Lockheed-Martin machinists on strike ... pension for new employees at issue

I don't mean to come off as being wholly in support of pensions. I'm not, really. I just think this is the short route for companies to absolve themselves of any investment whatsoever in their employees' retirement. Maybe it's because I came from the newspaper industry where 401k match ceased to exist, but that's the next step and every union employee at Lockheed should know it.

But there are advantages to the plan. Flexibility and the prospective higher rate of return is one. The ability to access that money for qualified educational expenses is another. (I know you can do this with IRAs, I believe also with 401k, you pay the normal income tax rate but no early withdrawal.) Another big one is spousal benefit -- pension payments stop or are greatly reduced if you die the day after you retire, but a 401k is your own nest-egg.

Mostly though, I really don't see it as a tremendous matter of unfairness to create a two-tier system. I only see it as unfair if it's taking something away or changing mid-stream on someone who has already made significant time on the first plan.

 

401k does have an early withdrawal penalty of 10% until age 59 1/2. Most do allow loans though that can be without tax consequence as long as you pay it back.

I saw a stat somewhere about companies that offered a pension plan today compared against something like 10 or 15 years ago. Percentage was something around 20-30% today versus 80% plus 15 years ago.

 

Defined benefit plans are insured by the government. So if you are promised an annuity you will get it. 401K's are not are not insured.

So as an employee I would want the defined benefit plan.

 

It's true at least some portion of your defined benefit plan's insured. But it's not true that if you are promised an annuity of, say, $6,000 a month that your $6,000 a month is guaranteed. It's also typically the case that you can invest much of your 401K in insured investments.

But, as has been pointed out, you can want the defined benefit plan all you want, but those are decidedly on the way out.

 

OK, so you agree the ERISA-covered and insured defined benefit is a better benefit than a defined contribution, and you're down to "so what, employers don't want to provide them, anyway." OK.

Sure, employers don't want to provide pensions. They're expensive. They really don't want to provide whatever meager percentage to which they've whittled their 401k contribution, if any, these days, either. Employers also want to shift medical coverage costs to the employee, too. Is any of that a surprise to anyone?

 

I don't see how you can get that from my posts ...

 

There isn't a labor lawyer in the United States who would agree with you, in that case.

 

Ohhhhh kaaaaaay ... whatever that means.

 

That means you cannot find a single lawyer who negotiates benefits for employees who would take a defined contribution program over a defined benefit program.

 

Gotcha ... I thought you meant that you couldn't find a lawyer who'd agree that I couldn't see how you'd get that I agreed that ERISA-covered plans were better ... so you see how confused I was!

 

According to Wikipedia, 74% of Lockheed Martin's revenues in 2009 came from military sales. They're practically an arm of the government anyway, so give their employees the same sort of pension plan government employees get.