Comments on: Pensions and Trust http://www.canajunfinances.com/2008/06/26/pensions-and-trust/ Personal Finances and Consumer Concerns, essays, stories, examples and how to articles with a distinctly Canadian Point of View Fri, 19 Mar 2010 18:56:53 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Nortel Pension Cuts | virtualgrant.com http://www.canajunfinances.com/2008/06/26/pensions-and-trust/comment-page-1/#comment-1824 Nortel Pension Cuts | virtualgrant.com Sat, 28 Jun 2008 05:43:34 +0000 http://www.canajunfinances.com/?p=932#comment-1824 [...] Big Cajun Man over at Canadian Personal Finance wrote an interesting post about Nortel’s recent pension cuts. He puts it into historical context and captures the employees’ feelings of betrayal. I would add [...] [...] Big Cajun Man over at Canadian Personal Finance wrote an interesting post about Nortel’s recent pension cuts. He puts it into historical context and captures the employees’ feelings of betrayal. I would add [...]

]]> By: Gene http://www.canajunfinances.com/2008/06/26/pensions-and-trust/comment-page-1/#comment-1815 Gene Fri, 27 Jun 2008 17:14:06 +0000 http://www.canajunfinances.com/?p=932#comment-1815 This is one case where a union can help out. Unions do seem to look out for their members with regard to pensions. There are always divergent views amongst employees. If you have a workforce filled with young, transient people, they will probably not be interested in contributing to a pension. They would rather make more money in salary. The older employees are more interested in pensions. I worked at a company that was facing lots of layoffs after a plant closure. The pension was defined benefit, and most people ended up taking the commuted value (an actuarial calculation of what your benefits are currently worth). The managment had a tough time explaining that two people with the same amount of experience would have a different commuted pension value if they were of different ages. Older people were closer to retirement and receiving benefits, so had a higher pension value. Seems that while the stock market was doing well in the 90s, employers took the opportunity to shift pensions from their own responsibility to their employees. This also happened in the US with the introduction of the 401k. It's an advantage for an employer to shift the risk of a defined benefit to the employee in the form of a defined contribution. This is one case where a union can help out. Unions do seem to look out for their members with regard to pensions.

There are always divergent views amongst employees. If you have a workforce filled with young, transient people, they will probably not be interested in contributing to a pension. They would rather make more money in salary. The older employees are more interested in pensions.

I worked at a company that was facing lots of layoffs after a plant closure. The pension was defined benefit, and most people ended up taking the commuted value (an actuarial calculation of what your benefits are currently worth). The managment had a tough time explaining that two people with the same amount of experience would have a different commuted pension value if they were of different ages. Older people were closer to retirement and receiving benefits, so had a higher pension value.

Seems that while the stock market was doing well in the 90s, employers took the opportunity to shift pensions from their own responsibility to their employees. This also happened in the US with the introduction of the 401k. It’s an advantage for an employer to shift the risk of a defined benefit to the employee in the form of a defined contribution.

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