People would be far less dependent on Social Security if corporations like IBM were not allowed to renig on their private pension promises...
As an IBM shareholder, please consider worrying a little bit more about what IBM is doing to increase and hoard their massive pension surplus. Shareholder resolutions related to this critical issue can be found at www.allianceibm.org\resolutions.htm
IEBAC (IBM Employee Benefits Action Coalition)
507 529 8777 ext 110
P.S. As an IBM shareholder, I am also outraged at the fact that the corporation is now charging the older retirees who built this company a larger and larger share of their medical expenses. Just one example: my dad just turned 78 and worked at IBM for 33 years. Effective in April, to retain the same medical coverage, his co-payment will go from nothing to $252/month. This is terrible treatment for retirees on fixed incomes!!!
Heh, amazing how the collectivists go quiet when the theft is revealed at the Federal level via inflation, misuse of SSI funds and now the soon-to-be-coming-to-your-wallet Federal Health Insurance ripoff.
"This is terrible treatment", indeed.....
So where is Ms Krueger nowdays, still collecting 'hers' or she been promoted upstairs??
Nobody is complaining about the pension fund being overfunded. This is a good thing.
What stinks about Lou and the pension plan changes is that they are using vapor profit from this overfunded pension plan to make the bottom line look better, at the real (not vapor) expense of the long time employees that made IBM great.
The additional "profit" being reported that comes from the overfunded pension plan can't be used to grow the business! It's not real money if you can't use it! The only advantage to the business is that IBM does not have to contribute to an overfunded pension plan, which saves a little money.
Since IBM hadn't been contributing since 1995, any claim that cuts to the pension plan would be used for other forms of compensation (stock options) must be outright lies.
Now that you are informed, if you choose to invest in IBM, don't bother crying when the vapor profits are exposed and the scheme falls apart. Don't bother complaining if IBM has a hard time generating revenue because the increased employee turnover rate is dampening productivity.
As an entirely different matter, unethical treatment of employees by breaking promises bodes ill. I do not want to enter into a business transaction with somebody that I can't trust. If IBM gets away with screwing their employees and wringing them dry, what is the next source of cash?
It was just an assumption. 8% over the lifetine of the 401K. Some years are down, maybe you lose 10 % the next year you may gain 20%. Just took the 8% because that looked like a good average over time for the markets. If you get over aggresive yes a loss is possible but so are big gains. You plays your cards and takes your chances. That is why you manage you investments, even inside a 401K.
Jet is right. The IBM pension plan could lose but it has not. If it did all of you would be screaming for IBM to prop it up. Again, what is the difference?
"You are making an assumption that there will never be a decrease to that 8% interest. That you will not go negative with any
investment option offered in the 401K portfolio. Now if you had seen the AT&T 401k article in the newspaper you would see
people getting ready to retire and having lost at least half of it. There isn't any insurance to recover it from, it is just gone. Make
sure your assumptions are correct before you count on a 401K retirement fund. "
Let's run with this for a minute. Isn't this same assumption valid as far as the IBM pension fund? Isn't it a good thing it's overfunded just in case the value take a big hit? After all, it was the rise in value that had a lot to do with where the fund is at. If the fund fell short, and it wasn't enough to pay the benefits, wouldn't you and other be screaming for IBM to contribute money to make up the difference?
Actually, you are wrong on the last answer:
>"That still doesn't give IBM the right to use
my pension money, that it had deducted as a business expense, to enrich Lou
Gerstner and other high-level executives."
It is not right that they enrich themselve falsely. Once again this is the way the
system is setup. Change the accountng rules and tax deductions to not allow
this behavior. >>
This executive compensation is setup by the board and the executive at hiring time. They said that they would pay the executives on "earnings". What they did not specify is how those earnings were generated. What the executives do is apply the pension money using FAS 87 accounting rule which is legal. What should have been done is have the executive only paid on the earnings that he could have a direct effect on. The executives do not have an effect on the pension surplus. That is handled by a managment firm. They are basically being compensated on money they did not have anything to do with. They can not use it to grow the company, they can not use it to put back into the company even though they have continously said they did this in order to apply this (I guess savings) to other programs in order to hire new people. They can not "apply" this money anywhere. They are also not paying into this fund and haven't been at least since 1995. They are so to speak on a "holiday" from having to pay into the pension fund. Now my question and point is this - why as a shareholder should you have to pay an executive a compensation on "earnings" that they have not generated (in part). I do believe that the shareholders should pay for generated earnings that they effected.
This in my opinion is the problem. We are trying to fix this via a proxy to be voted on at the annual meeting. It is just not right to compensate someone on that money when they did not generate it nor have anything to do with it. That is like paying someone for nothing - and their pay is BIG BUCKS - in the millions.
<<Lets just say that you started a 401k at age 30 and put the max in until you
retired at 60. If you look at it you will have over a million in the 401K plan with
just an 8% average gain over the life of the investment. >>
You are making an assumption that there will never be a decrease to that 8% interest. That you will not go negative with any investment option offered in the 401K portfolio. Now if you had seen the AT&T 401k article in the newspaper you would see people getting ready to retire and having lost at least half of it. There isn't any insurance to recover it from, it is just gone. Make sure your assumptions are correct before you count on a 401K retirement fund. We counted on our assumptions for a define benefit and look what is happening to millions of workers. Buyer beware!
>" I guess if a thief robs my house I should focus on the "hear and now" of the lack of jewelry, computers, and stereo equipment in my house, not on prosecuting the thief and receiving retribution."
If it is gone there is nothing you can do about it. If they catch the theif with your stuff you may get it back but most of the time you can just kiss it goodby. Sure, in this case the thief can be prosecuted and you will have your "pound of flesh". Gerster and the other execs only did what the tax and accounting(FISB???) laws and rule let them do. I understand the frustration. If you do not like the rules get them changed. IT is hard to change the rules after the fact. If the lawsuits prevail, I say great.
>"That still doesn't give IBM the right to use
my pension money, that it had deducted as a business expense, to enrich Lou Gerstner and other high-level executives."
It is not right that they enrich themselve falsely. Once again this is the way the system is setup. Change the accountng rules and tax deductions to not allow this behavior.
Once again you are carrying on this nonsense about 'stolen pension'.
According to law, no company can take back that money which has been vested to you, the pension you have earned on your salary to date.
So your pension earned to date is safe, as long as IBM remains solvent and the pension fund doesn't go bust.
Now with the lawsuits backed by the iebac and others, whether the fund will go bust is an interesting question.
It's the money you may have vested in the future, for pay which you have not earned, that is what this is about.
Since you haven't earned it, it can't be stolen from you.
Also, if you don't like this presumed 'pay cut', nobody's stopping you from finding an employer who will pay you what you think you are worth.
If the PBGC picks up your pension, there's a chance you won't get your full pension either. Check out their website.
"I understand that 401K's did not come into existance until the early 80's. I just have to figure that everyone has to deal with the here and now."
Gee, isn't that interesting. Most of the advice I've seen on this board from the Gerstner apoligists have accused we "whiners" of "not planning ahead." I guess if a thief robs my house I should focus on the "hear and now" of the lack of jewelry, computers, and stereo equipment in my house, not on prosecuting the thief and receiving retribution.
"Everyone should try an maximize all the resources they can over time."
And I have. I participated in the 401K program as soon as it was made available. I could afford to. I already owned a home at the time and didn't have children yet. That still doesn't give IBM the right to use my pension money, that it had deducted as a business expense, to enrich Lou Gerstner and other high-level executives.
"Just remember IBM could go bust some time in the future along with any pension you might have. The possibility is remote but it has happened to other big corps."
And that's why there's an organization called the Pension Benefit Guaranty Corporation. And trust me, the problem isn't "IBM going bust." The problem is that Lou Gerstner and his cronies are enriching themselves by having their compensation tied to artifically inflated earnings due to surpluses in the pension plan.