OK boomer
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Kids these days will never know the experience of having a friend tell you to go to this website and when you go there it’s a dude getting fucked in the ass while his dick spins around like a helicopter to the tune of 80s synth-pop dance classic “You Spin Me Round”.
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All of us not-boomer olds better buckle up because in 5 years it’s switching from boomers ruined the world to gen x
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Wow. Well now that you put it out on the table it sounds like this was all a part of your generation’s master plan!
AMC puts just printing money today
IBM said it’s guaranteeing a 6% return on that money through 2026. From 2027-2033, it guarantees the 10-year Treasury yield with a 3% floor and in 2034 and beyond, employees will receive whatever the 10-year Treasury yield is. The 10-year Treasury yield is currently hovering around 4.5%.
for older workers probably not ideal but pretty whatever as having some % of your portfolio in fixed income is not the worst idea, for younger workers having 25%+ of your yearly retirement savings being forced into 4.5% treasuries is pretty far from ideal.
- It’s unclear how the RBA will be funded. Under the Employee Retirement Income Security Act (ERISA), companies must fund 401(k) matches with real dollars. If IBM’s “credit” is just that, with “no cash in there, and it’s just listed on the books, if something bad happens, and IBM couldn’t make good on its liabilities,” employees would be on the hook, Hulme said.
wonder what happens if IBM goes bankrupt, surely the workers will all get their money in full and wont get screwed…
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Lol they’re gonna invest the money in the broad market, get that 7% it averages historically, and pay out 3-6%.
… and POCKET THE SAVINGS.
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Same as any private sector defined benefit pension plan. Cash balance plans are subject to ERISA minimum funding rules and the funds are held in trust for plan beneficiaries.
Like other DB pension plans, the cash balance plans are also secured by the Federal PBGC if the plan assets an insufficient to pay benefits.
A member of a cash balance DB pension plan is exposed to the risk that they may not get all their benefit if their employer goes bankrupt AND the assets in the pension fund are less than the cost of liabilties AND the PBGC doesn’t cover all their benefit. This risk is real, but it’s orders of magnitude less than the risk you take in a 401(k) plan where you accept responsibility for all investment losses and the risk of managing your longevity risk in retirement. 90%+ of workers are better off with a cash balance plan than a 401(k) plan.
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But why is this a cash balance plan? Isn’t IBM is just eliminating the 401k match and then creating a bespoke benefit entirely unfunded by employee dollars?
edit: Actually let me approach the question differently. If this is regulated as a cash balance plan, then what is IBM getting out of this vs. a 401k match?
Some details here: IBM to scrap 401(k) matching, offer alternative benefit • The Register
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My actuarial consultants tell me it is a cash balance plan, duly registered and regulated under ERISA. Of course I cannot verify this without direct access to IBM, which I do not have.
They added the new cash balance plan to their current DB plan. According to their 2022 annual report their global DB plans had a surplus of $3.6 billion. I am guessing that most of that relates to the large US qualified plan, sticking the new cash balance plan into that plan probably allows them to use the surplus in their legacy DB plan to pay for the employer “contributions” to the cash balance provision. So instead of putting actual free cash flow into employer 401(k) accounts, they’re using existing DB plan surplus to pay the cash balance cost.
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I feel like my worlds are colliding.
https://x.com/buccocapital/status/1724059064722751743?s=46&t=5Y4DrgHazxMWQ9paU0HR7w
Can’t tell if this is parody or not, and I refuse to find out.
FDIC wouldn’t have been my guess for government agency most likely to have a scandal involving strip clubs
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Over ATF?
Can someone ELI5 what the joke is here? It’s way over my head.
He’s just copying a specific sportswriters style of using team storybook narratives to describe current events and predict outcomes to boring software companies.
Not sure if that’s the best words to describe it but I think that should make sense. It’s like, what if someone talked about midcap software companies the way Bill Simmons talks about NBA teams? Doesn’t that make his whole shtick hilarious?
Company trades for a lower multiple of earning than their industry segment peers = some underdog no one believes in us storyline
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Thanks. It would have taken me a while to get there on my own.
one neat trick for solving inflation - restart student loan payments and make everybody poor again - thank you Joe!