From The Washington Examiner 7/19/10:
Virginia’s government is in surplus, and the McDonnell administration couldn’t be happier. So, too, are state workers, who were promised a three percent bonus if the state finished its fiscal year in the black.
But is Virginia’s surplus really all it’s cracked up to be? Republican Delegate Bob Marshall put it this way:
To say Virginia ended the fiscal year with a surplus when we decided not to pay all the bills i.e. VRS (I did not vote for the final version of the budget because taxes and fees were added which did not pass both chambers or which were rejected), is to be caught speeding with literary license.
Needless to say, Marshall’s pith doesn’t fit the narrative being peddled by McDonnell and others, who very much want the world (and credulous talk show hosts) to believe the books were balanced and a surplus generated without gimmicks or tax hikes.
Here’s McDonnell pitching his story to Sean Hannity. No taxes raised? A model for Washington politicians to follow? Sorry, Sean. They already do.
Marshall’s point about the VRS – Virginia’s state employee retirement system – is an important one. To help make the budget numbers work, the General Assembly declined to make a $620 million payment into the VRS. They say they will, at some future date, and with interest. But that’s playing with fire. A review of state pension plans from the American Enterprise Institute put Virginia’s unfunded liabilities at nearly $53 billion – 17 percent of state GDP.
So what about the taxes? To believe the line that taxes weren’t raised requires us to ignore the requirement that retailers had to remit their July sales tax collections in June — long before the money was actually collected (but very convenient for the state, considering its fiscal year ended on June 30). We must also pretend not to notice the reduction in the dealer discount – the monies from sales taxes retailers keep to offset their cost of collecting the tax – in addition to a special hold-back for the sale of certain tobacco products.Virginia’s manufacturers took a tax hit, too, as the General Assembly, and the McDonnell administration, agreed to let them claim only 2/3 of a federal tax credit on their Virginia returns. This was actually a victory, of sorts, as the Assembly originally proposed to cut the credit even more.
Back in March, Lt. Gov. Bill Bolling urged the General Assembly to eliminate these de facto tax increases, but also put in a good word for fee hikes…which were raised by $95 million.
And a fun fact about those fee increases? According to the House and Senate finance committees’ revenue report, any monies generated above and beyond their intended purpose revert to the state’s General Fund.
Believing that no taxes were raised also requires that we overlook the two percent hike in alcohol prices at state-run ABC stores . And let’s not forget: by raising liquor prices (or “mark-ups”) the state will, by extension, also realize more tax revenue from liquor sales.
If you ignore all those things, then yes, Virginia is in surplus and managed to get there without a tax hike and without a single gimmick.
But doing so requires more than willful ignorance. It demands a highly developed sense of the absurd.
The Va budget started out on a false premise and apparently is ending up on one also. When the budget was approved it included a huge loan from VRS to be paid back with interest. That loan should have never happened. I am not even sure it is legal according to the VA Constitution. It goes down hill from there. Yes, taxes were raised. No, VRS is not getting the money put it that is should get put in. Any funny business with the state pension is because of the State of Virginia and the funny money being played the past year. I smell a big class action lawsuit on the horizon.
Virginia needs to follow its own Constitution and balance the budget for real, not just on paper. It needs to pay its bills on time and it needs to not borrow money from within to balance its budget. The VRS is not the state’s AMT.
Is Bob Marshall the lone voice in the wind willing to speak the truth about Virginia funny money?
Thank you, Bob Marshall, for the best phrase I’ve heard in a long while, “caught speeding with literary license.” I’m weary of all the misleading interpretations our leaders –politicians, CEOs –put on facts. Wish the police chief would be quoted on crime, the budget people on money figures, etc.
In order to try and balance any budget that is in the red you either increase income or cut spending, you know economics 101. Rarely do you wind up hitting the perfect balance. Sure things were cut. If there’s any complaint, then it should be why couldn’t we raise revenues instead. If he raised taxes and caused a surplus we’d be bitching about that as well. Comments from the opposition are always formulated to produce a no win situation. It’s just politics. Shouldn’t surprise anyone.
If they want a balanced budget, they need to do something about that Virginia employees retirement plan, man.
People ask sometimes how Bob Marshall keeps getting reelected and this it. I think that even I posted a comment expressing my frustration the last time Bob let his mouth run far ahead of his brain on some social issue. However, on fiscal matters and conservation he is solid, and is even endorsed by some environmental groups.
Another plus for Bob is that he’s honest and consistent, even if you don’t agree with what he says. Bob has come up with some ridiculous sounding comments in the past, but he’s proof that Corey Stewart is an exception from the integrity and character of most of our local Republicans.
@Starryflights
Agreed Starry, the problem is that I suspect that you would prefer the easy, politically correct route that has gotten us into this mess through more taxes — killing jobs and economic growth that could then be compensated for by more spending — while I prefer that our politicians have some guts and cut spending, reduce entitlements – particularly unearned entitlements – and subsidies. Ah, but what to cut. Historically it has, again, been easier to avoid identifying who’s gore to ax by taking accross the board cuts of say 2 – 5 percent rather than lazer specific reductions. I don’t like that either, cause its chicken *&^%. You do your list / I do mine prioritized by the budget values. Your get 5 vetos up to the values needed and so do I. Sort of Clintonian.
Actually, I have never thought of Bob Marshall as’ the opposition’ in a Republican government. Not a Marshall fan at all but this time I feel he is right.
Paying it needs to pay its VRS bill. I could care less about increasing the liquor tax. I just wouldn’t say I didn’t increase taxes. That would make me a liar.
This whole ‘balancing the budget’ which is manadated by the VA Constitution just hasn’t been dealt with honestly or in the spirit of the law. You don’t borrow to balance a budget.
Marshall is my hero.
The only thing that I would add of course is that we need to get rid of VRS and our financial obligation to it.
We can look to Illinois to see how bad things get when you borrow from and have pension obligations.
How about 401k obligations? I see no difference in putting in for 401k and putting in for a pension as far as financial obligation. Money is money. Unfortunately, the state has started using the pension fund as an ATM.
Reminder about VRS, which has almost nothing in common with the Illinois pension fund:
The VRS is actually mandated by the Constitution of Virginia. The history also explains the following:
https://www.moonhowlings.net/index.php/2010/06/22/pensions-revisited/
Massive difference in the actual numbers between a pension and a 401K… I think I’d give the state my kidney if we could shift from VRS to a 401K. The cost savings for the state and taxpayers would be huge.
I agree with you that the VRS shouldn’t be tapped.
You fail to say where the savings are. I understand that there are differences in a pension and a 401k plan but…..the money an employer puts in is still money. 6% = 6 %
I am not sure you understand what is involved with VRS. I think you must think there is something in there that doesn’t exist in reality.
You might be giving up a kidney unnecessarily. good thing you have 2.
Well, the savings are variable by the retiree. Another way of looking at this is; currently the state is on the hook for 100% of the retiree’s income + overhead of funding VRS as a state agency. A 401K would cut the obligation to a 6% max match and administrative fees.
So, off the top of my head you’d save 94% of the total obligation + you’d be able to deactivate all the workers at VRS and have that building(s) ready for reuse for another state activity OR sell off the building and supplies for cost recovery.
It boils down to how do we want to play with the numbers. As any accountant will tell you; what would you like the numbers to add up to be?
Out of curiosity do you know the difference between a defined benefit and a defined contribution plan?
Get rid if of VRS? Let me tell you Marimn, my mom works for the state, for friggin peanuts! How dare you suggest that state employees forgoe some modicum of compensation for accepting below livable wages! Clearly, you do NOT work for the state. She works her ass off, does not get salary increases and now you want to cut the little benefit she does get, some nerve, some nerve.
The 401k plan was engineered so that companies could avoid many, if not all costs of a pension plan. Yes, they match what you put in, but in lower paid jobs, many people cannot afford to put any money into the plan, meaning no match.
There are a few employers who donate into 401k plans with no employee match – kudos to them,.
@marinm #13
Nonsense.
Future contributions for past service from the state to the VRS pension fund would be zero if politicians and bureaucrats didn’t raid it. The state provides the employee with an X% contribution to the 401(k) plan and/or the VRS retirement plan on periodic basis that coincides with the employee’s service. The state’s contributions should end there. The difference is that the employee bears the investment risk with the 401(k) plan and the state bears the risk with the VRS retirement plan.
VRS employs portfolio managers and other investment professionals to manage the pension fund so as to generate the return needed to pay retirees’ pensions when they come due. The minimum required amount in the VRS portfolio is an actuarial calculation based on the number of beneficiaries, their age, their income level and many other factors.
If the actual amount of the portfolio exceeds the actuarially-determined minimum requirement, the plan sponsor (government or private pension plan) can withdraw the surplus for other uses. That’s generally a bad idea, however, because the withdrawal reduces or eliminates a buffer that protects the plan in the event the investments perform worse than expected. Moreover, the buffer can also reduce future contributions by the plan sponsor while maintaining the same expected benefit for the retiree. This practice is generally legal.
If a plan sponsor simply defers a required contribution the portfolio needs to meet the required minimum balance in the portfolio based on employee service, big problems occur (if you are in the private sector). If a private sector plan sponsor (employer) says they are deferring the contribution because they want to look better for their stockholders, or they just don’t want to make the corporation, someone would very likely be going to jail. If they were unable to make the contribution, the Pension Benefit Guaranty Corporation (www.pbgc.gov, a government regulatory entity) would get involved to try to ensure that the pension liabilities didn’t get passed off to the taxpayers. Such a situation would also put the firm’s credit rating in the toilet.
Deferring a required contribution seems to be what Virginia did. Now, who is going to jail for this one?
@marinm #13
“It boils down to how do we want to play with the numbers. As any accountant will tell you; what would you like the numbers to add up to be?”
And another thing, this statement is pure BS. Arthur Anderson accountants who did such things for Enron lost their jobs and were disgraced in the accounting profession. Some went to jail. Accounting has strict regulations and rules as to how financial statements are prepared and the vast majority of CPAs adheres to these standards and codes of conduct diligently. I don’t know who marinm’s accountant is, but if they fit the description marinm gave, he should find someone else. The Manassas/Prince William County area has many qualified, ethical accountants.
@Pat.Herve #15
This is correct. Employers are not obligated to provide any pension or retirement plan. Most do, however, as a benefit to attract good employees. If an employer offers only a 401(k) with no employer contributions, they can shift virtually all costs of the retirement plan on to the employees.
In theory, 401(k) plans are a great idea. In practice, the results have not been great. The investment choices are often poor, fees are high, and most people have no idea where to begin to manage a retirement portfolio for themselves. Still, the benefit of the tax deferral makes participation in the 401(k) plan attractive.
Watch this excellent PBS documentary on retirement plans,
http://www.pbs.org/wgbh/pages/frontline/retirement/
and see the answers to some of the questions in this thread related to the documentary,
http://www.pbs.org/wgbh/pages/frontline/retirement/need/
NTK, from the state’s perspective is it more financially prudent to fund a state pension or state 401K plan?
I have no issue saying it’s not in the state employees best interest (for the most part – you can make an arguement for portability, accessing it before retirement age, etc.) but is it in the State’s best interest. Why or why not?
Thanks for that explanation NTK. Up until very recently the VRS was a solid pension and considered one of the best in the nation. It was self supporting. Now it seems it is a little rickety. Thanks Virginia.
It is impossible to find out information on what is happening with it also. I am surprised that people with VRS accounts aren’t bellowing like they have mad cow disease over Virginia sticking its hand in the till and also over Virginia deferring its contributions. Additionally a couple of localities in Tidewater have deferred their countributions.
A hundred million here and a hundred million there isn’t that easy to come up with.
I thought Republicans were supposed to be the kings of fiscal responsibility? Doesn’t sound like it here.
@Moon-howler
I’m one Republican who remains fiscally responsible, supports fiscally responsible public policy, and will blow the whistle on Republicans who don’t.
Moroever, if Virginia wants to offer VRS as an employment benefit, and other local jurisdictions want to participate, in order to attract good employees I have no concern. The idea that Virginia, other local jurisidictions, and public schools will attract good employees with nothing but a modest paycheck and well wishes is idiotic.
Watch the video I linked. It’s very eye-opening.
Excellent point, NTK. I am just very surprised, with the entire executive branch being Republican as well as the majority of the House of Delegates that this funny money stuff would be going on. Frankly, I am disappointed in the VRS and budget behavior. It just isn’t honest.
I would rather have a tax raised than to fake a balanced budget.
Watching now. I hope Marin watches also. It is an eye opener.
Very excellent…NTK. Thanks for recommending. It appears that the 401k plan is a very flawed plan.
GO NTK!!!!!
I’m watching it. It’s making me chuckle. mostly cause it’s alot of what myself and another poster who left the blog have been warning about.. except this is focusing on corporations versus state governments. Have to run an errand and will watch the rest later.
But, yes. I find this video VERY amusing. 🙂 🙂 🙂
Enlightening discussion, but I am trying to figure out what this Taxpayer’s statement means: ” Historically it has, again, been easier to avoid identifying who’s gore to ax by taking accross the board cuts of say 2 – 5 percent rather than lazer specific reductions.” What is a”gore” and how do you “ax” it? I don’t suppose Taxpayer means, “whose OX to GORE”?
If the $53 billion in liabilities is all money borrowed from the VRS, it seems to me Virginia is setting itself up to default and screw its employees.
It isn’t meant to be amusing. You also aren’t going to find it very amusing when you are being taxed to death to keep many baby boomers from having to eat catfood and live on the streets. Remember that the boomers go from 1946 to 1964.
Peope have been cheated by their corporations.
It basically says the the 401k is a very poor investment tool. It also says that pensions are much more solid if we are looking at what is best for the average worker and not the ceo.
All that knowledge must have been posted on another blog. All I have seen here is how everyone ought to go with 401k plans.
I am curious, Marin, why you find anything funny about it? Please explain the humor.
https://www.moonhowlings.net/index.php/2010/06/08/public-servants-the-new-political-targets/#comments was a good discussion on how pensions are going the way of the dinosaur.
And the other poster was Formerly Anonymous. Sorry I had forgetten the name.
Should we bring back debtors prisons?
Do you think it’s fair for a person to run up credit debt, buy a house they can’t afford and live high on the hog only to declare bankcruptcy and get excused from the debts they owe those evil corporations? Of course everyone here does, right? Now, replace an individual person with a corporation. Why does that make a difference? So, if we’re going to be consistent and look at these evil corporations that follow the bankcruptcy law…should we not bring back debtors prisons?
401Ks are more affordable from the States perspective than a pension plan. That point was not contended above and I doubt anyone will contend it. From an employees standpoint of course it’s not as good of a deal. That’s what makes it a good deal from the payers (corporation or state) perspective.
It’s foolish (and not in a Motley Fool way) to not look at assets, 401K, pensions, personal savings, and lowing quality of life when looking at the entire package of a person retiring. At 30 I was thinking about those things. For those that don’t — you can be a greeter at Wal-Mart and tell me where I can find something.
I’ll keep watching the video. It is enjoyable if not slanted heavily against a sustainable economy.
BTW, another very funny link. http://www.realclearmarkets.com/articles/2010/07/20/of_course_oakland_cant_afford_these_cops_98581.html
Here’s a taste.
This month, Oakland laid off 80 police officers, just over 10 percent of its total force, in order to balance the city’s budget. As a result, the city’s police chief says cops will no longer respond to 44 categories of crimes, including grand theft. The city’s elected officials regret the change but say they simply cannot afford to maintain current staffing levels. Whether that’s true depends upon your definition of “afford.”
At current levels of compensation, yes, Oakland cannot afford to maintain a police department with 776 employees. That’s because total compensation for an OPD employee averages an astounding $162,000 per year. But at a more reasonable level of pay and benefits, Oakland could afford to maintain its force, or even grow it.
I still don’t think you have explained why that video was funny. Interestingly enough, what you are proudly think you thought of at 30 might not be a reality when you are 70 and eligible to retire. Many people, like those who worked for United certainly set off with a plan. Then the plan changed. That’s what most of that video was all about…change and how people got caught in the change. The proverbial rug pulled out from under them. Many of those highlighted simply were too old, had too many years to make major career changes to respond to those changes that were beyond their control.
Rather than sitting back and being smug about your freaking infinite wisdom, have some compassion. and pray it doesn’t happen to you. Those people didn’t not plan for retirement or even for their future. They got caught up in a situation where the rules changed…and not for everyone. The CEOs kept their million dollar pensions while the middle class people just simply got screwed.
They got screwed because of someone else’s selfishness. Be very careful what you wish for.
Formerly and NTK are both very knowledgeable about financial matters. I listen to them, even if I don’t always like what they say.
And…Virginia has nothing to do with the pension in California. Not even close. I am only speaking of Virginia. Don’t even start to compare the 2 states. The VRS used to be self sustaining before it became the state ATM machine.
It’s not self-sustaining. If it was self sustaining that means taxpayers wouldn’t have to put a dime into it. It’s taxpayer funded. Let’s at least be honest about what we’re debating.
The video is amusing because what I’ve been saying on this blog for months about defined pension plans is about the same thing that’s being shown in the video. The only thing that’s different is that I have no compassion where the video takes the slant of showing the human/emotional toll. It’s the SAME message. Pensions are a risk. Sure a 401K is a risk but better to invest in multiple companies or industries (spread the risk) than to put all your eggs in one company. It’s amusing.
State employees, local employees’s salaries are also taxpayer funded. So what. That’s the name of the game. It is all part of compensation. Initial input has nothing to do with being self sustaining. Self sustaining means that it pays for its own up keep independently. If the state isn’t paying in when it should, that causes a problem.
Since the state now dabbles into it, that is probably a thing of the past.
I think you are just saying that you are a saddist and enjoy seeing people get the rug pulled out from under them. Might as well admit it. Most of what we do as human beings is because we have compassion for our fellow man.
Most pension funds are found in the public sector. That is no news flash. Some companies still have them but many cheap out and go with 401k. What I find interesting is that those companies that still have them are generally associated with defense contracting. Hmmmm…who really pays their salary and pension fund? Ultimately, it all goes back to the tax payer.
I wonder what marinm has for a retirement plan. Sounds so damned cocky. I think it is strange that he/she can find humor in the tragedy of others who have been screwed by their company. I full expect Virginia’s VRS will default to PBGC and people will get cents on the dollar for what they put into VRS. When this happpens, you should get out of any Virginia bond fund. If you can get your money out of VRS when you retire, you should do so and, if you are as smart as marinm, then you can manage your own retirement or turn it over to a professional manager and count your lucky stars.
I have at least five neighbors who have NO retirement plan. They are relying totally on Social Security. In at least two cases, they never earned enough to invest in any retirement other than Social Security. In one other instance, the person squandered their 401K fund. In another, the family invested in a scheme that has cost them everything and they are living from paycheck to paycheck. In three of the five instances, the people are living beyond their means and have no plans for the future. There is a small (24 homes) addition in our area–every homeowner is under water and many have interest only loans and are waiting for them to reset in the next couple of years. I’m talking about people who are in homes that cost at least $750,000. At least three of the 24 homes have been sold on a shortsale or went into bankruptcy. And two other homes are for sale–one of those is a short sale. People are not thinking about the future at all. The video is absolutely right–this is a time bomb of unbelieveable proportions.
I’m not a sadist. Money is a thing and I don’t get emotional about it.
Mr. Harris, I have a 401K that’s for the most part ‘even’, I have a pension plan with EDS (now HP), savings, my home, future income (god willing) and social security. And retirement still scares me at times.
I don’t think Virginia can default VRS to PBGC (the feds) as I thought PBGC was akin to the FDIC of pensions but for private corporations. I could be wrong on this but I’m pretty sure that’s right.
Thanks for the compliment but I’m not very ‘smart’ with money – I just ask a lot of questions and research, research, research.
Hell, I still think I can win the VA lottery. 😉
when you think you can depend on a certain income to live on and suddenly you find yourself wondering how you are going to pay for food or medicine, I imagine lots of people get very emotional.
I think when G-d was handing out empathy, maybe, Marinm, you said no thank you.
@marinm
You ‘re very fortunate. Many are not. As to emotions–it’s not about money–it’s about lives that have been devastated by this whole collapse–and that’s not funny.
@Elena
You got it Elena. I have done a lot of work with the elderly and can tell you that many have gotten caught up short and wonder from day-to-day how they are going to get by.
@marinm
Yes, apparently PBGCV is for private defined benefit retirement plans,which makes thaings allthe worse should Virginia default. That means VRS beneficiaries would get nothing. Nice deal. I think Moon mentioned a class action suit against the Commonwealth–now is the time to start.
a 401k is good for the savers (which are few). Look at how many people contribute to the 401k in a company, and you will see that the current working generation is not saving enough for retirement (or for anything else). Often the salary paid by a pension giving concern (public or private) is less, because there is a pension involved. In our moves to a more mobile work force, we are getting away from a defined benefit pension, and at the same time, moving away from company loyalty, and longevity.
One thing I like about the 401k, is that it is my money (mostly from my contributions) and I can take it with me, unlike some unvested pension credits that will expire, without me being able to take advantage of.
http://online.barrons.com/article/SB126843815871861303.html#articleTabs_panel_article%3D1
Ok, I’m *very* concerned and man enough to say….. scared.
@Pat, I like the concept of free money. However, people have to work many years to ever get enough from a job to support themselves in their retirement. Many places don’t have matching programs. If one has the choice of a pension or a 401k, a pension would win each and every time. When a 401k is gone, it is gone.
That one drawback for a pension involving not being vested is more than made up for if you can stick it out.
On the other hand, anyone can set up an IRA.
Blah blah blah……So you found someone to agree with you or rather vice versa. Pick a state other than California to compare. Virginia’s plan is nothing like California’s.
Meanwhile, prepare for a class action law suit here in Virginia if the state doesn’t knock it off.
In theory, a 401(k) is much better for an employee than a defined-benefit pension plan. A 401(k) is portable, the employee is instantly vested with any contributions they make and they are cheaper for employers to administer. Thus, more of the funds the employer budgets to employee benefits go to the employee as opposed to management expenses.
As the PBS video makes clear, 401(k) plans have not worked out as well as intended. Employees usually don’t take full advantage of them (they usually have no choice other than participate in an employer-sponsored defined-benefit pension), investment choices are often bad, fees are inexcusably high, and people don’t know how to make the right investment choices.
Under current law, employers or anyone associated with the company administering the 401(k) plan who advises people on how to select the investment choices is open to liability. People have to figure this out on their own, or find competent third-party advice.
If the problems mentioned above could be addressed, I would favor 401(k) plans in almost every circumstance over defined-benefit plans.
The Employment Retirement Income Security Act (ERISA) governs retirement programs in the US, including defined-benefit pensions and 401(k) plans. However, state and local governments are exempt from ERISA. Virginia can thus do things with the VRS (defer pension contributions that would be mandatory in the private sector) that would land the sponsor of a private pension (that is not exempt from ERISA) in prison.
If my retirement depended on VRS, I would be organizing marches in the streets of Richmond. When is that tea party going take place?
While CA is mentioned it’s not central to the authors article. Basically, the author is saying the system is just as bad on the public side (where PBS looks at the corporate side).
For a moderate, your bias is showing. I’m hoping that people would look at the information objectively and devoid of emotion.
From an employers perspective (from the States) a defined contribution plan is cheaper than a defined benefit. It’s a cost savings model that really should be examined.
California is used to back up almost every statement made.
What does being a moderate have to do with any of this? The fact that I don’t want to yank pension plans out from under people who are counting on them has nothing to do with politics. It has to do with having empathy for my fellow human beings. Don’t try to make it all political.
As for Virginia, the VRS has been a good plan and I hope that the state will keep its mits off of it for it to continue to be a good plan. If localities want to shift some of the contributions to the employee, then they are now able to do so.
NTK, I am surprised that no one has tried to organize something along those lines. In a perfect world, I agree with you about 401k. The world is far from perfect. I would actually prefer both.
@George S. Harris #35
George has summed up the essence of the problem extremely well. The bottom line is people suffering because of public and elected officials letting private greed run amok. Some will respond with a clichéd, boiler-plate argument that the “free-market” will take care of all of this. News flash – we have no free market. We have a system that is corrupt from Washington to Corey Stewart where moneyed interests buy their way from elected officials and subservient bureaucrats administer the results. Middle-class Americans pay the price. United Airlines employees lose their pensions completely while senior executives receive protection even after flying the airline into the ground. Prince William County citizens suffer congestion, higher taxes and a lower quality of life while Corey Stewart is packing for his move to Richmond.
I saw that idiot Glen Beck prattling on about the world coming to an end in 2012. I earlier saw him trashing one of my heroes, Teddy Roosevelt. Where are the Teddys now? We could sure use more Teddy Roosevelts, and fewer Glen Becks and all of those other morons who cheer on raids of public pension funds and provide blank checks for corporate greed in exchange for a campaign contribution.
Cheer Need to Know!!!! Standing ovation!!! You covered many bases on that one. Totally agree.
I like Teddy Roosevelt also.
@Moon-howler #46
401(k) plans were originally created as supplements to employees’ defined-benefit pensions. The intent was to provide a means for employees to enhance their retirement savings beyond their employer pensions. Employers began to use 401(k) plans increasingly because they are cheaper to administer and they shift the investment risk on to the employee. In most instances in the private sector 401(k) plans have supplanted defined-benefit plans altogether. Because of the changing workforce (i.e., much more mobile and transitory) the 401(k) model may be even better than defined-benefit plans, but only if the problems I mentioned above can be resolved. Continuing with the system as-is will leave most people with insufficient retirement income.
I like Teddy too:
Teddy Roosevelt: “Speak softly and carry a big stick”
but I like Yosemite Sam better, “I speak loudly and carry a bigger stick and I use it too”.