It just became easier for employers to dump retirees' pensions

[spanone]

New York (CNN Business)Traditional pensions are disappearing in America, and the federal government just made it easier for employers to get rid of them.

With no fanfare in early March, the Treasury Department issued a notice that allows employers to buy out current retirees from their pensions with a one-time lump sum payment. The decision reverses Obama-era guidance, issued in 2015, that had effectively banned the practice after officials determined that lump-sum payments often shortchanged seniors.

Now, advocates for the elderly worry that millions of people receiving monthly pension checks could be at risk.

"Permitting plans — for their own financial benefit — to replace joint and survivor or other annuities with lump-sum payments will reduce the retirement security of both workers and their spouses," AARP Legislative Counsel David Certner said.

https://www.cnn.com/2019/03/20/economy/lump-sum-pensions-retirement/index.html

[Blue Owl]

1. All part of Trump's America

[spanone]

2. Disgusting.

[malaise]

11. I disagree

This is the neo-liberal model and it has spread across the globe = the neo-liberal model is rule by oligarchs and it must be stopped

[marybourg]

3. If the lump sum payment is sufficient to buy

the pensioner or the pensioner/spouse an annuity equal to what they were getting from the former employer, it should be fine. It’s easy enough to look up one’s age and proposed lump sum amount and see if it’s sufficient to do so.

[edhopper]

4. Why do I think

it will be much, much less?

[zipplewrath]

5. It rarely is

You can blame it on overly generous pension plans if you want, but it is rarely so. This is especially true for people very close to retirement. A pension plan is a "shared risk" type of plan generally. As such, you receive benefits knowing that some will die early, and some will die later. If they buy everyone out at the same time, they don't know which ones will die early, and which will die late, so they "give" everyone roughly the same. So there is less to go around for everyone.

It's why 401K's and IRA's and the like are a loser for employees. They are unlikely to accumulate enough individually to what they could achieve if they pooled their resources.

[marybourg]

7. Well, some who received pensions at retirement have already died

by the time of buyout; for the rest, the insurance company selling the annuity to the employer has the same actuarial tables as the employer and so, if the buyout is fair, the payout should be the same. If it’s NOT fair, that’s the time to start yelling.

[spanone]

9. from the article...

For retirees, taking a lump sum is entirely voluntary. However, behavioral economists have found that people tend to value money that's right in front of them over money they will get in the future, even if the total over time would be greater. Plus, retiree advocates say that most people aren't well-equipped with the advanced financial knowledge needed to fully evaluate their options, and often, they're pressured by family members.

A 2017 study by MetLife found that one in five retirees who took lump sums spent them down within five and a half years, and nearly a third regretted using large chunks of the money for short-term needs like home improvements.

"People get blinded by the amount of money," said Bill Kadereit, president of the National Retiree Legislative Network. "'We'll offer you $400,000,' and they're age 65. It's not that much money at all. But they don't think about it that way."

[marybourg]

10. That's all true. The best thing to do

with such a lump sum in lieu of pension is to buy an annuity with it. Some employers have done that for off loaded employees, that is, not given them a choice, but simply bought them a commercial annuity with the same payout.

[zipplewrath]

12. Large companies don't buy annuities

They "self finance" their retirement programs. In some cases, those programs are depending upon future profits to fund them. There is a lot of regulation on this but none the less, there is no annuity involved, and in there lies the opportunity to "avoid" future costs by "buying out" employees. There is precious little regulation on these buy outs. IBM was an early adopter and they got sued big time.

https://www.nytimes.com/2004/09/30/technology/ibm-employees-get-320million-in-pension-suit.html

[colsohlibgal]

6. That Is Deplorable

People retire based on one paradigm then get the bait and switch later. Nice.

If this isn’t reversed when we get a sane Administration more and more will be working at McDonalds in their “Golden Years”. Empathy and Fairness are foreign concepts to this administration.

[spanone]

8. I hope they're keeping a list so the next Democratic President and undo all this shit.

[phylny]

13. We are truly months away from retirement and have decided to keep the pension instead of

taking a lump sum. It's a gamble - we could die in a year and then the company "wins." But we could live into our 90s and get the same amount every month.

We are very fortunate, having my husband's pension, 401K, and our Social Security when we decide to take it. We are acutely aware that most aren't as fortunate.

[fescuerescue]

14. If the employees are given a choice

A real choice I don't see as issue with it. Choices are always better than no choices.

But if the company can unilaterally decide to simply buy it out, without choice or negotiation, this is extremely bad.