<p>Why does he feel he hit the jackpot?</p>
<p>He gets a pension and a 401k?</p>
<p>Ibm is or was one of the leaders in cutting pensions.</p>
<p>A 10 percent contribution from a company is sweet…</p>
<p>[IBM’s</a> latest retirement move is bad for workers | Reuters](<a href=“http://www.reuters.com/article/2012/12/12/us-column-miller-ibm-idUSBRE8BB1QW20121212]IBM’s”>http://www.reuters.com/article/2012/12/12/us-column-miller-ibm-idUSBRE8BB1QW20121212)</p>
<p>Yes he gets both. You keep the pension earned up to the point they ended it and going forward you get the 401k. I am not an expert but from what I understand depending on your age there are different matches.</p>
<p>That is one reason I said others may not agree. </p>
<p>A friend that worked for one of the AT&T spinoffs has something similar. From what I am told J & J has a great pension and super 401k match also.</p>
<p>Tom1944, when NJ stopped funding its pensions was there an explanation? Or was everything hush hush for years?</p>
<p>IBM went to cash-balance plans in the 1990s along with hundreds of other companies and this was good if you were a young worker but you took a big haircut if you were an older worker. They changed that more recently to where their 401K is extremely generous.</p>
<p>The latest move dials that generosity back a little and also encourages employees to stick around. Their plan sounds good if you are planning (and have the ability) to stick around.</p>
<p>There are a lot of other issues about IBM and hiring and firing and outsourcing that make them one of the lesser competitive companies in the tech world.</p>
<p>From that article:</p>
<p>
The big corporation I last worked for screwed this up. They weren’t properly taking contributions from my bonus. It didn’t matter to me because I was contributing the dollar max anyway, so I didn’t really care which pile it came out of.</p>
<p>But rules are rules, and when I finally got around to pointing it out, they had to go back three years, figure out the missing contributions, figure out the company match, and figure out the lost earnings, and pay that into my 401k as a penalty.</p>
<p>So because they messed up on some rule that didn’t cost me a penny, they had to pay over $6,000 into my 401k.</p>
<p>Oops.</p>
<p>IBM’s 401k is pretty good, I’ve never worked for a company that contributed more than 3%, and my current company may or may not contribute anything, they don’t decide until the end of the year (and they haven’t paid for several years). So even if an employee lost out on a few months of match or whatever, they are still taking pretty good care of their employees.</p>
<p>A very good friend of mine works for IBM and we talk retirement funding and the 401k deal never comes up. Maybe he hasnt worked at IBM long enough to get 10 percent matches or to have a significant 401k plan.</p>
<p>IBM pays their sales people on commissions. Some of these commissions are paid at the discretion of IBM…</p>
<p>Dstark- it started with Governor Whitmans promise of a 30% income tax cut. That cost $1.8 billion and it was paid for by not making the pension contribution but instead using some sort of debt instrument to bond the payment.
That was taken to court but in the meantime she had left and the next governor Donnie D hatched a plan to settle the case by offering all pensioners and retirees a 9% increase to prove how flush the plans were. At that time they increase employee contributions to 5.5%. He also had an early retirement offer. He also did not make the contribution the employer was required to make. He was sued and the court ruled that while the pensions are guaranteed the funding is left to the legislature and governor. The next 3 governors all saw that as an opportunity to skip funding. Meanwhile with the skipped pension contribution the State provided municipal aid which was used to make the local pension contributions for the police and local government officials. This is where you see early retirement, double dipping and pension spiking. Those pensions are basically fine.</p>
<p>When Governor Chrisitie was running he told teachers and cops he would never change their pension. He sent them a letter saying their unions were lying to them. After the election he immediate railed against the pension abuses (none of which apply to teachers) and passed some changes to pensions. The big one was the removal of COLA if the funds are not funded at least 80%. That same law said full pension funding had to be phased in over 7 years. Employee contributions were increased going to 7%.</p>
<p>None of the changes really impact me personally since I have the ability to mitigate against them.
Clearly the State should not have played games and instead made their contributions as required going back to Whitman. There should never have been the 9% increase or the early retirements. I bet if the State did that we would not be having this discussion.</p>
<p>Tom1944, thanks for the history.</p>
<p>“He also had an early retirement offer. He also did not make the contribution the employer was required to make. He was sued and the court ruled that while the pensions are guaranteed the funding is left to the legislature and governor”</p>
<p>Hmmmm…</p>
<p>Nice contradiction…</p>
<p>Getting rid of colas…</p>
<p>Looks like that is what the country is going to do to deal with SS and income taxes. We aren’t going to get rid of colas exactly. Just cut them back…</p>
<p>The cut in colas might save a percent a year…at first the cuts seem small…but over time the cuts arent that small.</p>
<p>They did not get rid of all colas basically only for teachers and state workers. Cops and the connected politicians will still get them.</p>
<p>There are several cases in court now. The one I am most interested in says that all the pensions should have been put at equal funding prior to the law outlawing colas kicking in. The logic is since everyone played by the same rules why should some funds be cola eligible and others not since the only reason the pensions are better funded is because rather than make the pension contribution the State used those funds for municipal aid so the towns could make their pension contribution. </p>
<p>In reality the pols wanted you to believe they could cut income tax without property taxes going up. To “prove” that the State used the pension money.</p>
<p>Seems like it would be better to go to a 401K plan just to remove politics from retirement plans. At least at the state level.</p>
<p>As I said earlier I would have been happy with the 401k type plan the State has. I would have contributed my 5% and they would give me 8%. The problem is they required me to be in the pension and take 7% of my pay and then try to tell people I am greedy because I want what they agreed to.</p>
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<p>Well, politicians are calling lots of people greedy these days.</p>
<p>Welcome to the club.</p>
<p>Tom1944, you are not greedy.</p>
<p>It will be interesting to see how the court cases end up.</p>
<p>The problem with 401k plans is you can outlive your money…</p>
<p>With pensions the risks are the pensions don’t keep up with the cost of living or the company blows…</p>
<p>It is nice to have both a pension and a 401k…</p>
<p>I appreciate the pension however in my case since I love my job a 401k plan may have been better. </p>
<p>BC I agree. I can assure you I completely understand the frustration high income earners have when they look at their paystub. That is one reason I make sure to do the best job I can when I interact with the public. I want them to be overwhelmed with the service they get once they contact me. They may not like the answer but I can control the service I provide.</p>
<p>BTW, the frustration isn’t just taxes.</p>
<p>It looks like everyone out there is out to pick your pocket these days.</p>
<p>There were the payroll tax hikes and the tax hikes on high-earners for this year. On top of that in MA, there are a host of taxes that the Governor would like. We’re getting that in NH too though it’s not as crazy. For some reason, we have a weak economic recovery that a lot of people aren’t participating in and local, state and federal governments want to all take a little more. As do utilities (I’m glad that I’m not in the region that will have to buy power from Cape Wind at twice the price of conventional power), tolls, grocery stores, airlines, gasoline stations (I guess those are taxes), SEC taxes, cable companies, mobile phone companies (take a look at the charts of T and VZ) - everyone seems to be trying to squeeze every penny from everyone else before we head into a downturn again.</p>
<p>Tom1944, is your pension in jeopardy?</p>
<p>You said earlier you can mitigate against the changes.</p>
<p>dstark- I do not believe my pension is in jeopardy because ultimately the State does have the money and assets to fund the pension properly.</p>
<p>Since I like my job so much and do not mind staying if the colas are not reinstated each additional year I work I increase my pension and social security by close to 10%. I will just work several extra years to offset inflation concerns.</p>
<p>An advantage with the 401/403 type setup compared to a defined benefit plan is that the latter offers more room to cheat using the unrealistic projections leading to the kind of problems we are stuck with. This especially so in the public sector where the employer avoids making hard/unpopular decisions that an IBM would when there is an alternative to kick the can. With many of these pension plans the more realistic scenario to try to become solvent lies with what can be done with the denominator with the likes of Philip Morris, the fatty-food, and sugar-water industries.</p>
<p>Do you want to retire?</p>
<p>At this point in my life, I see no reason to retire in my sixties but, of course, I may change my view when I get there.</p>