Gyroscopic Investing

Pointedstick,

These changes that I speak about are generational ones. Im not talking about some sudden revolution. Im talking about a cultural dialogue emerging where society begins to discuss these things. So far we have had a monologue dedicated to consumption over the last 50 years. There have been social and environmental reprecussions from this. I think another dialogue that we need to start earnestly bringing to the national disucssion table is one of how to deal with end of life procedures. As baby boomer get older how are we going to afford to keep all of them hooked up for ages on life sustaining technologies? We need to discuss what to do when 85 year olds have terminal cancer. Is our society going to dedicate an enourmous quantity of medical resources to saving these people, or is there a healthier cultural shift we can talk about with regards to how to confront the end of life?

Social engineering can be very benign as well when all it does is help ensure that people take decisions that are in their best interests.

Here is a good example of beneficial social engineering. In the past many employer sponsored savings plans (401k) required an employee to opt in. Because it required employee to take initiative to set up account, most employees never got around to it and consequently saved very little over their work lives. Today, some employers are making the savings plans opt out. The employee is made aware that this 401k plan is being set up for them when they are hired, they have the freedom to opt out. Most employees however just keep the plan and slowly forget that this money is being deducted from their paycheck. In this case, at the end of their work lives they have amassed a considerable sum.

That is one example of how social engineering can be used to get people to make better choices without coercion or force.

doodle wrote: Slotine,

Is there any particular reason that you can think of why the 8 hour workday has stayed the same since the beginning of the century? The work week had been gradually declining since the beginning of the industrial revolution and then despite huge increases in productivity it hasnt budged in nearly a hundred years. That just causes me to wonder.

It's only 8 hours a day in certain countries and in certain industries.  Some occupations and professions work more and some work less.

Whatever amount of work that a person does it seems to me is the result of a balance that the market has struck.

If people are working 8 hours a day, doesn't that suggest that it is a balance that has been struck between what employers want and what employees are willing to give?

Sweden had another interesting social engineering project designed to encourage electricty conservation. They increased electric rates by a specific amount say 20 cents more per kilowatt hour. The additional charge however disnt go to the electric company but rather was deposited in a savings account fir the consumer. The increase in rates made people look for ways to conserve electricity in sensible ways by turning off lights or what not. At the end of the year whatever was in the account went back to the customer to spend in whatever way they chose. Most decided to spend it on other economic goods that were more stimulative to the economy than just purchasing electricity.

doodle wrote: Social engineering can be very benign as well when all it does is help ensure that people take decisions that are in their best interests.

Here is a good example of beneficial social engineering. In the past many employer sponsored savings plans (401k) required an employee to opt in. Because it required employee to take initiative to set up account, most employees never got around to it and consequently saved very little over their work lives. Today, some employers are making the savings plans opt out. The employee is made aware that this 401k plan is being set up for them when they are hired, they have the freedom to opt out. Most employees however just keep the plan and slowly forget that this money is being deducted from their paycheck. In this case, at the end of their work lives they have amassed a considerable sum.

That is one example of how social engineering can be used to get people to make better choices without coercion or force.

But that is social engineering in the context of a business owner deciding how to run his own business.

That is a far cry from a central authority telling business owners that they must provide a 401(k) plan with an opt-out, rather than opt-in, feature because the central authority has determined that this is the optimal plan design for business owners to use.

I happen to know a lot about the history of social engineering in the retirement plan context, and I can tell you that most efforts at social engineering undertaken by the central authority in the form of Congress or the IRS usually has countless unintended consequences, chief among them the demise of the defined benefit pension plan, which is a tragedy the scope of which people won't fully grasp until an entire generation tries to retire on a 401(k) plan + Social Security and realizes that it simply doesn't work for most people.

MediumTex wrote:

doodle wrote: Slotine,

Is there any particular reason that you can think of why the 8 hour workday has stayed the same since the beginning of the century? The work week had been gradually declining since the beginning of the industrial revolution and then despite huge increases in productivity it hasnt budged in nearly a hundred years. That just causes me to wonder.

It's only 8 hours a day in certain countries and in certain industries.  Some occupations and professions work more and some work less.

Whatever amount of work that a person does it seems to me is the result of a balance that the market has struck.

If people are working 8 hours a day, doesn't that suggest that it is a balance that has been struck between what employers want and what employees are willing to give?

From what I read here it seems the eight hour workday was a result of the political labor movement.

http://en.m.wikipedia.org/wiki/Eight-hour_day

doodle wrote: Sweden had another interesting social engineering project designed to encourage electricty conservation. They increased electric rates by a specific amount say 20 cents more per kilowatt hour. The additional charge however disnt go to the electric company but rather was deposited in a savings account fir the consumer. The increase in rates made people look for ways to conserve electricity in sensible ways by turning off lights or what not. At the end of the year whatever was in the account went back to the customer to spend in whatever way they chose. Most decided to spend it on other economic goods that were more stimulative to the economy than just purchasing electricity.

If the electric utility was allowed to set up this program as part of its responsibility for running its business I wouldn't have a problem with it.  If, however, the government told all utility providers that they had to do something like this I would say that's a dumb thing to do.

Who knows better how to manage an electrical utility, the managers and owners of the utility or the government?  If the government is the owner of the utility, I promise you that there is still a difference in views and competencies between the bureaucrat managers of the utility and the more distant legislative and executive officials that are making rules that all utilities must follow.

doodle wrote:

MediumTex wrote:

doodle wrote: Slotine,

Is there any particular reason that you can think of why the 8 hour workday has stayed the same since the beginning of the century? The work week had been gradually declining since the beginning of the industrial revolution and then despite huge increases in productivity it hasnt budged in nearly a hundred years. That just causes me to wonder.

It's only 8 hours a day in certain countries and in certain industries.  Some occupations and professions work more and some work less.

Whatever amount of work that a person does it seems to me is the result of a balance that the market has struck.

If people are working 8 hours a day, doesn't that suggest that it is a balance that has been struck between what employers want and what employees are willing to give?

From what I read here it seems the eight hour workday was a result of the political labor movement.

http://en.m.wikipedia.org/wiki/Eight-hour_day

Are you asking about why the workday is still 8 hours a day in some industries, or how it got to be 8 hours in the first place?  I thought you were asking about the former.

MT,

How does a defined benefit pension plan work if the company you have worked for all your life goes bankrupt. Wouldnt this type of plan be like having all your eggs in one basket as opposed to a more diversified 401k?

MediumTex wrote: I happen to know a lot about the history of social engineering in the retirement plan context, and I can tell you that most efforts at social engineering undertaken by the central authority in the form of Congress or the IRS usually has countless unintended consequences, chief among them the demise of the defined benefit pension plan, which is a tragedy the scope of which people won't fully grasp until an entire generation tries to retire on a 401(k) plan + Social Security and realizes that it simply doesn't work for most people.

I would love to hear more about the history of this, perhaps in another thread?

It's easy to get an inkling of the problem when you read articles concerning retirement and they quote people saying things like, "I have $120,000 in my 401(k) so I'm pretty well set for retirement!" Facepalm.

doodle wrote: Is there any particular reason that you can think of why the 8 hour workday has stayed the same since the beginning of the century? The work week had been gradually declining since the beginning of the industrial revolution and then despite huge increases in productivity it hasnt budged in nearly a hundred years. That just causes me to wonder.

I was just reading about how Keynes predicted that we would be living in a mostly "leisure society" by the year 2030. Too bad he's not around to explain why it isn't working out.

http://money.howstuffworks.com/five-day-weekend2.htm

But more in keeping with the topic at hand there was a modern president who once proposed the idea of a guaranteed annual income and it wasn't Obama. Surprisingly, it was Richard Nixon. (I didn't read through all 27 pages of this thread so I apologize if somebody else already mentioned this).

It goes against my libertarian instincts but I sometimes wonder if the idea of some sort of "citizens benefit" might not be a good idea. For example, when I was in Belize I learned that they give everyone an acre of land when they are born. If we tried something like this in America, unfortunately we'd probably be arguing about the fairness of not giving it to the "undocumented" among us.

doodle wrote: MT,

How does a defined benefit pension plan work if the company you have worked for all your life goes bankrupt. Wouldnt this type of plan be like having all your eggs in one basket as opposed to a more diversified 401k?

Defined benefit plan sponsors pay a per-participant premium to the PBGC each year, which provides FDIC-like coverage in the event that a plan sponsor goes bankrupt or the plan is otherwise unable to meet its obligations to plan participants.

Defined benefit plans don't go broke and participants don't lose their benefits.  What DOES happen is that younger employees simply never get a defined benefit plan benefit in the first place because of the chilling effect on employers' desire to offer plans like this due to social engineering attempts undertaken by Congress to "improve" these plans.

The amount of misunderstanding out there regarding how the whole retirement plan system works, especially with respect to defined benefit plans, is staggering.

notsheigetz wrote: It goes against my libertarian instincts but I sometimes wonder if the idea of some sort of "citizens benefit" might not be a good idea. For example, when I was in Belize I learned that they give everyone an acre of land when they are born. If we tried something like this in America, unfortunately we'd probably be arguing about the fairness of not giving it to the "undocumented" among us.

I often feel similarly. Friedman actually endorsed a "guaranteed minimum income", and The FairTax also has a similar thing in the form of the "prebate". What Belize does is fascinating, but I wonder how long it will be until they start to run out of land, as unlike fiat money it's finite, and Belize isn't that big.

Pointedstick wrote:

MediumTex wrote: I happen to know a lot about the history of social engineering in the retirement plan context, and I can tell you that most efforts at social engineering undertaken by the central authority in the form of Congress or the IRS usually has countless unintended consequences, chief among them the demise of the defined benefit pension plan, which is a tragedy the scope of which people won't fully grasp until an entire generation tries to retire on a 401(k) plan + Social Security and realizes that it simply doesn't work for most people.

I would love to hear more about the history of this, perhaps in another thread?

It's easy to get an inkling of the problem when you read articles concerning retirement and they quote people saying things like, "I have $120,000 in my 401(k) so I'm pretty well set for retirement!" Facepalm.

There are three basic problems with 401(k) plans.

First, the plan design allows you to chip away at your retirement savings by taking loans, hardship distributions and distributions when you change jobs.  By the time you get to retirement, all of the financial needs you have encountered along the way have typically seriously eroded the ability of your account to actually provide a "retirement" benefit.

Second, participant-directed investments in a retirement plan setting is one of the dumbest ideas I've ever heard.  It's the financial equivalent of taking your car to the repair shop and having them say "Okay, there's the tools, and there's the parts, go fix it."  This part of the story doesn't get much coverage, but it's a terrible flaw in the design of 401(k) plans, and it has been driven almost exclusively by the fiduciary liability provisions that Congress put in place under ERISA.  Employers don't want ANY potential liability for investment decisions, and thus plan participants have been given a job that amateur investors virtually always fail at.  The equity bull market from 1982-2000 covered up this flaw, and people are still struggling to grasp it.

Third, there is no mechanism in most 401(k) plans for converting an account balance into a lifetime stream of income.  What happens with most people is they retire at age 65 and by age 70 most of their 401(k) balance has been depleted.

MT,

How could corporations contribute to defined benefit plans in the united states and still be competitive in the global economy? Werent these benefit plans what made american car companies and industry so uncompetitive and thus that is why they were done away with? Wouldnt corporations in a global economy  just rather move overseas and hire workers who dont demand or expect such plans?

doodle wrote: MT,

How could corporations contribute to defined benefit plans in the united states and still be competitive in the global economy? Werent these benefit plans what made american car companies and industry so uncompetitive and thus that is why they were done away with? Wouldnt corporations in a global economy  just rather move overseas and hire workers who dont demand or expect such plans?

What you are talking about is more true of retiree medical coverage than of retirement plan benefits.

As far as the differentials in labor costs you are talking about, yes, that is why companies have been offshoring jobs for decades, but it's an overall compensation issue, not just an employee benefits issue.

doodle wrote: MT,

How could corporations contribute to defined benefit plans in the united states and still be competitive in the global economy? Werent these benefit plans what made american car companies and industry so uncompetitive and thus that is why they were done away with? Wouldnt corporations in a global economy  just rather move overseas and hire workers who dont demand or expect such plans?

I don't think it's any coincidence that my company discontinued the pension plan around the same time as our email addresses changed from myname.companyxyz.com to myname.companyxyzglobal.com.

I "wisely" invested the lump sum payout in one of T. Rowe Price's target date retirement funds. That was in 2008. I probably don't need to supply the gory details but suffice it to say the story helps to prove MT's point. Thankfully I've since discovered the PP.

And as for MT, would you be in favor of 401k's being more like 403b's where the funds are required to be invested in some form of annuity?

I know that investing your own money is a bad idea for most people, but isnt a central belief of libertarianism the idea that people need to take responsibilty for themselves and their lives?

doodle wrote: I know that investing your own money is a bad idea for most people, but isnt a central belief of libertarianism the idea that people need to take responsibilty for themselves and their lives?

Libertarianism has nothing to do with opposing a policy that requires people to do things that they don't know how to do.

It would be like saying that because I am a libertarian I don't go to the doctor; I just read about medical procedures and attempt to perform them on myself.

Defined benefit plan sponsors pay a per-participant premium to the PBGC each year, which provides FDIC-like coverage in the event that a plan sponsor goes bankrupt or the plan is otherwise unable to meet its obligations to plan participants.

Defined benefit plans don't go broke and participants don't lose their benefits.  What DOES happen is that younger employees simply never get a defined benefit plan benefit in the first place because of the chilling effect on employers' desire to offer plans like this due to social engineering attempts undertaken by Congress to "improve" these plans.

The amount of misunderstanding out there regarding how the whole retirement plan system works, especially with respect to defined benefit plans, is staggering.

Doesn't the PBGC only cover pensions up to a certain amount (as a lump sum or annual payout)? What happens if your pension (that you and your employer had made contributions for i.e. that you had EARNED AND PAID FOR) was larger than that? Do you just lose anything above the PBGC insured amount?

Also, what happens in the following situations if you have contributed to a tradtional defined benefit pension?

1. You work for an employer for a year or two and then quit for another job. Are all of your contributions (not the employer match, but YOUR contributions) immediately vested, or do you actually stand to lose money that YOU contributed? Witha  401K, most employer matches (and profit sharing, if applicable) take a year to five years (depending on the plan) to vest fully but at least your own contributions are fully vested immediately.

2. You work for an employer for the better part of a decade and then want to roll your money over from that employer's pension plan when you leave your job. You are fairly young (say 29 or 30) Does your lump sum include at l;east as much as you contributed (plus any earnings) or do GATT, the RPA, and ERISA make it so that (depending on age and current interest rates) you could actually end up (especially if you are younger) rolling over even less than you put in?

3. What happens if you contribute to a pension, have built up several hundered thousands in contributions over decades of service, and then you find out from your doctor that you have six months to live? At least with a 401K, you can take it all out (subject to taxes, of course) and spend it/give it to heirs as you see fit. What happens when you have a pension (especially if it doesn't offer a survivorship payout option).

4. Same situation as above, but say you have no spouse, no heirs, and no dependents. Do you just lose everything you have contributed (like what happens with Social Security if you pay in for years) or is there some provision to take a lump sum so you can at least enjoy your money for the time you have left?

5. What's so wrong with 401Ks offering loans? For someone who has CC debt at 29% or a car loan at 15%, taking a 401K loan to pay off said debt (and then contributing the difference-i.e. between the 401K loan rate and what they were paying at 29% or 15%-as a 401K contribution since they were paying that much in any case) makes sense.....there's no way someone is going to earn 29% in a 401K and even 15% would be hard to do, but if they pay off the debt and then "pay it back to themselves" at whatever rate they were paying then they have just made an "investment" that gave them a guaranteed 15% or 29% return.

D1984 wrote:

Defined benefit plan sponsors pay a per-participant premium to the PBGC each year, which provides FDIC-like coverage in the event that a plan sponsor goes bankrupt or the plan is otherwise unable to meet its obligations to plan participants.

Defined benefit plans don't go broke and participants don't lose their benefits.  What DOES happen is that younger employees simply never get a defined benefit plan benefit in the first place because of the chilling effect on employers' desire to offer plans like this due to social engineering attempts undertaken by Congress to "improve" these plans.

The amount of misunderstanding out there regarding how the whole retirement plan system works, especially with respect to defined benefit plans, is staggering.

Doesn't the PBGC only cover pensions up to a certain amount (as a lump sum or annual payout)? What happens if your pension (that you and your employer had made contributions for i.e. that you had EARNED AND PAID FOR) was larger than that? Do you just lose anything above the PBGC insured amount?

Yes, there are caps on benefits that the PBGC covers, just like there is with FDIC coverage.

For 2012, the cap on PBGC guaranteed benefits is $55,841 at normal retirement age.  Less than 15% of participants in the typical defined benefit plan have a benefit worth more than this, and many of these people are executives who are frequently made whole through post-bankruptcy retention plans.

It's not perfect, but it's pretty good.

Also, what happens in the following situations if you have contributed to a traditional defined benefit pension?

1. You work for an employer for a year or two and then quit for another job. Are all of your contributions (not the employer match, but YOUR contributions) immediately vested, or do you actually stand to lose money that YOU contributed? Witha  401K, most employer matches (and profit sharing, if applicable) take a year to five years (depending on the plan) to vest fully but at least your own contributions are fully vested immediately.

VERY few defined benefit plans outside of the governmental sector permit employee contributions.  Where such contributions are permitted they are always 100% vested.

2. You work for an employer for the better part of a decade and then want to roll your money over from that employer's pension plan when you leave your job. You are fairly young (say 29 or 30) Does your lump sum include at l;east as much as you contributed (plus any earnings) or do GATT, the RPA, and ERISA make it so that (depending on age and current interest rates) you could actually end up (especially if you are younger) rolling over even less than you put in?

Again, there are very few of these plans out there outside of the public sector, but you would always receive the greater of the value of your contributions and the discounted present value of the normal retirement age benefit (assuming the plan provided for pre-retirement distributions).

3. What happens if you contribute to a pension, have built up several hundred thousands in contributions over decades of service, and then you find out from your doctor that you have six months to live? At least with a 401K, you can take it all out (subject to taxes, of course) and spend it/give it to heirs as you see fit. What happens when you have a pension (especially if it doesn't offer a survivorship payout option).

All private sector defined benefit plans provide a joint and survivor annuity as the default form of benefit.  If you found that you had six months to live you would probably want to retire and elect the form of benefit that would provide the best options based upon your short life expectancy (this would be a lump sum if the plan provided lump sums, or a joint and survivor annuity if it didn't).  Employee contributions can always be refunded in lieu of the payment of the accrued benefit, though the accrued benefit is normally worth at least two times the value of the employee contributions.

4. Same situation as above, but say you have no spouse, no heirs, and no dependents. Do you just lose everything you have contributed (like what happens with Social Security if you pay in for years) or is there some provision to take a lump sum so you can at least enjoy your money for the time you have left?

It depends on the plan.  Most plans provide a joint and survivor annuity option that would allow you to designate someone to receive survivor benefits upon your death.  Many plans also provide a lump sum option.

5. What's so wrong with 401Ks offering loans? For someone who has CC debt at 29% or a car loan at 15%, taking a 401K loan to pay off said debt (and then contributing the difference-i.e. between the 401K loan rate and what they were paying at 29% or 15%-as a 401K contribution since they were paying that much in any case) makes sense.....there's no way someone is going to earn 29% in a 401K and even 15% would be hard to do, but if they pay off the debt and then "pay it back to themselves" at whatever rate they were paying then they have just made an "investment" that gave them a guaranteed 15% or 29% return.

There's nothing wrong with 401(k) plans providing loans, except that providing loans is not the purpose of a retirement plan.  There's also nothing wrong with taking money out of your kids' college savings to pay off your credit cards, but that's not why you set that money aside in the first place.

In practice, if you let people dip into retirement accounts for non-retirement purposes, they will, and when they want to retire they typically will not have enough money left.  I'm not saying that people shouldn't be allowed to do this, I'm just saying that IMHO it's a design flaw in the overall structure of 401(k) plans.  One of the many great things about defined benefit plans is that there is no mechanism for pulling money out before retirement (short of taking a taxable distribution when you change jobs), and thus when you go to retire your full benefit is waiting for you.

I'm mainly speaking here from the perspective of the employer.  If the employer is going to make the investment in providing a retirement program for its employees, it seems like the employer ought to be able to expect that this program will actually allow employees to retire some day.  Unfortunately, many employer do not have a deep understanding of some of the points I am making, and thus they just go with the flow and are now finding that employees they expected to retire are hanging around longer because they can't afford to retire, and that creates a real quandary for employers who would like to bring in younger employees.

Slotine wrote:

doodle wrote: Sweden had another interesting social engineering project designed to encourage electricty conservation. They increased electric rates by a specific amount say 20 cents more per kilowatt hour. The additional charge however disnt go to the electric company but rather was deposited in a savings account fir the consumer. The increase in rates made people look for ways to conserve electricity in sensible ways by turning off lights or what not. At the end of the year whatever was in the account went back to the customer to spend in whatever way they chose. Most decided to spend it on other economic goods that were more stimulative to the economy than just purchasing electricity.

Do you mind posting a link or the name of the policy?  I'd be interested in seeing the published results.

I searched for it this morning and couldn't find it. I remember that it was a northern European country though...I'm pretty sure it was Sweden. Another study that I read concerned using social pressures to encourage conservation by publically posting your energy usage compared to your neighbors. I can't find that study either 

MediumTex wrote:

doodle wrote: I know that investing your own money is a bad idea for most people, but isnt a central belief of libertarianism the idea that people need to take responsibilty for themselves and their lives?

Libertarianism has nothing to do with opposing a policy that requires people to do things that they don't know how to do.

It would be like saying that because I am a libertarian I don't go to the doctor; I just read about medical procedures and attempt to perform them on myself.

I just remember the vehement opposition that libertarians at CATO and Von Mises had to social security and how people would be better served to invest their own money than be forced to deposit it with the government. It seems that most of the material that I read for privatization of social security came from libertarians. I thought that a central tenant of libertarianism is that you can't protect people from their own incompetence. If they want to bet their retirement money on black in Vegas, then they have the freedom to do that. I mean who is anyone to tell them what they can do with their money?

VERY few defined benefit plans outside of the governmental sector permit employee contributions.  Where such contributions are permitted they are always 100% vested.

Why do so few non-governmental plans allow this? Is it typically just corporate policy or is it some sort of ERISA or Pension Protection Act regulation?

Also, in one of the rare cases that employee contributions ARE allowed, are they tax deductible? Are they subject to the same annual benefit limit (enough to buy a $200K--although IIRC it will be $205K next year--benefit given a participant's age and the assumed interest rate) as employer contributions to pensions or are they subject to the (usually) much lower limits under 415(d) that defined contribution plans like 401K's are subject to?

Again, there are very few of these plans out there outside of the public sector, but you would always receive the greater of the value of your contributions and the discounted present value of the normal retirement age benefit (assuming the plan provided for pre-retirement distributions).

Do you mind putting some hard numbers on this? Say a 30-year old male employee (i.e. 30 years old when he quit to work at a different job) had been working for an employer three years and had put in $17,000 of his own money per year. I know that the "value of his contributions" amount would be $51,000 but what would the discounted present value of his normal retirement benefit be in $ if taken in a lump sum?

Is the discounting done via interest rates (i.e. the 30-year Applicable Federal rates) or some other kind of formula?

Also, when/if the lump sum is taken, can the money be rolled over to a 401K or a profit sharing plan, or can it only be rolled over to another pension plan or 412 plan?

this would be a lump sum if the plan provided lump sums, or a joint and survivor annuity if it didn't

It depends on the plan.  Most plans provide a joint and survivor annuity option that would allow you to designate someone to receive survivor benefits upon your death.  Many plans also provide a lump sum option.

The words "if it didn't" and "many plans" imply that at least SOME plans could (depending on how the employer chose to set it when they set up the plan) and inf fact do only provide the joint and survivor option (or only provide a choice of single life option and a joint and survivor option with no choice of lump sum which in this case is just as bad). What if you have no heirs, your parents are both dead (or you are estranged from them for whaetver reason), you were an only child, and you aren't married and don't have a significant other of any kind? A joint and survivor option is useless to you...you need the money in a lump sum now (and no, you can't sell it as a structured settlement or viatical because who will pay much of anything for a benefit that will only continue six months since you have no one to put on the "survivor" option). Is there no law that REQUIRES employers to at least offer a lump sum option upon departing one's job?

I realize that this seems a kind of pedantic complaint since after all it was the employer's contribution (if it was one's own contribution it would all be removable as a lump sum as per your post above) and therefore might be seen as "free" to the employee so someone might say the employee has no reason to complain about limited payout options since it didn't cost him/her in the first place but that misses two important points:

One, if the employer DIDN'T offer the pension with the forced choice of joint-and-survivor or single life (but no choice of lump sum) that money could be spent on other benefits that the employee might actually could have used, and,

Two, if that money was done as a 401K match or profit sharing match it WOULD have been available as a lump sum to rollover or spend or whatever.

It just seems to me that a pension with no other option than annuitization "punishes" the employee for being terminally ill (and thus having a shortened lifespan) and for having no one (family, significant other, children, etc) to make choosing the joint and survivor option worthwile. Why should one be punished for being sick or for one's life choices to be a loner?

There's nothing wrong with 401(k) plans providing loans, except that providing loans is not the purpose of a retirement plan.  There's also nothing wrong with taking money out of your kids' college savings to pay off your credit cards, but that's not why you set that money aside in the first place.

If you paid the money back (at your credit card interest rate)  to the plan instead of to the credit card company then it seems your kids might actually be better off because very few if any safe investments in a 529 are going to net a guaranteed double-digit yield with rates where they are today.

One thing that folks seem to be missing is that during this period of widespread private pensions, nothing was preventing workers from saving their own money for retirement in addition to the pension. I think MT's point is that since ERISA all but destroyed private pensions, workers are now left only with the self-funding approach.

There is nothing libertarian about the government destroying choices, even if what remains is something that's self-directed. Libertarians acknowledge and embrace the fact that many (even most) people want to delegate the majority of tasks to others rather then doing everything for themselves, retirement planning included.

Heck, you didn't sew the shirt you're wearing, did you? There's nothing un-libertarian about that!