GM Inside News Forum banner
1 - 3 of 3 Posts

·
Registered
Joined
·
2,021 Posts
I'm torn on this. I feel for them but also recognize that a government bailout sends a really bad message and I bet every company with a pension is thinking "how can I dump my pension obligations on the government"?

I have a 401k, is anyone going to bail me out if my returns aren't ample enough for my retirement? I'm at the whim of the markets with substantial YTD losses - no one is covering me, so why should I and everyone else cover a partial loss of someone's pension?

Again, really torn. I know a 401k situation is a little different as I'm planning on being at the whim of the market vs. someone who was banking on their pension. But still - it is money out of my pockets to benefit someone else that quite possibly will still have a better pension than my 401k income, even if their pension is 30% lower.

Maybe a cap on government assistance depending on the pension level or something.

I don't know.
I started working at IBM right around the turn of the millennium, when they were one of the first blue chippers in '97 to dump their pensions and move everyone to a combo of a cash balance and 401k plan. The senior folks who weren't grandfathered (over the age of 40 at that time) lost bigly from a financial standpoint. The cash balance plan collecting interest at a rate of prime plus one percent, as we headed towards two decades of declining interest rates, killed those guys. They worked around 20 years under a promise of a pension, only to have the rug yanked (by a financially healthy corporation no less).

The problem is this. I started with a 401k, and if you do, you will probably end up to the better vs. a pension in the long run. Obviously it takes some knowledge to properly invest to be able to survive market fluctuations over a lenghty working career - and companies weren't great 20 years ago at providing education on the matter, though it's improved quite a bit and things like target date funds help the uninitiated a lot. But the key is no matter what happens, that money is yours from day 1 (even if there are some laggard companies out there that hold a vesting period on the employer match). Company goes bankrupt, your retirement fund is still safe.

With a pension the money is never yours until you retire. You are banking on a corporation making good on its word so you can plan to have X dollars per month in retirement. So it's not right for these people to have their retirement hinging on something completely out of their hands, and then wiped out by poor corporate decisions. The answer to that today is to completely move all new employees to a 401k plan, but for those who started on a pension, they shouldn't be left out in the cold due to circumstances beyond their control.

And yes, it is solid evidence of why having a union at your back is worthwhile, particularly for the blue collared.
 

·
Registered
Joined
·
2,021 Posts
Did any GM salary employees or retirees lose their pension? Remember, every one of these years-long big pension Delphi employees started as GM employees........ (GM spun-off Delphi in 1999)
My father was a salaried engineer and retired in '99. He did not lose his pension, but he took a haircut on the payments and health insurance after the bankruptcy. Been 6 years since he passed so memory is getting foggy but I think it was roughly equal to his SS payment.
 

·
Registered
Joined
·
2,021 Posts
My dad retired in?..... around 2003, he was GM hourly (UAW) he didn't lose anything, although I remember when things were melting down at GM in 2007/2008; he was concerned, my sister just bought her first house, I bought my second house (and hadn't yet sold the first one) I remember my dad saying; "I might be able to help one of you, but I'm not sure I can help both of you".

In your dad's case, (hypothetically) if $3,000/month ($36,000/year) goes to $1,500/month ($18,000/year) AND have to pay for your own health insurance, one would certainly notice and likely have to drastically alter your lifestyle, and I'm sure many were forced to go back to work (or spouses were forced to continue working).
Yeah I remember him being chapped at the UAW guys not losing anything, but the salaried guys getting whacked. Thinking about it more I now also recall, GM was trying to buy out the non union pensioners post bankruptcy for a cash payment. He asked my advice and I said don't give up the monthly payments, plus if it was in your benefit why would GM be pushing it? A lot of my historical IBM cynicism was in play with respect to pensions. Of course in hindsight due to short life, he would have made out better with the payoff, but you can't really plan for that.
 
  • Like
Reactions: Ed753 and BlackGTP
1 - 3 of 3 Posts
Top