article on pension changes

[brad]

http://www.cbsnews.com/stories/2002/...in532435.shtml

as i see it, main thing is pensions dont have to be in seperate account (not part of corp. assets) . can anyone say, bankruptcy, uh oh youre just out of luck?

[marbles]

"as i see it, main thing is pensions dont have to be in seperate account (not part of corp. assets) . can anyone say, bankruptcy, uh oh youre just out of luck?"
-No, that's not what the article says at all. I would recommend you read it again, but it's a pretty crappy article anyway...

If you want to learn more about the differences between defined contribution and defined benefit plans, you're better off just typing "defined benefit" or "defined contribution" or "cash balance plan" in a google search.

[brad]

'Unlike a 401(k) plan, employees neither own the accounts or make investment decisions. Unlike a traditional pension plan, the worker isn't guaranteed annual benefits after retiring.nlike a 401(k) plan, employees neither own the accounts or make investment decisions. '

yeah it is a crappy article

[marbles]

You're right; it is a crappy article. The funny thing is you happened to cite one of the more misleading passages of half-truths in the whole thing.

If I may:

"'Unlike a 401(k) plan, employees neither own the accounts or make investment decisions."
That's true. Of course, the defined benefit plan being replaced was never managed or owned by the individual employees, either. Funny the article doesn't mention that. Were you under the impression that the average Teamster is trading on the portfolio of assets that drive his pension plan?

"Unlike a traditional pension plan, the worker isn't guaranteed annual benefits after retiring."
This is untrue, particularly in the context of the article. At retirement, every Employee is guaranteed the amount in his Cash Balance as defined by the Plan. If the Balance is small, it's because the Assets haven't performed well, not because the company has bills to pay. Further, if an employee had accrued a benefit prior to the conversion, his retirement benefit cannot be lower than the benefit he had previously accrued.

Please, do yourself a favor and learn more about how these things work, and make sure your source is unbiased. Otherwise, you may just bump into an actuary at a cocktail party someday and really look silly in front of everyone.

[brad]

ok but if the company goes bankrupt then how do u get your cash balance as defined by the plan?