Dec 7, 2007

Interesting Business Week Article on 401(k) Trend

Sent in by a reader.



Please post anonymously. I didn't find any recent post regarding this
topic - everything seems to be focusing on the pending workforce
restructuring actions at LANL and LLNL.


article offers a good perspective on how the LANS (and LLNS) TCP-2 401(k) match
really stands up (or doesn't stand up) to what some private sector
employers are starting to implement. Maybe we should push LANS and
LLNS to add Devon Energy to the list of BenVal comparator companies?


Anonymous said...

Other DOE labs, e.g., Argonne, put 10% into TIAA for employees.

Eric said...

BenVal comparisons appear to be a way to rig the game to get the outcome that you want.

For instance, compare two defense companies, one mostly with experienced Ph.D.s and one with newly hired assemblers.

The predominantly Ph.D. company loses.

Just a thought

Anonymous said...

Indeed, then why is the DOE so damned stingy at LANL and LLNL?

Anonymous said...

"The new plan would provide workers with employer contributions so generous, a significant number could reasonably expect to do better than they would in the traditional defined-benefit pension plan. In return, employees would have to cede to the Oklahoma City company much of the control over their investment decisions."

This Super 401k reminds me of the plan Enron had for their employees. Just turn the money over to the corporate types and let them make all the 401k investment decisions for you (i.e., to hedge funds run by buddies, highly leveraged commodity bets, etc).

No thanks. I'll stick to my own 401k diversified investments and a pension. More legs on the stool give it a better chance to remain standing. Anyone who would trust Devon Energy with something called a "Super 401k" is a total fool.

Anonymous said...

Very bad idea. Company assumes full control of your future but takes none of the risk of the investment decisions. Not worth it IMO.

K. Boland said...
This comment has been removed by the author.
Anonymous said...


$15,500/.06 = $258,333

I'm a TSM and I don't make close to 1/2 that.

[The under age 50 $15,500 limit is for employee contributions only.]

K. Boland said...

I stand corrected. Deleting the original post.

Anonymous said...

Super 401ks? What will the sleazy money-men of WallStreet think of next?

To get these high returns, Devon Energy is subjecting employees to high risks. The employees may not explicitly realize this since Devon Energy controls the funds. They *will* know it once these riskier bets go bad. Also, note that since this is a 401k and not a pension, all sorts of well thought out pension regulations and controls go right out the window with this Super 401k scheme. It's like having a pension, which is controlled by someone else, but without any of those pesky pension protection laws getting in the way. How convenient.

On the day that these Super 401k schemes start to crash, the media will pick up the story, Congress will take retro-active action, and Super 401ks will become as dead as an Enron stock trading scheme.

People are always looking to get something for nothing. Super 401k workers are going to learn the same hard lessons that others have learned before them.

Anonymous said...

Hey, Mister, I'll take a Teaser-Freezer along with that Super-Sized 401k and a large order of fries. Put it on my credit card.

Anonymous said...

Seems to be similar to what happened here with TPC1 vs TPC2 decision.
"For Devon employees, the big decision--the new 401(k) vs. an old-style pension..."I expected the choice to be obvious," said David Klaassen, internal communications manager. Klaassen, 37, had spent a few hours reading the brochures the company mailed after Aug. 1, complete with a forecast of his projected benefit under each plan, and playing with the online tool actuaries from Towers Perrin designed to help employees crunch the numbers. For Klaassen, like many in the 35-to-45 bracket, the outcome would sometimes change, depending on key assumptions, such as his expected retirement date and investment returns. He chose the old pension plan.

For employees on either end of that age range, the choice tended to be more clear-cut. The vast majority of those under 40 gravitated to the super 401(k). "I have enough time to make up for a downturn," said Marla Freeman, 25, a communications specialist who has already saved $11,500 in her 401(k). Like many in the under-40 crowd, Freeman says she believes she has the potential to earn greater long-term returns in the 401(k) in part because, unlike a pension, the account can continue to grow even after an employee leaves a company...

For most over 50--including accountant Ken Eason--the traditional pension was generally the plan of choice. Because a pension plan multiplies an employee's years of service by the average pay in the final years of work, a large portion of a person's pension is typically based on earnings in the last decade on the job, said Ron Gebhardtsbauer, a senior pension fellow at the American Academy of Actuaries. That's why most older employees would find it hard to replace the additional benefits they would have earned by staying in the old plan. Besides, "with a pension, I'm going to get that check every month," said David Templet, 58, a manager in the environmental health and safety department. "With a 401(k), who knows what the market will do? At my age, it didn't make sense for me to take that risk."

Anonymous said...

"..a large portion of a person's pension is typically based on earnings in the last decade on the job"

Hmmm, I did not know that. Sounds like we need to start laying off all workers after the age of 50 at LANL. That will save tons of cash for my Complex Transformation!

- Tom D'Agostino

Anonymous said...

D'Ag the Bounty Hunter, huntin' down those dirty, double-dipping, expensive, pension fund depleting staff lifers!