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Sly · 08-06-2011, 01:00 PM

Quote:

Originally Posted by kane

Their second problem is that they have a ton of unfunded pensions. From what understand a normal company that offers you a 401K or some kind retirement sets that money aside over the years to pay for the retirement/pension when that person gets old enough to draw it. The USPS (and many government agencies) don't do that. The person retires and starts drawing their pension and it is just another bill that they now have to pay. I read a while back that they USPS has somewhere in the area of 4-5 billion dollars worth of unfunded pensions. All those baby boomers who got jobs working for them are now retiring and drawing pensions at the same time people are stopping using the service.

I don't know enough about pensions to have a full discussion on them, but the way a 401(k) works is the employer can offer a contribution or a employee match of some sort. So let's say that the employer agrees to contribute a 1% match. This means that if the employee makes $100,000 a year and the employee contributes 1% of their salary to their 401(k), the employer will match that 1% contribution. That match is on the spot, it happens at the same time as the employee contribution. Not 10, 15, 20 years later when the employee retires. The employer really has little to do with the employees retirement aside from that 401(k) contribution.