I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?
A defined-contribution pension plan, where you end up actually owning the assets in question, is the only way to be sure that no one will shrink your pension in bankruptcy, or (for a public pension) reduce them by legislative fiat.
And more and more pension funds offer low-fee index funds than ever before. Praise Vanguard.
The whole scenario of giant global entities taking over agriculture and food services is probably the most obviously bad but ok things that will happen in my lifetime. We've declared dairy some sort of environmental catastrophe, to be replaced by cloudy water percolated through soy, almonds and similar products, which ultimately will roll up to 4-6 companies like Coke, Pepsi, Inbev, etc.
Assuming of course that you have actually saved over time and have picked appropriate assets to invest in.
Defined benefit plans have their problems--both the funding and the fact that they were historically designed around long-term employment at a single organization. But they do have the virtue of being a retirement income stream that requires no action on an employee's part.
ADDED: >no one will shrink your pension in bankruptcy
Except the market depending upon where you have invested your money
This risk is why Congress passed ERISA and created the PBGC, which nevertheless is at risk of failure itself, with its own projection for its insolvency being about 5 years out.
The problem is not defined benefit vs defined contribution really, it's that companies are not really required to fund defined benefit.
There are 1001 third party companies (normally insurers) who will happily underwrite a defined benefit scheme (so if the employer goes under the pensions are fine). But that would mean employers actually making pensions contributions that would actually fund the actual cost. Firms prefer to under pay the schemes. Depending on the scheme/firm/local-laws, that might be by just underpaying it, or by more cunning means like using the funds to buy company stock (so it looks like its funded on paper but you're just as screwed when the employer fails, Ironically this is what the federal government is doing with social security too) or by making optimistic assumptions (if I assume all workers die a week after retirement age and a 9% interest rate, final salary pensions need only cost me 5cents a head today! Can you prove I'm wrong?)
Unions (where they exist and have influence) also don't want to push this. Admitting the employer is unlikely to pay is a serious accusation that won't be proven for 20+ years. If you press hard and the employer DOES up their (real) contributions then that means you'll lose out somewhere else in the compensation package (so less health coverage or lower raises). Plus, If you get someone 1000 dollars more in 20 years, but 10 dollars less now, they won't thank you,they'll demand to know where there 10 dollars is!
This is also the reason politicians won't regulate harder: it would push firms to declare bankruptcy sooner (and the electorate punishes that, better let the problem worsen and hope its the next guys issue) and it would mean many firms withdrawing or cutting back their schemes. And again, people would rather have the promise of a good pension (that will likely never happen) than the certainty of a mediocre pension.
The key issue here is a mix of costs and people being strongly incentivised to lie about a cost now as the problem won't happen for decades.
The only advantage defined contribution has is that it is harder to cheat. But actually, defined benefit schemes are less risky and far more appropriate for the average dummy than defined contribution schemes.
Well, yeah because defined benefit actually makes some kind of commitment on what you're going to get, whereas defined contribution just tells you what you'll give, right?
I mean it's all in the name. DC is just "give us yer money and sure we'll do our best for you, as long as our fees are paid"....
The bigger problem is that unsophisticated investors may overly invest in risky assets that don't pan out or they don't invest at all/borrow against savings/etc.
Individual investors do have the option of investing in things like treasuries and annuities. Of course, in an economic collapse, all bets are off. But if you're willing to put up with low returns (maybe 3%), you can invest your money pretty safely.
DC retirement plans heap all correlated market risk on individual retirees.
Given that the risks of an underfunding are greater than an overfunding, that market returns are exogenous to the merits of any given retiree, and the goal is to supply adequate income to live on in retirement, the arguments in favour of a DB plan, a payment mandate by the employer, a government backing, and severe penalties for malfeasance, including clawbacks to investors and creditors of deadbeat employers, seems more than appropriate.
McClatchy just had pension trouble. So does my home state of Illinois. So does this company, apparently.
You seem to think it's possible to just magic a large-scale change in human behavior into existence. It isn't. I think DC+social security is a pretty fair compromise. You're never going to starve if you totally screw up. There's also Medicare to help pay medical expenses. So the worst-case scenario isn't awful. On the other hand, if you want a comfortable retirement with a nice house, travel, etc., you need to be a good steward of a DC plan.
I also think having people with a little more skin in the game (the stock market) will help to tamp down this tiresome class politics about how the 1% is screwing everyone over. Pensions are big investors, it's not fair that some investors (pensioners) get bailed out in a bad market environment, whereas others (DC plan participants) don't. Don't forget, pensions don't magically create money, they have to invest and rely on the whims of the market just like DC plan participants.
Plus, there are good DC plans. The better ones opt you into a target date retirement fund and automatically invest in a reasonable basket of securities so you don't have to figure it out yourself. Human Interest is a great example of a simple, no-frills plan I've seen. My wife's Schwab account is too complicated.
I get that DB might be better in theory but I fail to see how, given the constraints of reality, and human nature, and politics, we aren't going to get a repeat of the current DB fiasco over and over again. Just look at the incentives.
I like the fact that I have a DB plan from a prior employer but, as you say, I'm not sure it's a great fit for most situations moving forward.
The big issue here though is how to make either work for the average person? A defined benefit scheme where the employer is fiddling the books will fail. A defined contribution scheme where the management company is charging fat fees and pushing risky investments will fail. Can we really trust the majority of people with no financial acumen to tell the difference?
I feel like both require the user to swim with sharks right now...
Whereas DB, it seems like every place and in every time, there are always incentives to underfund, to cheat, to push liabilities around, to misrepresent them, to dump them on taxpayers. These things are closer to immutable human nature and won't change, IMO.
The bigger issue that is NOBODY can really afford to retire given how long people are living, escalating medical costs, and low rates of return. The DC people are just ahead of the DB folks in realizing this, because they're relying on bailouts there isn't enough money anywhere to fund. Illinois is a case in point.
If you tell people to shut up and pay and we'll assure the outcome, they can do that. Thats DB.
If you give people an "account" (even with good default investments), people have to manage that. They have to fill it up when they have a bad year, with actual cash from their current accounts. They have to ignore their brother in laws who put all the money in enron and made a bomb and tells you you're an idiot for sticking low fees. They have to pay attention and watch out for changes to fees or laws. And they have to start moving the money to lower risk items and plan 5+ years ahead to retire. And even then, that's just getting the index fund strategy right. The strategy may fail. They have to put money in when a market goes down and take it out when a market goes up.
I doubt very much that people will succeed at that. That's the core flaw in the DC model.
Personally I think that sort of work is better done centrally.
The obvious solution is simply to get rid of the laws that allow and encourage corporations and courts to collude in stealing employee pensions.
Sure, he's humorous, but he's not offering his opinions except in the most general terms. He follows facts, not hype.
Carlson started his career as a journalist, working for right-wing publications.
Funny world we live in.
Tucker is right wing. He also has a very casual relationship with the truth.
Oliver is definitely to the left, but he also doesn't lie.
There’s like 10 different companies discussed on the first page itself, including the specific company here.
I mean, it’s all over mainstream media.
Many of them are incredibly poorly run. Bad hiring practices, little/no investment in operations or process, etc.
All I'm saying is, you have to look case by case at what's going on. Sometimes the PE firm does basically loot the business. In others, entrenched management has been there decades with little board or investor oversight, is performing way below the rest of the industry, and really does need a swift kick in the ass.
Don't rush to blame the PE guys here anyway. Everyone knows Americans are drinking much less milk, they probably bought it at a deep discount knowing they might not be able to turn it into a successful business, and that bet failed.
Finance is famous for making people sitting at their desks all day waiting to get a deck at 11AM to put in logos with the correct resolution.
Can you name me the 10th-best PC operating system maker? No, you can't, because there isn't one. Whereas I'm sure the management practices of a typical small-town pizza shop aren't great.
I'll grant that perhaps companies get lazy if they're monopolies but that doesn't last forever. I just think it's silly to suggest that companies in cutthroat, competitive industries are less high-performance than average, smaller firms.
I can't overstate the degree to which all the different industries in New York socially overlap. The degree of separation between someone who works in technology, media, finance, publishing and advertising is 0 or 1. Those relationships become marriages, friendships, acquaintances, people sitting next to you at charity dinner.
Perhaps most critically the Times is a family owned business, the owners are billionaires, the current owner is also it's publisher. They have no interest in poking around the fundamental mechanics of how rich people operate in this country.
Shiny stories of fraud or insider trading or whistleblowing? Absolutely. But questioning the core mechanics of capital, especially capital centered in New York operates would never happen.
Which is which (and when since they switch roles sometimes) is a matter of opinion not fact. You can't really regulate that any more than you can arrest people for being "bad"...
Should businesses not be allowed to take on too much debt?
oh wow, I never heard of that happening before thanks for the tip.
Like I said, the movie itself would be more relatable if any possibility of the circumstances were relatable for a man. For women its practical to dream about a man choosing them for qualities they were born with while the man created every circumstance in their own life to obtain wealth and security before eventually decide to choose that woman, and that movie caters to that. It took me a while to figure out why certain romance movies were unappealing and predictably so between genders, and that's what it is.
I don't actually care about or mind the reality. The extent of my point is that watching depictions of it aren't interesting when no part of it is something you can dream about and have a chance of it happening.
Gender stereotypes may have some truth to them, but it’s far less than most people seem to think. Everything else being equal, most women would prefer to date attractive men and most men would prefer to date wealthy women.
If this is an issue for you, vote in members of Congress who care about this. There's an election coming up this year. Your representative in the house will be on the ballot, and maybe one of your senators. Please find out where the candidates on your ballot stand on this issue.
The only thing that has changed is that PE has managed to take some cues from VCs and mount a PR campaign aimed at techies and other new-money types to make it seem like the industry isn’t as vulturistic as it has always been. And techies and new-money investors believe them. Because it’s easy to believe the wolf until he kills you or leaves you for dead.
As to why it’s not illegal... there’s both the realpolitik “who are friends with congresspeople” as well as the wonky “how do you make it illegal? It’s just combining a lot of elements of capitalism”
The way you make it illegal, of course, is preventing stuff like directors being able to get paid big bonuses for buyouts (basically bribes to accept LBOs), by properly classifying such movements as stealing assets from the company
Why would I want a law to warp the market even further to protect pensions and these zombie companies?
Perhaps my observations reflect the sentiment of others and that's why bigger waves haven't been made, because we don't care about this slow motion trainwreck.
Lever up