Why did most companies pivot from pensions?
15 replies (most recent on top)
Cost and the simple fact that pensions by design benefit long term employees. The days of people staying with a company 30 years are over. Now statistically a 5 year employee is long term. You don’t accumulate enough benefit for the plan to be feasible. Pensions are antiquated plans that don’t fit the modern business world.
@1ghb+1vbjWgnq
I read where IBM unfroze their cash balance pension when they stopped making 401K matching.
https://www.thestreet.com/retirement-daily/saving-investing-for-retirement/ibm-switches-to-cash-balance-pension-plan-what-does-it-mean-for-employees-and-employers-#:~:text=IBM%20has%20an%20existing%20cash,to%20employees'%20retirement%20benefit%20accounts.
Do not forget the Non-Qualified plans for Highly Compensated employees. These plans exist because the 401k plan would not pass compliance testing.
It was decided by CEO Ken Thompson, when asked why he made the decision in a town hall, he simply said they did it to be “competitive.”
Thompson of course being the same mo--n who ignored David Carroll’s warning to him and the Board about buying the hunk of cr-p Golden West. Then accepting the “business risk” of continuing to sell pick a pay sub-prime mortgage loans. Geniuses!
Wachovia failed shortly thereafter. Not a fan of WF management since, but the city of Charlotte was very lucky WF came in with the offer to buy Wachovia without TARP $. After the Fed had already announced Citi was taking over Wachovia. Which would have been a disaster for Charlotte as Citi would have taken the assets/deposits and said goodbye to CLT and the to all Wachovia employees.
401k is essential for saving for the future. Yet WF consistently reduces the benefit and value of the WF plan. The plan/WF went from matching employee contributions with each payroll, to ER match quarterly in company stock, to what exists now. No ER match for EE contributions unless you are an employee on the last minute of the last day of year.
Next WF will follow IBM once again to be “competitive” and do away with the 401k company match.
Just another way to take from employees because management cannot come up true operating efficiencies beyond laying people off, shifting more and more jobs offshore, and creating other morale lifting decisions, RTO, tracking the minutes you are at your desk on your computers, etc. I wonder how they calculate time away from your desk if you are “collaborating” in a conference room with those jobs sent offshore?
Charlie and executive management does values WF employees. Hello Union?? What else do employees have to lose?
So?
Fortunately, I came of age, when I realized I had to to take care of myself. I didn't do it right initially, but i did start tucking some money away.
I also got wf to pay for my degree. they got their moneys worth.
Heh, I am now a 'credentialed', worthless, retiree!
Cheers!
Greed.
No exactly true, the c suite all have a golden parachute - healthcare / pension… ok for me and not for thee.
because it cost companies more than the opposite, which is to shift all the responsibility and risk to the employee (401K or any other defined contribution plan)
"Boomers extracting more profits out of companies."
Say what?
Have one from my state gov job. Never made a great salary but stuck with it for 25 years, so pension and health care. I know these are too expensive for private industry.
Liability and expense. The company becomes your fiduciary even if the assets are held with a 3rd party fiduciary. It’s not overly difficult to learn how to manage your own account and if preferred, fee only investment advisors are also a reasonable cost.
Very expensive. You do have the option to set some money aside each check throughout your career though which will typically result in you accumulating millions over a 40 year career. So just simply be responsible.
Pension = The corporation's responsibility to manage the money.
401(k) = Your responsibility to "manage" the money.
Boomers extracting more profits out of companies.
Expense and ERISA. Try Google next time.