Quote:
Originally Posted by Sly
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.
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This is how it is supposed to work. You and your employer set aside money that is invested or gains interest over the life of your employment with them. When you then retire that money is in an account. For a while the USPS did that, but some of that money was taken for other thing by the government and then they just got away from it completely. At one point they actually transferred 30 billion in unfunded pension debt to the general federal employee pension fund so it could be paid on the federal level. They were also given a $15 billion line of credit and it still looks like they have around $50 billion in unfunded pension costs and that number is growing by as much as $4-$5 billion per year.
Each year that passes they get further and further behind. They will have to change that soon if they ever want to see the light of day again.