Originally Posted by
KC10 FATboy
My $130,000 was adjusted for inflation using a 2% per year inflation rate. Hence $5.3M is needed in the account to keep the same $130k purchasing power 25 years later.
if the company wants to end the defined pension, fine. Replace it with a defined contribution adjusted for inflation. They can afford it.
Haven't those who have been arguing for a straight DC plan been saying that pay raises and ever increasing IRS limits are default inflation adjustments? You totally neglected how pensions really work and are stuck on the 4% rule. That isn't how pensions work or are funded. If you look at how much it would cost to purchase an annuity today for someone turning 65 next month with a guaranteed yearly payout of $213,000 for life, that cost would be around $3.3 million or less. That is a far cry from your required $5.3 million. Our current contract even mentions purchasing annuities with the unions consent.