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Thursday, July 21, 2016

John & Mark's Pension Play
Unity Consciousness #768


Act I

“The Wall Street Journal reported that Hostess Brands said it used wages that were supposed to help fund employee pensions for the company’s operations as it sank toward bankruptcy.
The Journal said it isn’t clear how many of the company’s workers were affected by the move or how much money never wound up in their pension plans as promised.” “It’s what lawyers call betrayal without remedy.”

1st Inspection

By now we should know the majority of companies promising pensions are morally bankrupt. Why willingly put money in their hands and hope they will “do the right thing” decades later, if the company is still around?
Newflash: Companies are doing the right thing. They are criminals and they're accepting money from those who willing put it in their pension plan hands.

Anyone fully relying on a pension or other type of check from any government beyond 2020 is living in downtown Illusionville. Governments have been morally bankrupt since the beginning of societies. These same governments tell you every year they can't balance the budget and they need more money and they will still have to make cuts. That's old game and about to play completely out.

Act II

“... employees, including public employees, think of themselves as protected by contracts that specify those benefits -- and according to the federal and many state constitutions, states are not supposed to make laws impairing the obligation of contracts.
Yet the equation of benefits with inviolable contractual rights is too hasty, both legally and morally. As a legal matter, many public-pension plans are in fact created by statute, and it is well established that what a legislature may do by law, it may also undo.”


John: Hey, Mark, when you cash your check why don't you give me X% and I'll match it with another X% and hold it for you and 40 years later I'll pay you a monthly amount for the rest of your life.
Mark, What's the catch?

John: There's no catch. It's a savings plan that allows you to prepare for retirement with pre-tax dollars and immediately double your money from the contribution I put in.
Mark: Sounds good!

John: You know what Mark, rather than you having to deal with this every month, it'd be much easier for you if you just sign this piece of paper that's worth more to me than it is to you so I can automatically deduct X% from your paycheck before you even see it. That way, you'll just get used to it.
Mark: OK!

John: I'll give you a piece of paper every so often showing you how much we each put in and how your money just keeps growing towards your retirement and financial security.
Mark: Thanks.

John: By the way, you can even put in more money if you'd like, which will make your retirement savings grow even faster and increase your monthly annuity.
Mark: Wow! Are you going to put in more also?
John: I'd like to but I legally can't.
Mark: OK.

2nd Inspection

John doesn't tell Mark that John and his legal and political partners can change the rules, deductions, fees and change how his annuity is calculated without consulting Mark. John also neglects pointing out that Mark's money is locked in as soon as Mark contributes it and can only be withdrawn by Mark under certain circumstances and even when those conditions are met, John will take Mark's money and loan it back to Mark and Mark has to pay it back.
On the other hand, John's matching contribution requires a vesting period of Xyears.
As expected, the hook is set and the greed of getting something for free overrides sensibility.

Mark's money is free money to John, that John did not work for.
Mark is trading the use of his money right now for the use of his money later. This is the same logic of letting go of a bird in the hand because you see two birds in the bush, that you might not catch, especially if you come back during retirement and expect hose birds to be there waiting for you.
John IS NOT matching Mark's money.
John is investing Mark's money and promising to give Mark a little bit of the interest income from Mark's money while John keeps most of the interest while having full control of the principal.
A pension plan is the exact same thing as private social security.*
The only difference is one is controlled by a company and the other is controlled by a government.
The same fiasco that is social security's growing insecurity is what will happen to pension plans. It has already happened as companies and governments go bankrupt and/or sell their companies and create the legal right to avoid paying as promised.
You can search and read all about this.

[Scene now shifts to the very moment you are reading this to help you understand this is happening right now today. This pension play is alive and unwell.]

3rd & Final Inspection

Pension plans were good for earlier generations because the number of workers contributing to the plan was greater than those leaving the workforce. This allowed a system that was broken from the start, to appear to be a good idea for workers. Workers have always gotten the short end of the deal.
Since the inception of pension plans up till now, societies have continued to decline morally, fiscally, culturally, infrastructurally and in physical health. All these things are just a small handful that drain resources and hasten total system collapse.

People who first entered the post-high school workforce after 1965 are in extreme jeopardy, if a pension or other type of check that someone else controls, is the main source of support.

More and more in the past few decades pension plans, deferred compensation plans, 401K plans, IRA's and plans by other names have been made more enticing to get you to put more of your current money in someone else's hands. People are encouraged to contribute the maximum and when they leave employment they are discouraged from taking their money completely out and when you do you get a huge penalty just because you want your money. Other tricks are used such as automatically enrolling employees and automatically increasing contributions especially by getting you to agree to contribute based on a percentage of salary.

*Under social security, John is forced to contribute a FICA tax towards his retirement of 7.65% and his employer supposedly contributes 7.65%. Out of these two contributions for all employees and employers, the US Government not only pays retirement benefits, but also survivor's benefits, disability benefits and medicare benefits. Basic math tells you that 2 – 4 = -2.
Social security and pensions are too far gone to fix. They are terminally ill-conceived. In order to prolong pension plans and social security, the only avenue is to increase contributions, and decrease recipients and benefits.

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