Pension funds status question concerning current stock market conditions. How safe are they?
Posted by Dolores
Guy E asked:
With everything else failing and being bailed out, I am wondering if the pension funds for retirees are safe as the stock market deteriorates, and if by chance any of the pension funds would fail, would they be bailed out by the government, to protect those of us who have no other means of income? Retired, and very, very worried. Serious and honest opinions please! Thank you all! God bless America!
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With everything else failing and being bailed out, I am wondering if the pension funds for retirees are safe as the stock market deteriorates, and if by chance any of the pension funds would fail, would they be bailed out by the government, to protect those of us who have no other means of income? Retired, and very, very worried. Serious and honest opinions please! Thank you all! God bless America!
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April 22nd, 2010 at 3:50 pm
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Well, retirement funds are not safe anymore, because of this economy. If you want to save the most money without worrying, just get your money, put it in a box, and bury it in your backyard.
April 25th, 2010 at 11:15 pm
Kansieo.com
You can’t squeeze blood out of a turnip, so if a pension plan is loaded with WAMU stock, AIG stock and GM, then you may see your pension cut to a small percent of what was supposed to be paid from the fund.
I took a lump sum settlement and invested it myself, so when the market started going to the dogs, I sold my stocks and bought short-term government bonds and my portfolio has been going up a little almost every day.
April 26th, 2010 at 4:01 pm
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They are guaranteed by the government for what ever that is worth.
April 29th, 2010 at 8:36 am
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A lot of pension funds invest their money in the stock market. And many of them have recently lost a lot of money. And government pension funds are having similar problems.
Any guarantee by the government or a private company is only as good as their source of income. Which means that when most taxpayers are in trouble, then even the government isn’t in a good position to fulfil its guarantees.
Government guarantees are good only when one or two companies go bankrupt. But when the whole economy goes into a deep depression. Then the government is in as much trouble as everybody else is.
Perhaps if things get really bad. Then everyone will have to cut back on their spending and live more frugally than before. But I don’t think it will ever get so bad that people will be starving in the streets the way it happens in Ethiopia or some place like that.
May 2nd, 2010 at 1:55 pm
pension
Today a consortium of businesses made a request to the government to allow an extended period of time to fund their pensions due to loses in the current market. Apparently the pensions are currently underfunded by about $4 trillion.
None of the companies in the consortium was identified but was represented by a third party to keep the companies names confidential.
Although most companies claim to jointly fund the pension with the employees, sometimes the company does not have to provide funding during a specific year if the investment gains exceed the needed employers contribution during that year.
All pension funds in the US are government insured. However, a 100% payout is not guaranteed if the fund is underfunded ($44,386.32 per year maximum guarantee by the government).
May 4th, 2010 at 5:30 pm
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Realize that there are a number of layers of protection included in your defined benefit pension.
1) The plan must have assets held for investment which are the source of your income in retirement. These are subject to the market losses you are seeing.
2) The plan sponsor (your old employer if you are non-union or all the employers who employ workers in your union) must continue to contribute cash to the plan. Of course, they can go bankrupt and that source of funds can dry up.
3) The PBGC (Pension Benefit Guarantee Corporation) backs up the plan in case it runs out of money. The guarantee is limited, no more than $40,000 or so per year in benefit payments, but you would need to have been very well paid and had very long service in your plan to exceed that level.
Finally, if everything failed and you had to trust only the assets in the plan, you, as a retiree in payment, are given highest priority for assets in the plan. In other words, your benefit gets funded first, even if that means reducing benefits for current employees.