Adjustable pension plan design begins to gain converts (this plan screwed my mom)

[Omaha Steve]

http://www.pionline.com/article/20130429/PRINTSUB/304299981/adjustable-pension-plan-design-begins-to-gain-convertsadjustable-pension-plan-design-begins-to-gain-converts

Benefits can shrink or grow depending on performance
By Kevin Olsen | April 29, 2013

A new pension plan design that allows employers to drastically reduce their risk while still providing lifetime income to participants is gaining support as an alternative to moving employees into a defined contribution plans.

The adjustable pension plan was conceived by Richard Hudson, principal consulting actuary at Cheiron Inc., New York. Its key difference from a traditional DB plan is that the benefit received each year is adjusted from an original multiplier based on the previous year's investment performance.

The plan design shares the investment risk between employees and employers while providing more retirement income security than a typical defined contribution plan.

Earlier this month, Consumers Union, Yonkers, N.Y., reached a collective bargaining agreement with the Newspaper Guild of New York to create an adjustable pension plan that will replace the standard DB plan for guild members. The existing plan had about $42 million in assets as of Dec. 31, 2011, according to the company's most recent Form 5500 filing. That plan will be frozen on May 31, and contributions to the adjustable plan will start June 1.

FULL story at link.

My mom worked for a non-profit hospital for 30 years. For that she averaged about $150 a month. Awhile back the stock mark was doing so well she got a one time middle of the year bonus. The next year her monthly check was cut in half thanks to crooks on Wall St.

[SheilaT]

1. I'm slightly confused.

Is your mother's $150/month her pension? Or was that her monthly wage?

I hope she also gets SS.

[Omaha Steve]

2. Mom's pension averaged $150 a month

She passed away last August. With her Social Security (dad benefited from a union wage) her total income after dad died in 94 was about $1,000 a month.

Medicaid was the only reason she died with dignity with cancer in a hospice.

OS

[SheilaT]

4. Thank you for the clarification.

My mother was a nurse also. She worked at a hospital with no pension plan whatsoever, but she had the foresight to purchase an annuity at a reasonable point in her life. She was born a couple of years before your mom, and passed away in 1999 at the age of 82. She had the good fortune to go quickly from a stroke, so we weren't faced with either a terrible disease or a slow decline.

I am glad your mother was able to be in a hospice at the end.

[hollysmom]

3. this is not sharing the risk, this is putting the risk onthe employee -

hencethe company has no vested interest in the stockp performance and they can find a job for their idiot nephew.

In one company - our 401k was invested with a mutual fund company that was one of our clients - I always felt the company agreed for them to put us in the worst performing mutual funds in exchange for continuing to do business with us.
Let companies invest in Social security plus. we would get more. I am done with the market.