pension.

The only failure in the 401K system is it requires someone to need to take time to pay attention to what their account is doing and to have some basic understanding of investments.  A company matching my contribution on a 1:1 basis tax-deferred up to a certain amount is a no-brainer good deal.

As far as defined benefit plans, it's not just corporate malfeasance creating such a drain on them.  Take a look at what the government has done with Social Security retirement age.  Take a look at what foreign countries are trying to do about raising their retirement age.  

A major problem is having a significant amount of people on your payroll who aren't producing a dime for the corporation going onto plans after 20-30 years of service instead of 40 to 45.  It makes a huge difference.  A corporation or government simply cannot afford to pay for massive amounts of idleness without some sort of financial repercussion down the road especially with the number of boomers who are and have retired in the last 10-15 years and who are planning to retire in the next several years.

[nathanm]

A major problem is having a significant amount of people on your payroll who aren't producing a dime for the corporation going onto plans after 20-30 years of service instead of 40 to 45.  It makes a huge difference.  A corporation or government simply cannot afford to pay for massive amounts of idleness without some sort of financial repercussion down the road especially with the number of boomers who are and have retired in the last 10-15 years and who are planning to retire in the next several years.

That's what the investment income is supposed to be for. When the administrators use it as their own personal hedge fund or lock most of the assets up in company stock it tends not to work out as well. You'll note that most companies still have defined benefit pension plans..for upper management. (AFAIK, most white collar professional firms also have defined benefit pensions in addition to the 401k) Either way, the companies that have been able to dump their pension plans on the PBGC without actually going out of business are getting an enormous advantage. AFAIK, the PBGC rescue doesn't even count as income for them. If a bank writes off part of your mortgage, you get a nice 1099 and get to pay income tax. (YMMV at the moment, as there are temporary rules in place exempting some writedowns from taxation)

[we vs us]

Actually, the problem with 401ks is that they track the market.  They track ups and downs.  This is great if you retire on an up year, but awful if you retire on a down year.  And of course we had several down years, there. 

This is not to say that it doesn't have a place in retirement investment.  But it definitely demands that you have a level of expertise and active participation that something like a pension does not.  While I think that level of engagement is acceptable for some, I'm not ready to suggest that it's the best choice for everyone. 

[Conan71]

Actually, the problem with 401ks is that they track the market.  They track ups and downs.  This is great if you retire on an up year, but awful if you retire on a down year.  And of course we had several down years, there. 

This is not to say that it doesn't have a place in retirement investment.  But it definitely demands that you have a level of expertise and active participation that something like a pension does not.  While I think that level of engagement is acceptable for some, I'm not ready to suggest that it's the best choice for everyone. 

Company pension plans which heavily invest in their own stock also track the market.

The point is, with a 401K or IRA, you can control your own destiny if you pay attention to what is happening and seek to learn even just a little about investments.  I'm not even counting on SSI being available for me in another 20 or so years.

[Teatownclown]

Company pension plans which heavily invest in their own stock also track the market.

The point is, with a 401K or IRA, you can control your own destiny if you pay attention to what is happening and seek to learn even just a little about investments.  I'm not even counting on SSI being available for me in another 20 or so years.

Guess work....is that like hard work in your vocab?

[nathanm]

The point is, with a 401K or IRA, you can control your own destiny if you pay attention to what is happening and seek to learn even just a little about investments.

Some people can. SWMBO cannot. Due to some ethics compliance issues, she gets to choose between a few stock and bond index funds, a couple of funds that invest in developing countries, and treasuries. The only market timing she gets to do is moving funds from stocks or corporate bonds to treasuries when it looks like the market is going to take a dump and vice versa.

Expecting everyone to become learned enough to wisely invest in the stock market is like expecting everyone to become learned enough to wisely select their Congresspeople. Some people can and will do it, but most won't or can't.

[rdj]

Ah, public policy to ensure the lowest common denominator can continue to be just that!  The key to a country's success!

[heironymouspasparagus]

The only failure in the 401K system is it requires someone to need to take time to pay attention to what their account is doing and to have some basic understanding of investments.  A company matching my contribution on a 1:1 basis tax-deferred up to a certain amount is a no-brainer good deal.

A major problem is having a significant amount of people on your payroll who aren't producing a dime for the corporation going onto plans after 20-30 years of service instead of 40 to 45.  It makes a huge difference.  A corporation or government simply cannot afford to pay for massive amounts of idleness without some sort of financial repercussion down the road especially with the number of boomers who are and have retired in the last 10-15 years and who are planning to retire in the next several years.

In other words, to be a certified financial planner.  1:1 is good if you can get it.  Many, if not most don't.  But there is good news on the horizon - the average value of a 401k in this country is at an all time high since Fidelity began tracking them in 1998.  $74,900.  PLENTY for anyone's retirement!!  Yep, now if only we had all been trained as certified financial planners instead of whatever career it is we chose!  Wow, another one of the "personal responsibility" moments....dumb engineering school!


I'm more than a little curious about where you see all those non-producers retiring after 20 years of doing nothing...I want a job like that...I could still put in 20!!  Except for the manager's doing the cutting (and the was oil, so that was obvious), I have never been in a company where there were people just sitting around not producing a dime for the corporation.  In fact, most of those companies cut meat rather than fat when they did the cutting.  There just wasn't that much fat.  Maybe I have just been blessed to work with a lot of good, decent, hardworking people who get up every morning thinking about doing a good job when they go to work (or they are just so scared of getting dumped, they dare not have any other thought?).  Haven't met that person yet who gets up thinking "how can I screw off all day and stick it to the company".  They must be out there - I keep hearing about them all the time - I just haven't had the misfortune to work with them.  Maybe before I reach retirement time, I will be so afflicted...

That even includes the big - moderately well unionized - company - and we have gone from around 120,000 at the bottom of the Bush adventure to over 170,000 now.  Not too bad for such a defective economy - oh, wait, that is the Fox fantasy....   Still waiting to find the malingerer there.

[heironymouspasparagus]

The point is, with a 401K or IRA, you can control your own destiny if you pay attention to what is happening and seek to learn even just a little about investments.  

Control your own destiny....  


Wow!.... I mean, like, WOW!!!

[Conan71]

Control your own destiny....  


Wow!.... I mean, like, WOW!!!

You are for someone else controlling your destiny?  Who?  The government?  Some corporate board?  Some small business which might not exist in five years?  Wow!... I mean, like, WOW!!!

What, you aren't bright enough to plan for and manage your own retirement with a little help?  You're supposedly an engineer, I doubt you are very good at letting others do things for you, why would seeding your retirement be any different?