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View Diary: Hostess took workers' pension money to fund itself (158 comments)

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  •  You mean, like the 401k at Enron? (5+ / 0-)

    http://money.cnn.com/...

    Who do you think is the trustee of the 401k account?

    I deal in facts. My friends are few but fast.

    by Farugia on Mon Dec 10, 2012 at 05:55:40 PM PST

    [ Parent ]

    •  Certainly (2+ / 0-)
      Recommended by:
      johnny wurster, OldGrandet

      Pensions get raided. Not sure I've ever heard of 401k being touched.

      •  It can be done (2+ / 0-)
        Recommended by:
        blue denim, samddobermann

        The company's management decides who manages the accounts (Fidelity, etc.) and which options are available. The fund manager will do what its client will ask them to do, including directing the investments towards itself.

        The client here means your company's management, not you.

        It's harder to pull on self-directed accounts, but you have to remember that a lot of 401k allow only very limited options.

        I deal in facts. My friends are few but fast.

        by Farugia on Mon Dec 10, 2012 at 06:26:57 PM PST

        [ Parent ]

        •  By the way... (3+ / 0-)

          That's exactly what Enron did, with Enron shares being the only option.

          I deal in facts. My friends are few but fast.

          by Farugia on Mon Dec 10, 2012 at 06:27:45 PM PST

          [ Parent ]

          •  they weren't the only option. employees (3+ / 0-)
            Recommended by:
            Sparhawk, nextstep, VClib

            chose to invest in Enron.  401k plans can't get raided.

            •  And if you're not invested in the company stock... (3+ / 0-)
              Recommended by:
              BlackSheep1, nextstep, samddobermann

              ... you get, mmm, reminders about not being a team player? The other options offered were largely theoretical.

              A 401k is not as easy to pilfer as a  defined benefit pension plans but the company has its hands in it and that's what makes for disasters.

              You also have to remember that with control fraud, it's not the shareholders who are pillaging their company but the management who is. The case of a private equity deal is a control fraud squared opportunity, as the actual management is also the "shareholder" through leverage, aka a "shareholder" without barely any equity but with its hands on all the levers. But it's being the management that makes the opportunity, not being a shareholder.

              Without going to the extremes of Enron regarding 401k plans, the conflict of interest can also be of a different, more insidious nature, essentially kickbacks from the plan manager to the company's management, the plan manager paying itself back by pushing shitty (and lucrative for the manager) investments on the employees.

              401k plans should be in the employees hands. The only relation between the 401k and the employer should be that each paycheck, the employer transfers the funds (and the titles in case of a payment in equity) to the plan manager designated by the employee, and that's it. But everything else should be in the employee's hands, like an IRA (and that would spare the nightmare of transferring 401k when changing employers).

              I deal in facts. My friends are few but fast.

              by Farugia on Mon Dec 10, 2012 at 08:00:42 PM PST

              [ Parent ]

      •  401k (0+ / 0-)

        Late to the comment thread, but I couldn't help it:

        I'm sure that there are accounting tricks that can take money from 401ks. Recent case in point: IBM shifts 401(k) contributions to once-a-year matches.

        In this case, IBM is no longer providing match money with each paycheck; instead, they're providing that match money in a lump sum at the end of the year. The percentage of the match is the same, but (A) the employees miss out on the interest and accumulation through the year and (B) if they employee quits or gets laid off before December 15, they get no match for the calendar year. This is supposed to "save the company money" on retirement plans.

        Now, IBM employees can't really complain, because the company is matching money, and it doesn't have to do that. However, it's a benefit that the employees are promised, and the company is monkeying with that to not provide as much.

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