
GE freezes pension benefits for 20k employees - jrwan
https://www.businessinsider.com/general-electric-freezes-pension-benefits-for-20000-employees-2019-10
======
zarro
I really think that the sooner we can separate out pensions and healthcare
from employers, the better.

Businesses main area of expertise is not in pensions and healthcare, and they
cannot provide these services as efficiently as if there were many different
insurance companies on the market offering these services for sale, and
instead the company paid you a fee for your services, and then you went out on
the market and bought your own pension plan and health insurance.

~~~
chooseaname
I would love for this to happen. But I see a couple blockers.

1) It is some sort of badge of honor to get a "job with benefits".

2) What if more people decide to not get healthcare? If your job gives it to
you and you "only" have to pay a few hundred a month for your family, you are
more likely to get it than if you payed everything out of pocket each month
(even if your compensation increased). People would see all the extra money
and just not get healthcare. If enough people did this, healthcare would be
too expensive for the rest of us.

3) People are just reluctant to big change. And this is a big change. There
would be politicians on the news claiming someone was "taking away your
benefits".

~~~
ScottFree
I have yet to meet a single person who hasn't enthusiastically agreed that we
should separate healthcare from employment. The reluctance comes when nobody
has any idea what we're going to replace it with.

We're at an unusual social state in this country where nobody trusts the
government and nobody trusts big business. What does that leave?

I'm a US freelancer, so I don't get health insurance through my employer. I
get most of my healthcare directly from doctors and pay for visits and lab
tests in cash. It works especially well when you tell them in advance you'll
be paying with cash and haggle a price before walking through the door. I pay
for a high deductible plan through a christian co-op for unforeseen events.
This has proven to be considerably cheaper and more effective than paying for
a plan through the obamacare marketplace.

~~~
chooseaname
> I have yet to meet a single person who hasn't enthusiastically agreed that
> we should separate healthcare from employment. The reluctance comes when
> nobody has any idea what we're going to replace it with.

Sadly, I have, and it is invariably from people who basically say those who
don't work don't deserve healthcare. It is disturbing to hear people say this.
They don't want to "pay" for someone else's healthcare. They don't get that
they already are.

> We're at an unusual social state in this country where nobody trusts the
> government and nobody trusts big business. What does that leave?

Where did we go so wrong? Is it because we treat government like football
games? One side has to dominate the other; all or nothing? What happened to
compromise for the greater good?

~~~
throebd
Would the free healthcare include only US citizens, all people who live in US,
or everyone who comes to US on holiday?

If you want more affordable healthcare, you should make it cheaper, not force
other people to pay overpriced bills for random strangers.

~~~
seanmcdirmid
Other countries have already figured this out. And no one ever calls it “free
healthcare” except for a few naive American libertarians. They don’t provide
free healthcare, and if you aren’t in the system (and paying via taxes or
otherwise covered via tax revenue redistribution), you’ll get a bill one way
or the other (unless there is an agreement between two socialized health
systems).

~~~
ScottFree
> Other countries have already figured this out.

None of those countries are the size of the US. Just like in Physics, you
can't expect a 1/10th scale model to behave the same as the life sized
version.

~~~
seanmcdirmid
Japan has what...126 million people? So according to your math, America must
have 1.26 billion people? Australia is as big as the US if you meant by area,
plenty of other countries approach 100+ million besides Japan.

The EU has 511 million people. Sure it is multiple systems, but they all work
much better than ours does.

~~~
jki275
Japan is a totally different culture than America, and their health care
system is similar to ours in that it is employer paid. Also, you have no
medical privacy rights, your employer gets a copy of every medical bill you
incur.

Source, lived there six years and spouse was in that system for over 25 years.

~~~
seanmcdirmid
Our healthcare system isn’t employer paid, it also has a large individual
market (or those who can’t get access at all).

Japan, unlike the USA, has a health insurance plan for those who can’t get it
through their employers (NHI, hence their system is considered universal).

~~~
jki275
I'm not sure what you mean by "our", that's ambiguous in this context. If you
mean US, we don't have a "healthcare system", most health insurance is
partially employer paid. My comment was not as clear as I meant it -- I meant
that Japan's healthcare system is employer paid, which is similar to how most
people in the US are insured. Maybe that's more clear.

Japan does _also_ have NHI, but most are insured through their employers, as
nearly everyone in Japan either works or is insured by someone in their family
who works.

------
eternalny1
Keep in mind this comes on the heels of the Madoff whistleblower saying GE is
a fraud:

[https://www.barrons.com/articles/ge-insurance-fraud-
madoff-w...](https://www.barrons.com/articles/ge-insurance-fraud-madoff-
whistleblower-report-51565915505)

They piled up massive losses in their insurance division (long term care) and
guess who gets slammed because of it?

The workers.

~~~
lotsofpulp
I doubt it, defined benefit pension plans don't make financial sense in the
current climate. Who is able to predict which company will be around in 30 to
60 years in the future, and what the economic climate will be?

And much of the pension fund investments are going to the same place as 401k
money anyway. Why not directly invest in VTI and skip paying all the pension
fund managers and staff? It's not like they have some secret investment return
recipe, and it shows in their performance.

~~~
chrisseaton
I wouldn’t even agree to getting a defined benefit pension these days - why
wouldn’t you want to invest your own money instead of letting one company you
happened to work for control your pension?

I have a defined benefit pension from a previous employer and frankly I count
it as zero in my financial planning since I have no idea if it’s actually
coming or not.

~~~
SketchySeaBeast
It still has value, assuming you're intending on working until you retire and
the company has no signs of failling - why wouldn't you want a (nearly)
guaranteed income for the rest of your life? That doesn't preclude you from
investing your own extra cash into investments.

I understand the dynamics have changed, but my boomer parents and in-laws are
both enjoying retirement with the fruits of a defined benefit pension, and
both are quite comfortable.

~~~
froindt
There are so many ways it can go wrong - and when it does, the results can be
disastrous.

The article below mentions how poorly things can go, with private equity
groups buying a company, things go poorly, it gets liquidated (pension gets
dissolved), then the same private equity group buying it out of bankruptcy.
Funny enough, with Marsh, the executive pension plan got a good payout
relative to the thousands of store and warehouse employees.

The pension isn't free to offer. I'd much rather they increase my base pay or
give a more generous 401k match.

[https://www.washingtonpost.com/business/economy/as-a-
grocery...](https://www.washingtonpost.com/business/economy/as-a-grocery-
chain-is-dismantled-investors-recover-their-money-worker-pensions-are-short-
millions/2018/12/28/ea22e398-0a0e-11e9-85b6-41c0fe0c5b8f_story.html)

~~~
SketchySeaBeast
Personal savings can be equally disastrous - it's mismanagement of a pool or
an individual. I get that individualism runs high, especially in this sector,
which is running hot and people are enjoying being highly desirable, but
pensions took the concern of managing retirement from the average worker for a
generation. Would the average pensioned worker in 70's or 80's have had access
to the education and resources required to ensure that they could save what
they needed to to retire? I don't know.

------
joeyrideout
An important distinction to make with GE is that most of their pension plan is
"defined benefit" as opposed to "defined contribution". The latter is much
more common nowadays because it avoids these massive long-term obligations to
the company.

EDIT: Added "most of". A percentage of their employee base has already
transitioned to defined contribution.

~~~
lotsofpulp
In the US, "pension" typically means a defined benefit pension.

~~~
joeyrideout
Not any more... "The percentage of workers in the private sector whose only
retirement account is a defined benefit pension plan is now 4%, down from 60%
in the early 1980s. About 14% of companies offer a combination of both types."
[1]

[1]
[https://money.cnn.com/retirement/guide/pensions_basics.money...](https://money.cnn.com/retirement/guide/pensions_basics.moneymag/index7.htm)

~~~
lotsofpulp
I mean that in common vernacular, when someone says "pension", they are
referring to a defined benefit pension. Otherwise, in the US, we use 401k,
IRA, "retirement funds", or other words.

~~~
walshemj
And a 401k and IRAs is are very poor "pension" plan compared two other
countries.

~~~
lotsofpulp
I'm not sure what you're claiming. It's possible to design a very lucrative
and costly defined benefit pension, but in the US, no employer is offering it
other than governments, and even the governments are beginning to croak under
the stress of unsustainable benefits, so new employees are not eligible for
them.

~~~
walshemj
I was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a
SIPP).

~~~
lotsofpulp
Based on some quick Googling, I don't see what is so much better about an SIPP
or a group personal pension plan? SIPP offers some kind of matching from the
government, but it doesn't seem significant.

~~~
walshemj
Main one is Tax relief at your highest rate on income tax you get an extra 20%
into your pension - if your a higher rate tax payer you can reclaim the extra
tax relief.

For a higher rate taxpayer you put in £60 and get £100 in your pension.

You can also do salary sacrifice and reduce you income tax and NI lability

~~~
sokoloff
Unless your retirement tax rate will be lower than your working years rax
rate, it comes out in the wash eventually.

It's quite likely that some people today will end up paying _higher_ income
tax rates in retirement than today.

~~~
walshemj
Id like to see that worked out in detail have you got an example? unless you
mean you bust the lifetime limit, which is just bad planning.

And you can use drawdown to manage your income from the pension and you would
of course make use of income from your ISA.

------
dannykwells
Can someone explain what this means, and how its not illegal? Arent pensions a
contract?

~~~
matthewaveryusa
Not sure if this is legal or not, but this is definitely why I think the
401k/private saving model is the best. It's a lot easier for governments/corps
to change the payout of a system they run vs. clawing money away from an
account you own. That being said there should be a minimum safety net for
those that don't have the diligence to save by their own accord.

~~~
Retric
Personal 401k’s don’t offer much over saving directly. It has some tax
advantages at the individual level, but those tax savings are just shifting
money around at the societal level.

The upside of public / private pensions is pooling money among a pool of
survivors. Rather than saving X money to live off of at 95 while risking dying
sooner you essentially save less on a bet that will live to be 95. Die early
and you don’t care about losing that bet. Of course this means less money for
people to inherit.

Sadly for individuals it’s illegal to set contracts up to do this as they
create incentives to kill people which have resulted in past murders.
Annuity‘s can offer some of the benefits, but are forced to make less risky
investments.

~~~
_ah
The "death contract" is a Tontine.
[https://en.m.wikipedia.org/wiki/Tontine](https://en.m.wikipedia.org/wiki/Tontine)

------
twodave
Do pension funds rely on a growing population in order to sustain themselves?
I wonder whether they'll see a resurgence as the baby boomers die off and the
age distribution in the U.S. becomes more uniform, or if these sorts of plans
are a thing of the past.

~~~
bryanlarsen
Pension funds (and retirement savings in general) depend on low-risk
investments returning significantly above inflation. These no longer exist,
for a variety of reasons, demographics being one of many.

People have been assuming that negative interest rates are a temporary thing
but people are beginning to think that this may actually be the natural state
of affairs.

Historically, protecting your wealth cost real money: banks had to hire guards
to protect the gold in their vault. Fractional reserve banking flipped this so
that the banks started paying interest.

But now the world is awash in capital so low risk investments now return
interest less than the inflation rate. Even the nominal rate is now sometimes
below 0.
([https://news.ycombinator.com/item?id=20696343](https://news.ycombinator.com/item?id=20696343))

There is no longer such a thing as a "safe investment". The only way to grow
your money is to take risks with it, and the level of risk required to get
returns significantly above inflation is growing.

~~~
zaphod420
This is good for Bitcoin.

~~~
ishansharma
Can you explain further? I’m curious how Bitcoin benefits from it?

~~~
zaphod420
The comment I replied to said "There is no longer such a thing as a "safe
investment". The only way to grow your money is to take risks with it".

Bitcoin is seen as a risky investment by most people. To those of us that
understand what it actually is and how it works, it's the best kind of
money/store of value ever invented.

The only other options I see for storing wealth are things like precious
metals, real estate, or stocks and bonds.

I think precious metals are kind of useless as money and over hyped as a store
of value. Asteroid mining could flood the market in the future.

Real estate is a lame investment. People need homes. When people buy up real
estate to park wealth, it drives up the cost of homes for new home buyers.

Stocks are a maybe, but I would only buy stocks like apple and tesla. I don't
really like most corporations.

Bonds are a joke, with negative interest rates.

In the grand scheme of things, Bitcoin looks like the most sane place to store
wealth.

~~~
SketchySeaBeast
> Bitcoin is seen as a risky investment by most people. To those of us that
> understand what it actually is and how it works, it's the best kind of
> money/store of value ever invented.

Why? Just because the other options have downsides, what makes Bitcoin good?
There was a rush in 2018 - are you assuming it's going to happen again?
Bitcoin seems to be super unstable, more so than anything else I'm aware of -
why would I want my retirement savings to be able to fluctuate that much every
year? What stops a new cypotcoin from coming along and being dubbed superior,
removing the value of Bitcoin overnight?

~~~
zaphod420
Bitcoin is good because there is a fixed supply. The scarcity of it means
basic supply and demand market mechanics are in play. It’s price is volatile
because people with a lot of money can move the price easily by simply buying
and selling large amounts of it. The value has steadily increased year over
year though, and eventually there will be sufficient market depth which will
help stabilize prices. It’s also good because banks can easily prevent you
from accessing your own money. When your money is in bitcoin, no one can
confiscate it, or charge you negative interest rates on it.

Lots of new coins claim to be the next bitcoin, but the truth is, bitcoin is
the next bitcoin. Look up the user aantonop on YouTube for why this is the
case.

------
kpmcc
And while they cut pension benefits, this is what the CEO makes:

[https://www.cnbc.com/2018/10/05/new-ge-ceo-larry-culp-
inks-s...](https://www.cnbc.com/2018/10/05/new-ge-ceo-larry-culp-inks-stock-
heavy-contract-worth-up-to-300-million-if-shares-soar.html)

~~~
spo81rty
It says his compensation is largely tied to company stock performance. He is
not guaranteed all of that money. He and the company have to perform.

~~~
rwmj
Stock is up 3% on this news, and no doubt will be up on future news of cuts to
headcount, benefits, etc. So there's a conflict of interest here.

~~~
gruez
>Stock is up 3% on this news

What? According to google finance, the stock closed $8.57 last Friday, opened
$8.55 today, reached an intra-day high of $8.65, and closed at $8.56. There's
no way you can say that it was up 3%.

~~~
rwmj
Literally what it says in the article.

------
mschuster91
... and this is why pension schemes should be managed by the government or at
least tightly regulated.

Just imagine GE going bankrupt - who's gonna pay the pension, then? The
government in a bailout or what?

~~~
helpPeople
Do people not understand this is how pensions work.

If your company isn't there when you retire, you don't get a pension.

I find it incredibly risky to rely on pensions. I don't quite understand why
employees are so excited about non cash benefits.

~~~
phonebanshee
Why do you think that?

httpss://en.m.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation

~~~
lotsofpulp
PBGC only insures some part of a pension, has many exclusions, and is
definitely not "funded" enough itself to protect against the number of pension
funds that are running out of funds.

[https://www.ai-cio.com/news/multiemployer-pension-
lifeboat-s...](https://www.ai-cio.com/news/multiemployer-pension-lifeboat-
sinking-fast/)

------
La-ang
Lol. I remember Chomsky saying GE is not about manufacturing much as it ought
to be, but rather about moving money in very complicated ways.Who foresees its
collapse in the next 5 years?

------
anonuser123456
Most (if not all) pensions do not contractually guarantee future contributions
or cost of living adjustments. You can't claw back existing obligations, or
promised future obligations.

Pension systems are just a big scam on everyone.

------
entropea
Didn't they just get a massive tax cut?

------
rlonstein
Appropriate...
[https://www.youtube.com/watch?v=zOXtWxhlsUg](https://www.youtube.com/watch?v=zOXtWxhlsUg)

------
dfischer
More signs of debt crisis and global liquidity risk. Now wait until California
capitulates...

~~~
dfischer
Lol downvoted? Why?

------
Clubber
I inherited the desire to buy American cars to support America workers from my
Uncle would was a WWII vet. He didn't like Japanese products (he was in the
Pacific theatre). I've been buying American cars for the last 20+ years and
currently own a GM. I think the next one I buy will be Japanese or German and
it's ironic. While I spent my money on American cars to support American
workers, the American companies offshore their manufacturing / assembly to
Mexico while foreign companies who sell cars in the US use domestic labor for
manufacture / assembly.

So it seems like if you want to support American workers, you should buy
foreign cars that manufacture / assemble in the US. That's certainly
unintuitive.

~~~
rootusrootus
Are you conflating GM with GE?

~~~
entropea
I read it that way too, at first, mostly because of GM's recent strike &
health benefit cut headlines.

~~~
RIMR
That's pretty incredible that you read this article so fast that you managed
to misread the ~30 instances of "GE" and "General Electric" as "GM" and
"General Motors", and never noticed the giant "GE" logo at the top of the
article, or the "General Electric" stock ticker on the sidebar.

It's almost like you only read the headline and nothing else, because the
article itself screams "General Electric" in a way that nobody who actually
visited the page would ever have been confused.

