There is a discussion going on to change the type of pension account for new hires. To go from the current defined benefit plan to a defined contribution plan.
A defined benefit plan lets you know how much money you will get when you retire. An example is 50% of your current pay. You know what you'll get and get it until you pass away.
With a defined contribution, you pay a defined amount every month and rely on the market for what you get when you retire and it's very possible for you to out live you savings. Giving you nothing, when you least can afford it.
In those departments that have a two tier system (defined benefit vs defined contribution) the "young guys" feel that the "old timers" didn't protect their backs. When the "young guys" take over the bargaining unit they give away benefits for the "old timers" that hadn't looked out for them when they could.
Don't let this happen here!
chicagotribune.com
Retirement accounts hit hard
Associated Press
October 8, 2008
The upheaval that has engulfed the financial markets is also devastating people's savings, forcing families to hold off on major purchases and delay retirement, Peter Orszag, the head of the Congressional Budget Office, told the House Education and Labor Committee on Tuesday. Lawmakers began investigating how the turmoil is whittling away workers' nest eggs.
Orszag's findings:
$2 trillion The amount Americans' retirement plans have lost in the past 15 months.
10% The percentage lost by public and private pension funds and employees' private retirement savings accounts such as 401(k)'s between mid-2007 and mid-2008.
10% The additional percentage lost in just the past three months.
Copyright © 2008, Chicago Tribune
Wednesday, October 08, 2008
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