Can someone explain what this means, and how its not illegal? Arent pensions a contract?
Plan was closed in 2012, so these are longtime employees.
People currently collecting pensions are not affected.
Ex employees in the pension are being cashed out with lump sums.
Source: https://www.wsj.com/articles/erie-hit-rock-bottom-the-former...
The upside of public / private pensions is pooling money among a pool of survivors. Rather than saving X money to live off of at 95 while risking dying sooner you essentially save less on a bet that will live to be 95. Die early and you don’t care about losing that bet. Of course this means less money for people to inherit.
Sadly for individuals it’s illegal to set contracts up to do this as they create incentives to kill people which have resulted in past murders. Annuity‘s can offer some of the benefits, but are forced to make less risky investments.
The idea that these encourage murders only came after they were banned, and used in plot devices that required a small number of people. (e.g the Fighting Hellfish)
There is plenty of discussion about brining them back as financial instrument.
https://www.npr.org/2015/11/27/457392597/live-long-and-prosp...
https://www.npr.org/2017/10/26/560152250/a-case-for-tontines...
I beg to differ. My IRA doesn't offer a 6% match.
Not sure if it made outside just the Houston news cycle at the time but as an employee of a competitor I heard from friends at Enron that their employer froze all sales of their stock in employee 401ks before going under. Lou Pai managed to cash out as part of a divorce settlement as documented here https://www.chron.com/business/enron/article/Ex-Enron-exec-P... but most employees were not able to divest themselves and protect their retirement.
The 401k plans I’ve seen all had an option to invest the money in a diverse fund. Either a target date retirement fund that auto allocated to a mix of stocks and bonds, or to other funds such as an S&P 500 index.
Freezing employee stock sales is fairly normal as I understand it. I get emails all the time from my publicly traded employer stating I cannot trade in their stock during certain times (due to the risk of insider trading).
That said, I looked it up and it seems like the claim at the time was there was an “administrative change” to the plan during that period, so not what I speculated it might be.
Employees are very lucky if employers contribute 50% of their contributions (which would would be a max possible of $9500 match this year). And usually it’s significantly less.
In 2019 employers are allowed to contribute up to $36000. No company I have heard of provides anyway near that. The 401k has unfortunately allowed employers to care very little about employees retirement.
If you say the denizens of the companies I’ve worked at are all very lucky, I won’t disagree, but it’s surprising to hear this is uncommon.
EDIT: Or perhaps your percentages are (unusually, for US conversations about 401k contributions) referring to total outlay, by which standard a 100% match is a company covering 50% of the total outlay? But in that case the limit is no where near $9500, perhaps you were missing a 1 in front? The max employee contribution to a 401k was $18,500 in 2018...
EDIT: Sorry just reread your comment, yes that’s another way companies will structure it x% match up to y% of your salary. The x and y differ wildly. Also some will add a up to z total match. Which kind of formula works out best for you highly depends on your salary. But the average employer contribution for someone maxing out their personal contribution is $3000.
>In the simplest terms, contributions made by HCE’s can’t be excessive when compared to those of non-HCE’s. For example, if the average plan contribution by non-HCE’s is 4%, then the most an HCE can contribute is 6%.
Not that I hear much complaining about the compensation, they're rolling in after-tax dollars and RSUs.
So no, not really a contract.
They really are the worst.
25% employer contribution match? That seems very high. I've never worked at a company with higher than 5% match.
I don't know what kind of match they had.
What is a common yearly bonus/raise like at Microsoft, including stock options/grants?
Reality is, 401k is much better for all parties as company and employee can part ways at any time. Employee has more control over their funds, but risk they will lose it all (not companies problem).