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Steve Smith
03-26-2012, 08:15 AM
Of course, some Companies in the UK do rifle the pension scheme. Robert Maxwell and his Mirror newspaper, for example. I think it's called "fraud".

I'm not certain but I think after this became public knowledge, controls were put in place to prevent it happening again.


Steve.

Michael R 1974
03-26-2012, 08:26 AM
[QUOTE=steven_e007;1321769] I've just received my pension statement from the company they paid the pension too. It is still sitting there, safe and sound until I retire.

QUOTE]

How do you know this for sure? The funds in a defined benefit plan are invested. What if those investments tank? At least in north America, the "funded" status of a defined benefit plan can quite quickly go from surplus to deficit. When that happens, the sponsoring company has to inject cash. If the company isn't in a healthy enough financial position to do that, what happens?

Where I work, at one point in the late 90s the fund was in such a massive surplus position due to the performance of the fund, it seemed inconceivable the plan could ever be in a deficit position. Well, that gigantic surplus completely evaporated and in recent years the company has had to inject cash into the fund. This is one of the reasons why new employees are now forced into a defined contribution plan.

railwayman3
03-26-2012, 08:27 AM
Of course, some Companies in the UK do rifle the pension scheme. Robert Maxwell and his Mirror newspaper, for example. I think it's called "fraud".


When Gordon Brown (UK Chancellor of the Exchequer) rifled Private Pensions Schemes in the late 1990's he called it "a reformation of the corporation tax system" rather than "fraud".
At least Robert Maxwell had a bit more style to him than most politicians.

keithwms
03-26-2012, 08:33 AM
But then we have the Federal govt dipping into social security funds, not exactly setting a good example.

You're wildly OT but I'd really like a fiscally informed explanation of this, please.

It's complicated ;)

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund#Recent_attention

Basically, the health of the trust fund relies on the health of the Federal bond market; there is no stack of gold or whatever that is set aside. So borrow-and-spend practices directly endanger the solvency of the fund. If the US were to face, say, several years of 5% 10 yr bond yields such as we now see in Spain and Italy, the fund would be in severe danger.

CGW
03-26-2012, 08:56 AM
It's complicated ;)

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund#Recent_attention

Basically, the health of the trust fund relies on the health of the Federal bond market; there is no stack of gold or whatever that is set aside. So borrow-and-spend practices directly endanger the solvency of the fund. If the US were to face, say, several years of 5% 10 yr bond yields such as we now see in Spain and Italy, the fund would be in severe danger.

Not quite...

http://www.nytimes.com/2010/08/16/opinion/16krugman.html

keithwms
03-26-2012, 09:36 AM
Ah yes well Krugman is well known for almost always taking the view that spending is good and cutting is bad. Even if you agree that we should've had more stimulus, most of Krugman's ideas are politically impossible. And his usual defense is: look! we haven't seen substantial inflation or big problems with bond yields. Well yeah, inflation isn't a problem until it becomes a problem... and then it's a *big* problem. For younger people like myself, Krugman may as well be the wizard of Oz, he's stuck somewhere back in the 1950s with old ideas about government driving growth.

We must become much more responsible, for the sake of our citizens and our businesses, and tend our bond yields. We are at ~2% on the 10 yr mostly because of euro-zone flight risk. It's certainly not because we miraculously became solvent last year and will always be. If our bond yields spike, there will be pain and it will be acute... and the trust fund will certainly lose value.

CGW
03-26-2012, 09:49 AM
Ah yes well Krugman is well known for almost always taking the view that spending is good and cutting is bad. Even if you agree that we should've had more stimulus, most of Krugman's ideas are politically impossible. And his usual defense is: look! we haven't seen substantial inflation or big problems with bond yields. Well yeah, inflation isn't a problem until it becomes a problem... and then it's a *big* problem. For younger people like myself, Krugman may as well be the wizard of Oz, he's stuck somewhere back in the 1950s with old ideas about government driving growth.

We must become much more responsible, for the sake of our citizens and our businesses, and tend our bond yields. We are at ~2% on the 10 yr mostly because of euro-zone flight risk. It's certainly not because we miraculously became solvent last year and will always be. If our bond yields spike, there will be pain and it will be acute... and the trust fund will certainly lose value.

I'll take a Nobel laureate and the facts over right-wing fear-mongering and fabulism any day, thanks.

keithwms
03-26-2012, 10:02 AM
Ah yes, the predictable Nobel comment. One of the most controversial modern economists and yet because of the Nobel, the masses treat his every word like gospel. Fortunately, some of us don't place all of our faith in theory.

By the way, at no point have I declared or implied any agreement with right wingnuts. But it's high time that liberals and conservatives both realize that the other side does have a point.

Roger Cole
03-26-2012, 10:16 AM
This sort of thing never solves anything and never changes any minds. (FWIW I'm pretty much in Krugman's camp, but I don't pretend anyone here will change their mind based on what I write.)

I'm 20 years out from retirement and pretty confident of having social security. This has nothing to do with Kodak though.

wblynch
03-26-2012, 10:23 AM
Social and financial responsibility knows no boundary by decade. Time has shown over thousands of years, how the rules work. Things are no different now. The 1870's, 1920's and 2000's in the US all fit the same pattern. It takes the same solutions to crawl out of the ditch. Krugman is right. FDR was too.

Young bucks love to blame gray hairs and believe that the rules are different for their younger generation but guess what, they are still the same.

The merger mania, vulture capitalism, incessant tax cuts, spending cuts and pension cuts began right after a certain US presidential election in 1980. The trend has lead directly to our current situation.

The pension problem started by corporations seeking permission to underfund the pensions. Each year they went back and asked for lower and lower limits until they got so deep they flat did not want to pay the money back. They claim duress, then bankruptcy, to eliminate their responsibility and "emerge a fresh, revitalized company".

Kodak is just following the recipe laid out by United Airlines, General Motors and hundreds of others. In the end they will sell off the rights and equipment and it will be up to the buyers to determine if we still get to buy film. Perez and his minions will retire to the Hampton s with the spoils.

Photo Engineer
03-26-2012, 10:25 AM
Guys;

Kodak does not administer its pension plans. Thats right, planS plural! They have several. They administer one plan for the "highly compensated" or very senior members of the staff. Only those will lose their pensions, and only regarding the part that was paid into when they went over a certain pay grade.

There are also recent lapses in payment to the outside manager of the plan(s) that Kodak failed to make. These are noted in the debt that Kodak owes to outside banks and investment firms.

The only part that Kodak administers for all is the health care plan. That they can discontinue with a wave of the hand. It is not guaranteed nor is it funded from anything. My understanding is that it is paid monthly or quarterly by EK. All I do know is that EK has asked to discontinue this health care plan.

So, an average worker will keep his pension but lose health care. We lost dental care 2 years ago. It has been gradually eroded.

A highly compensated worker will lose about 1/2 of his pension and health care.

PE

Roger Cole
03-26-2012, 10:31 AM
So they get to keep everything that was promised, with the possible exception of a few of the very richest who least rely on it, and lose something that, while nice, was never guaranteed to begin with.

That isn't nearly so bad as it sounded before the clarification. Thanks PE.

While I still sympathize, most retirees don't have health coverage from former employers. They have medicare and a private supplement.

Photo Engineer
03-26-2012, 10:45 AM
The one thing you missed is the fact that Kodak "guaranteed" health care to us, and our financial planning is based on that fact. That "guarantee" is what prevents their stopping it altogether. They have to go to court to get that guarantee abolished so that they can discontinue that plan.

And for some employees, about 50% or more of their pension will vanish. As you say, these may be the very wealthy, but it can still hurt them a lot.

So, here I have medicare + a private supplement (paid by EK). This private supplement will stop, and I will then have to pay up to about $250/month that I didn't have to pay before. There goes my financial plan. How easily could you afford that sudden and unexpected change to your budget?

PE

Roger Cole
03-26-2012, 10:48 AM
Ok, sorry, I misread your previous post. I took this:


The only part that Kodak administers for all is the health care plan. That they can discontinue with a wave of the hand. It is not guaranteed nor is it funded from anything.

to mean that this was never guaranteed. I see now you meant that it was "guaranteed" in that Kodak promised to pay it, but they never had it backed by anything more tangible.

That's bad and I do sympathize. I hope something can be worked out better than "poof, it's gone." :(

MattKing
03-26-2012, 04:52 PM
The Kodak Canada pension plan is similar. As of the end of 2010, the independent department of the Ontario government that serves as a "watchdog" over private pension plans has evaluated that plan as being 96.2% funded (actuarial valuation of projected obligations vs. actuarial valuation of capital on hand plus projected investment return). Not perfect, but not disastrous either.

Kodak Canada retirees have another thing in common with Eastman Kodak retirees - their health benefits are paid for them. Those funds are paid from operating profits of the current company.

The two fundamental differences are:

1) health coverage is much, much cheaper in Canada. There is a small monthly premium in some provinces for the majority of health care, with an additional premium for "extended" benefits like dental care, prescriptions, physiotherapy, etc.
2) Kodak Canada is not in bankruptcy, but it is a wholly owned subsidiary of Eastman Kodak, which is in bankruptcy.

I've caused my father (a Kodak employee for 37 years and a retiree for the last 26 years) great consternation by wondering if Kodak Canada might end up being sold by the bankruptcy trustee to Fuji :whistling: (like many Kodak "lifers", my Dad is fiercely loyal to Kodak and quite partisan about the "competition").

Photo Engineer
03-26-2012, 05:17 PM
I might mention that when I retired, the US retirement fund was over-funded by quite a bit. Somehow, someway those in high places managed to deplete it. I guess it was by not paying into it, and that during a bad market.

So, that is another point here to consider.

PE

keithwms
03-26-2012, 05:44 PM
I might mention that when I retired, the US retirement fund was over-funded by quite a bit. Somehow, someway those in high places managed to deplete it. I guess it was by not paying into it, and that during a bad market.

But Krugman says there's no problem! Maybe he'll divert some of his Nobel winnings to your retirement account...

But seriously, what happened is that the social security fund(s) were never intended to become a retirement account. There is a big difference between a minimal safety net and a full pension.

wblynch
03-26-2012, 06:43 PM
There are tens of millions of American seniors that have only Social Security for their income.

I think if anyone was able to measure it, there probably never were more than 10 or 20 percent of American workers that were ever covered by a 'pension'.

What to do about the other 80-90%?

Throw us to the wolves, I guess. Thank God (and FDR) for Social Security.

Ken Nadvornick
03-26-2012, 06:53 PM
Therein lies the more fundamental problem. In our society 80-90% end up with essentially nothing, no matter how hard they work and try to save.

What to do with them? Soylent Green, I guess...

Ken

Sirius Glass
03-26-2012, 07:08 PM
There is no gray line. There is no wobbling to one side of the line or the other. When the line is so clearly drawn then anyone with the slightest bit of integrity and compassion must defend that line. So... you'd shaft all those people so you can have your Kodak film? My stance on this makes me a piggish bore? Wow... what has America come to?

Frankly, I'll keep my principles, thought of as a piggish bore or not.

You misread #145! I am agreeing with you!