The 401K Drives Inequality: NY Times article.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

It is too expensive to live in or holiday in Switzerland.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'd rather not read what progressive think since they always want to abolish a system because the MC/UMC use it. Recently (before Biden) they tried to do away with PSLF student loan forgiveness because of doctors and lawyers apparently using it.

Anyways, I think the only options would be to up the scale of social security or create one of those sovereign funds like some Gulf countries have to supplement retirements.

Yes, shares of a sovereign wealth fund for all from birth is a MUCH better idea than all of this communist crap of taxing more in the name of equity. Hell, even Alaska has a sovereign wealth fund for its residents. Norway has a sovereign wealth fund for its citizens. A sovereign wealth fund that pays out regularly would give ALL an equal and vested interest in the economy of the country. Much, much better idea.

Proposes collective ownership of state resources and handing out shares to citizens….while throwing around the “communist” label liberally at others.

Read a friggin history book. What you describe is exactly what happened in the USSR and post Soviet 90s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

Swiss productivity has historically been higher than US productivity. Since COVID, the US has been slightly more productivity:
https://tradingeconomics.com/switzerland/productivity

Switzerland has long led the patents per capita ranking, taking the #1 spot in 2024 and 2023:
https://www.swissinfo.ch/eng/science/switzerland-tops-global-table-for-patents-per-capita/73890507

Switzerland also has a GDP per capita 22% higher than the US.

So yeah, maybe we should learn a thing or two about retirement savings from them.

[Anonymous]

I work at a small bank that eliminated the pension around 2003. I heard if you worked there 40 years you got a full pension equal to your last salary. It is still funded but frozen in 2003. No new contributions.

They replaced it a 6 percent match in 401k. Some of the tellers and operations people don’t even put six percent in to get full match.

[Anonymous]

Anonymous wrote:Are you a white male?

Pensions benefit men who don’t have to step out of the workforce for childrearing.

401ks and private brokerage accounts allow for worker mobility. You’re not tied to an employer for life.

What does being a white male have to do it. I thought black women were known for never stepping out of the workforce to raise children aka the 1950s homemaker style due to institutional racism making it financially infeasible, so they'd have benefited from pensions back in the day. And many actually did, especially government workers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

I have to agree that you cannot hold the Swiss out there for their economy and productivity. What works there is not for here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

Swiss productivity has historically been higher than US productivity. Since COVID, the US has been slightly more productivity:
https://tradingeconomics.com/switzerland/productivity

Switzerland has long led the patents per capita ranking, taking the #1 spot in 2024 and 2023:
https://www.swissinfo.ch/eng/science/switzerland-tops-global-table-for-patents-per-capita/73890507

Switzerland also has a GDP per capita 22% higher than the US.

So yeah, maybe we should learn a thing or two about retirement savings from them.

No -- you can't compare the Swiss to the US. US is so much bigger, diverse, and the scale is so much larger. The US drives the world economy. No other country or region really does that. Could we do things like this -- sure. We would pay workers a lot less. Everytime you ask workers if they would take less for more benefits the answer is no.

[Anonymous]

But we can’t have everything. Many European countries do retirement and pensions much better - but taxes are higher and salaries are lower to accommodate that.

[Anonymous]

How about - crazy idea - the money that the government steals from us in the form of SS, the gov invests on our behalf in a special account we can never touch under any circumstances… instead of just being a massive ponzi of robbing Peter to pay Paul.

All we need is a special tax that is essentially a forced 401k and not some weird redistribution scheme (SS) where you only get a fraction back of what you put in.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

Swiss productivity has historically been higher than US productivity. Since COVID, the US has been slightly more productivity:
https://tradingeconomics.com/switzerland/productivity

Switzerland has long led the patents per capita ranking, taking the #1 spot in 2024 and 2023:
https://www.swissinfo.ch/eng/science/switzerland-tops-global-table-for-patents-per-capita/73890507

Switzerland also has a GDP per capita 22% higher than the US.

So yeah, maybe we should learn a thing or two about retirement savings from them.

No -- you can't compare the Swiss to the US. US is so much bigger, diverse, and the scale is so much larger. The US drives the world economy. No other country or region really does that. Could we do things like this -- sure. We would pay workers a lot less. Everytime you ask workers if they would take less for more benefits the answer is no.

The US is larger, yes.

But in Switzerland, 26% of the country is foreign born - the highest in the OECD. In the US? It's only 14%.

Do I need to swat you back with facts a 3rd time?

[Anonymous]

I'm not sure I see the problem. People who plan and save get to retire comfortably. People who don't either keep working or have to live with less money. Retirement isn't something that is guaranteed, and, as noted above, is a fairly recent concept.

If we are going to change everything, then we should start with improving financial literacy and education. Beyond that, people need to take responsibility and make their own choices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Gift article link:

https://www.nytimes.com/2024/05/08/magazine/401k-retirement-crisis.html?unlocked_article_code=1.qk0.FoXn.AmNofORfld_i&smid=url-share

The evidence seems clear. My family has won in this scenario as have many of those who post here. We have a federal pension along with a 401K that's been maxed out for over a decade, and was well-funded before that.

But, overall, for our society taking away pensions and making people save for retirement as a replacement seems to have been a poor plan. People don't plan or save for the future. Some can't, others just don't have the desire to, many others are living paycheck to paycheck whether because of low wages or poor planning.

We should never have left pensions behind.

So you want to work for One Company your whole life, and take a chance that they have funded the pension well, invested it well, won't bankrupt it, won't act fraudulently..... as opposed to being responsible for your own life, your career choices, work for one company, do a side gig to earn more when you are young, learn about investments, the market, and be responsible and accountable for your own retirement? Mmmk.

Of course not. We should have both.

[Anonymous]

Ahh, never change, NYT, never change. It’s funny because, years ago, I did some consulting work with a few NYT senior execs. While nice enough people, they were exactly what you would expect.

That said, the responses in this thread at least give me some comfort there are a few sane people left in the world.

Defined benefit pensions are untenable, I think most of us agree. The left clearly wants a UBI scheme / massive enlargement of SS / new entitlement. I don’t believe that is tenable either, much less a good idea.

The answer is mandatory retirement savings, and we’re moving toward that idea (as the article mentions). While I’m not in favor of forcing companies into defined benefit plans, I am in favor of forcing them into defined contribution plans. I’m also ok with making participation mandatory, as long as the mandatory contribution is pretty low.

I have a 7 figure 401k balance in my mid-40s, but part of that is because I contributed starting in my early 20s while making $30k per year. We need to reward people who make responsible decisions.

[Anonymous]

If OP wants a return to pensions, then I tend to think that it would need to be an enhanced Social Security program, and NOT funded by employers. Or it must be something portable [u]that does not depend on any one employer (as that business model does not exist).

One downside of a pension is that, when you and your spouse die, the money goes away. At least with a 401(k), you can pass some of that down to your children as part of an inheritance for them.

I believe that the following life skills need to be essential parts of a K-12 education:

1. Financial Education and the importance of saving 20 percent into your 401(k) at all times. (Some people do not get financial education at home, and so we must teach it in schools. The 401(k) does not need to "drive inequality" if everyone gets a basic education in the advantages of using it, and the importance of saving, etc.)

2. Coping Skills -- Life is full of ups and downs. We all need to learn how to manage your anger/disappointment in healthy ways (rather than resorting to alcohol, drugs, rage driving, over-eating, over-spending, etc).

[Anonymous]

Anonymous wrote:I work at a small bank that eliminated the pension around 2003. I heard if you worked there 40 years you got a full pension equal to your last salary. It is still funded but frozen in 2003. No new contributions.

They replaced it a 6 percent match in 401k. Some of the tellers and operations people don’t even put six percent in to get full match.

But that’s the point. All of the previous pension plans were too generous and therefore not sustainable. You can’t have someone work age 22-52, and then pay them a generous pension for 30-40 more years. And yet that’s what it was. Many people in the United States claim a pension longer than they ever worked for the place paying the pension. It’s mathematical insanity.