So JMac Politics, a blog that I follow, is based in GA. A great set of posts have come from there regarding what is known as Defined Benefits. I have tried to follow them as they are a hot topic in the region, but I keep coming back to the same question.
So, like any normally curious person, I did a little bit of reading and investigating. (Sort of like the Mainstream Media did for all of the candidates in this past election cycle /sarcasm off) Here is what I found.
Eventually, everyone retires. Well, unless they die of course, but that is kind of a morbid thought that I would not really want to entertain given the fact that I am still one of the gainfully employed.
So after a person retires, many companies offer retirement pensions. You know, like the United Auto Workers (UAW) do for their folks. Although I would like to praise the UAW because not only do they do that for retirees, but if you get laid off, you still qualify for 95% pay while you relax at home.. er.. seek out new employment- as long as that job is approved by the UAW of course. Would not want to lose those benefits!
So anyway, some companies base the retirement not on what their investments return, but on a flat rate. That rate is based on salary at the time of retirement, length of employment etc. There can be any number of factors involved, but the overriding factor is that it is a DEFINED rate. It cannot go down. In the case of the military, it actually goes up annually by a rate determined by the defense budget.
This is all well and good, but what’s all of the hype? Well, imagine a company that is doing poorly. Now imagine that same company having a set amount of benefits it is required to provide retirees. And then extend that out to include a larger and larger number of surviving retired folks (darn that pesky science-extending-life thing!). Do we not see the issue here?
Of course I am one of the guilty. I get a monthly check from the US Government for my 20 years of Naval service. I like my money. I don’t want to give it up. But I DO see the problem for businesses who choose this retirement benefits model. In GA, the county is going to be saddled with paying the bill… meaning your local taxman will have to raise rates to stay afloat.
And NOW, the kicker. As reported in JMac Politics, the US Congress has passed a bill to provide relief to businesses suffering from a Defined Benefits plan. If the company cannot pay its retired folks, Uncle Sam will help foot the bill.
YAY for the American Melting Pot. Not only do we get so share our culture, not only do we get to share our wealth, but now we get to share our debt, too!
In the words of Yakov Smirnoff, “What a country!”
The revolution is at hand. Will you be a leader or a follower?