<story><title>McClatchy files bankruptcy</title><url>https://www.mcclatchydc.com/news/nation-world/national/article240139933.html</url></story><parent_chain><item><author>turc1656</author><text>The one thing that made them &amp;quot;make sense&amp;quot; to most people was that the average person is&amp;#x2F;was terrible at personal finance and retirement planning.  The company running the pension was a way for the average person to be &amp;quot;guaranteed&amp;quot; a retirement income without having to worry about anything.&lt;p&gt;Remember, corporate pensions were a big thing when the US was at it&amp;#x27;s greatest economic strength (post-WW2) and the internet with all of its modern tools to make investing much simpler for the average person didn&amp;#x27;t exist.  You had to pay brokers for every single trade or someone else to advise you or you had to just buy and hold a small set of stocks for 30 years and hope those companies would still be around (a fair bet at that time).&lt;p&gt;Back then companies didn&amp;#x27;t really go under like this.  If anything, they got bought by a larger company and merged, but the frequency of that was nothing like today.&lt;p&gt;Today, with health care costs what they are, having pensions and defined benefit plans are insane to me.  It&amp;#x27;s much better for the company to say &amp;quot;we will match x% in a 401k&amp;quot;.  They are defining their contribution and it has a cap.  If anything happens to the company, the employee&amp;#x27;s funds are safe as the money is already transferred.  For the employee, it does require them to manage this money but that&amp;#x27;s far easier and cheaper today and that money doesn&amp;#x27;t require the company to be around forever.  If things tank, the employee is protected.</text></item><item><author>Waterluvian</author><text>I discovered the concept of pensions managed by corporations when Sears Canada went under and a ton of people lost their pensions.  I guess it&amp;#x27;s a pretty common thing. But it seems absolutely insane to me.&lt;p&gt;Who in their right mind, given any choice on the matter, would want to lock their retirement into the existence and health of a corporation?&lt;p&gt;Until I saw the Sears debacle occur, I thought everyone basically puts together RRSP (Canadian retirement tax havens, I think 401k?) accounts and rely on their required payments into the Canada Pension Plan.  It&amp;#x27;s much less likely that the government or a bank will fail, and the bank, unlike Sears, is CDIC backed.&lt;p&gt;I guess my question is: why do we allow companies to manage retirement funds?</text></item></parent_chain><comment><author>adrianmonk</author><text>Also, 401(k) plans were not even possible until a tax law change in 1978 and an IRS ruling in 1981. So there was a lot of time in the pre-401(k) world for things like pensions to evolve. And now that 401(k) plans exist, pensions have gotten way less popular.&lt;p&gt;I would guess it&amp;#x27;s mostly old companies who have them. One factor may be that it&amp;#x27;s tough to transition a company to not having a pension plan once one has been established. At the very least, you create two classes of employees, old employees who have pensions and new employees who don&amp;#x27;t. It&amp;#x27;s a form of compensation, so you have to figure out a way to achieve parity in a way that makes everyone feel they&amp;#x27;re being treated fairly.</text></comment>
<story><title>McClatchy files bankruptcy</title><url>https://www.mcclatchydc.com/news/nation-world/national/article240139933.html</url></story><parent_chain><item><author>turc1656</author><text>The one thing that made them &amp;quot;make sense&amp;quot; to most people was that the average person is&amp;#x2F;was terrible at personal finance and retirement planning.  The company running the pension was a way for the average person to be &amp;quot;guaranteed&amp;quot; a retirement income without having to worry about anything.&lt;p&gt;Remember, corporate pensions were a big thing when the US was at it&amp;#x27;s greatest economic strength (post-WW2) and the internet with all of its modern tools to make investing much simpler for the average person didn&amp;#x27;t exist.  You had to pay brokers for every single trade or someone else to advise you or you had to just buy and hold a small set of stocks for 30 years and hope those companies would still be around (a fair bet at that time).&lt;p&gt;Back then companies didn&amp;#x27;t really go under like this.  If anything, they got bought by a larger company and merged, but the frequency of that was nothing like today.&lt;p&gt;Today, with health care costs what they are, having pensions and defined benefit plans are insane to me.  It&amp;#x27;s much better for the company to say &amp;quot;we will match x% in a 401k&amp;quot;.  They are defining their contribution and it has a cap.  If anything happens to the company, the employee&amp;#x27;s funds are safe as the money is already transferred.  For the employee, it does require them to manage this money but that&amp;#x27;s far easier and cheaper today and that money doesn&amp;#x27;t require the company to be around forever.  If things tank, the employee is protected.</text></item><item><author>Waterluvian</author><text>I discovered the concept of pensions managed by corporations when Sears Canada went under and a ton of people lost their pensions.  I guess it&amp;#x27;s a pretty common thing. But it seems absolutely insane to me.&lt;p&gt;Who in their right mind, given any choice on the matter, would want to lock their retirement into the existence and health of a corporation?&lt;p&gt;Until I saw the Sears debacle occur, I thought everyone basically puts together RRSP (Canadian retirement tax havens, I think 401k?) accounts and rely on their required payments into the Canada Pension Plan.  It&amp;#x27;s much less likely that the government or a bank will fail, and the bank, unlike Sears, is CDIC backed.&lt;p&gt;I guess my question is: why do we allow companies to manage retirement funds?</text></item></parent_chain><comment><author>bb88</author><text>&amp;gt; Back then companies didn&amp;#x27;t really go under like this.&lt;p&gt;The mean time between job transitions was less.  That&amp;#x27;s partially because pensions created job loyalty even if was through golden handcuffs.  If people had to work another 5 years for another 15-20% in your pension, people would do it.&lt;p&gt;It fell down because:&lt;p&gt;1. Corporate raiders would buy companies to take the money out of the pension plan.  Pensions are by and large unregulated.  And pensions are just a bunch of money sitting in an account of which payouts are largely determined by corporate policy instead of by contractual obligation.&lt;p&gt;2. Companies would fail to pay into their own pension fund based upon overly rosy economic projections that wouldn&amp;#x27;t come through.  This forced companies to declare bankruptcy just to get out of the burden of paying a pension that was promised as part of the salary years ago, even if it was a contractually obligated pension.&lt;p&gt;3.  401k&amp;#x27;s became the norm.  Because companies now no longer have a separate account they have to manage, and it&amp;#x27;s only x% (3 or 4 usually) of your paycheck.&lt;p&gt;In the end it comes down to, how well you trust people to manage your future.  Back in the 50&amp;#x27;s it worked largely well, because people weren&amp;#x27;t willing to break societal norms.</text></comment>