In theory if you’re vested I believe ERISA Laws protect against that. Then again - USA #1 never ceases to “amaze.”
And where does the money come from if the company blows the pension fund on risky investments and then goes bankrupt?
This is why I always take the week off before my bonus vests. Can’t fire me when I’m not there!
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And in fact are legally obligated to do everything possible to squeeze employees in order to maximize shareholder value.
In the 1990s all the plans had surpluses. It used to be routine to offer surplus to people to get them to retire.
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What’s a VAP?
Looks like Visiting Assistant Professor
Agree that this is a bad optics for Emory. But I assume someone tells them up front that the plan vests after 3 years, and VAPs don’t last longer than 2 (which sounds standard for a visiting professor), so I think it is hard to call it a “scam”. Not sure how rustled to be by this if it wasn’t some sort of surprise. Obviously when evaluating the offer you need to discount for the value of this retirement account.
Seems dumb for Emory to even offer it. Maybe their retirement plan is set up so that they are forced to. I know retirement plans have all sorts of rules that need to be followed for them to be compliant.
This seems like a non issue to me. It’s rare, but visiting positions do sometimes convert to full time positions, in which case those first two years of contributions are valuable.
Having to settle for a visiting position when you want a tenure track position sucks, but I don’t think there’s anything scammy about the retirement plan here.
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I’ll be honest - I misread the post I replied to as DC not DB.
From my rudimentary understanding of it is the plans get audited and have certain parameters they have to adhere to. I think a lot of issues stem from investments within these guidelines performing poorly due to whatever circumstances or companies going busto. The Pension Benefit Guaranty Corpation foots the bill on some of these and/or takes over the plan - but I couldn’t tell you when this does or doesn’t happen.
It’s similar to when life insurance companies go busto. There’s a state fund all insurers kick money into that covers some/all of it and often times another insurer takes over the company.
This retirement setup was fairly common at the national labs in the sciences. Postdocs are for two years and many are hired as full time research staff at the end of the two years.
For example, Sandia National Lab was ‘owned’ by Lockheed. Postdocs could put money into a 401k and have employee match from Lockheed. To actually keep the employee match, one must work for three years. In general, this program was perceived as spidercrab mentioned, a nice perk for postdocs that stay at Sandia, not a punishment for those who left.
Still don’t trust it when I hear about pension funds owning FTX, and knowing this stuff could be audited by Anderson and insured by AIG (or modern equivalents). If there’s money to be had, someone somewhere is trying their best to game the system.
I feel better having money in a 401k that at least is ostensibly under my control (until the road warriors come).
I don’t blame you, and if that’s a real concern of yours it would be worth understanding if/when you can take a lump sum and move it to an IRA. Usually the annuity option has a higher EV on paper, but that accounts for life expectancy and no chance of the fund imploding.
I don’t have a DB pension. I’m just saying why I’d be leery of choosing that option over 401k if I was in my 20s or 30s. If it was govt work, then I’d take the DB pension for sure.
If there is no choice I’d take whatever’s offered. And obviously not taking advantage of a company match on anything is crazy.
Is it a complete freeroll?
This is correct, it’s illegal to have a plan where the employee’s own contribution has a vesting provision.
This is rational and a matter of personal choice, but I think objectively the risk of losing money in your 401(k) because of normal market volatility and uncertainty is quite a bit higher than losing money in a DB plan because the promise isn’t fulfilled. Pension plan defaults are big news because they’re rare and because the narrative of “old people lose pensions because of corporate mismanagement or bad corporate behavior” is inherently appealing. That story will attract a lot of clicks and reads and shares. Basically no one anywhere is interested in a story that says “983rd DB plan in a row successfully paid all it’s promised benefits to retirees”. That’s just boring.
DB plans are problematic because the risks tend to be mispriced, and especially in the public sector the costs and risk are easily kicked down the road for future generations to deal with. Intergenerational risk transfer is a valid argument against DB plans, especially public sector plans. But generally speaking corporate DB plans delivered all the benefits that people earned in them, and the small number of failures get outsized press coverage.
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Clearly my brain was fried on a Friday night. I think @mosdef gave a great explanation about this above.
He’s certainly way more qualified to opine on this than I am.
Still don’t like the idea of a bunch of MBA Masters of the Universe dreaming up ways to screw me over “in the fiduciary interest of shareholders” until the day I die.
I’m not saying I’d never do it. I know plenty of people still living fine on their corporate DB pensions. The stability of the company would matter.
I’m just saying I think 20-30-somethings erring on the side of zero trust in their corporate overlords is probably a decent strategy. Look at what happened at twitter. How many people got fucked out of some vesting or bonus or whatever they were expecting?
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Yes it’s the right attitude overall but people have to know when that thinking will lead them astray. Not taking the employer match in our savings plan because you think the company can’t possibly be offering a deal that good is an own goal.