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Opinion please, state gov't. control of some retirement plans.....
A very short read with this link. But I personally don't get this. Is there some form of astrological alignment that is affecting those in governments thinking they are better able to run just about anything from a "central planning" function?
Wow. First I've heard of this. Maybe CALPERS is looking for a lot more in the way of contributions to mask the rotten job they've done for the last ten years or so.
On the other hand, if this setup isn't mandatory, but rather an optional service to be provided to small employers, it might be worth talking about.
Based on other readings I believe the idea is to provide many companies/organizations with the opportunity to get access to better plans than they usually have access to. A company with 20 workers is not going to get access to the Fidelitys , Vanguards and other good plans. Instead the employer (who probably doesn't know as much as almost all the visitors to this site ) is likely to get a plan for his/her workers with high fees and other problems in return for being told that the plan will cost HIM very little. That's true but his workers will end up with a bad plan. Most employers do not want to rip off their workers so this option is a good thing.
Thanks, jerry. Your notes about this make sense. The article was a bit light on facts and details, but that is why I was curious about other knowledge about this process.
Here's a half-Informed shot based on a quick read. Sounds like politicians are waking up to the fact many (most?) participants in 401k type plans do a poor job managiing them and preparing for retirement. Under the old & disappearing DB plans, employees couldn't easily raid their plan while still employed. Not true of 401ks & similar. I know of folk who borrow & borrow from these plans while still working. Than, if anything's left when they hit 59.5, pull the remaining $$ out and squander that before even retiring. Sadder yet to think that often much of that $$ came from an employer match. Irresponsible? Of course. But, what does society do with masses of impoverished seniors in few years? Anyway, sounds like these politicians are trying to figure how to keep some of that $$ from being squandered in the manner just described. Not sure how having bunch of incompetents trying to solve the problem of incompetence will turn out
One of the few problems besides costs in a defined benefit pension in contrast with defined contribution plan is that states haven't been putting in their required contributions for many years. NJ is a prime example. Christie boasts about making a $1.1 billion contribution to state DB plan, larger than the 4 or 5 previous governors ever made; problem is he is required to put in around $3.5 billion+ based on legislation enacted requiring contributions to spread over a fixed amount of time for the State to fulfill its required contributions so it will have paid it off.
Heard on radio Providence, RI may declare bankruptcy. What kind of effect will that have on their pension?
Under-funding defined pension plan is wide spreaded in both public as well as private sectors. IBM was reported to fund their pension plan only 20%. Someday this will affect the older retirees, and those who use their 401(K) plan are better off. Existing laws are NOT adequate to prevent this practice to continue.
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On the other hand, if this setup isn't mandatory, but rather an optional service to be provided to small employers, it might be worth talking about.
The article was a bit light on facts and details, but that is why I was curious about other knowledge about this process.
Take care,
Catch
Heard on radio Providence, RI may declare bankruptcy. What kind of effect will that have on their pension?