Does the Loss of Defined Benefit Plans Hurt America's Future?

LGilmore

Guru
1000 Post Club
The Boeing company's biggest labor union just by the narrowest of margins (600 votes ) voted to end their defined benefit plan and convert to a 401k plan in 2016. The trade off was work guaranteed to 2024 on a new plane (actually an old plane with new wings) a 10k bonus and a 5k bonus after 5 years or so. The 401k will do a 10% match for 5 years, then 5%....

Yes, I've actually installed 401k plans and understand them very well, thanks.


Here's my concern and if you've been in this business a while you'll understand. A large majority of people do not fund their 401ks at all. Of those that do, many make very poor choices and fail to monitor and adjust plans. Many who change jobs, cash out their 401ks as well. The actual track record for 401ks and success is pretty dismal.
Yes, I understand total returns and such, was securities licensed for 25 years.


Here's what concerns me. By the wholesale switch to defined contribution plans are we pushing a problem down the road onto the government to provide for all those who fail at saving?


Defined benefit plans allowed a person to be stupid savings wise because in the end, the pension was there for them. So what happens to the majority when they fail to save? What happens to taxes and government services when these boomers retire with money that lasts ten years?


Defined benefit plans worked because the employer HAD to be responsible for them. In a nation of consumers who don't save, what is it really going to cost in a country where we don't let people starve? Even if the person makes the poorest choices possible, we still take care of them. So how do we cover the cost of those who don't save?
 
Back
Top