401Ks are a disaster: Column

[tblue37]

191. The part that bothers me most, though, is the lie that

Last edited Sat Feb 9, 2013, 02:53 PM - Edit history (2)

it is "taxpayer money" that pays our pensions. It is NOT the taxpayers' money. It is the employees' money.

The taxpayers' taxes fund government functions and services, just as an employer's money pays for the work of his employees. But once the employees do the work and get paid, the money is no longer the "employer's money"; it is the EMPLOYEES' money.

The following scenario might help people understand why it is misleading to say that taxpayers’ money is used to fund these pensions. That is like saying that the paycheck a worker deposits into his bank account is his employer’s money. It isn’t. Sure, the employer’s money is used to pay the worker, but once the worker is paid, that money is his money, not the employer’s.

If the worker does the contracted work, but the employer doesn’t pay him his wages, or doesn’t pay him part of his wages, the money the employer withholds is still the employee’s money, and by withholding it, the employer is helping himself to an interest-free loan for however long he keeps that money—while depriving the employee of the interest that money would have earned if it had been in the employee’s bank account.

And if the employer never pays the employee the money at all, then the employer is stealing the employee’s money.


Here is the analogy:

Say my employer notices that I have trouble saving money or avoiding temptations to spend unwisely, and he worries I might need some savings cushion in the future. Meanwhile, he sometimes has cash flow problems; even though he has money enough to pay my wages, sometimes he must cover other expenses that run him short temporarily.

Imagine also that he has a partner who has a lot of power over but little understanding of the business side of their business.

My boss works out an arrangement with me. He will pay me the agreed upon wages, but not all at once. I accept the idea of being paid only, say, 85% or 90% of the money I have earned in each paycheck, but he promises to deposit the withheld portion in my bank account, though sometimes he will have to TEMPORARILY postpone a deposit if he runs into a serious cash flow problem.

Meanwhile, he keeps his ignorant partner happy by showing that he is getting my work at a below-market price (since he is actually paying me only 85%-95% of what he owes me at any given time), and he encourages his partner to admire and even reward his financial savvy for doing so. For years, his partner accepts the lie and remains ignorant of how much I am contracted to be paid for my work.

But usually, when the cash flow problems are not pressuring my boss, he doesn't bother to deposit into my account the money he still owes me, since our arrangement has locked me out of my account for a few decades, because we agreed that would help me resist the temptation to blow my money rather than saving it as I need and want to do, so I cannot get to my withheld wages until the agreed upon time. But he keeps using MY MONEY, THE MONEY HE STILL OWES ME, to pay for his own stuff and his partner's stuff, even when they have plenty of their own money to use.

In other words, he keeps using the portion of my pay (MY MONEY) that he is supposed to be depositing in my bank account as an interest-free loan (which also means, of course, that he is not only using my money, but also depriving me of the interest I would be earning on that money if he were depositing it into my account the way he is contractually obligated to do). Not only is he not paying me the money he owes me, but he is also causing me to lose a lot of money that my withheld pay would have earned in interest over the years and decades if it had been sitting in my bank account as it was supposed to be doing.

Then when it is time for me to start accessing my own money in my own savings account, I am told there is little or no money in there after all, because the portion of my pay that was withheld was never deposited in my account after all, even though our signed and legally enforceable contract promised that it would be.

When I insist I should be paid the money that I earned but that was supposedly only temporarily withheld from my paycheck, the ignorant partner starts screaming about my greedy attempt to get "extra" money out of their business after I no longer am even working for them.

And my other boss, who knows better but who likes having MY money to spend for his own and his partner's purposes, encourages his partner to continue thinking that it is THEIR money I am demanding, not MY OWN money that they have been using for years rather than paying me directly or depositing for me in my temporarily
locked account.

Now that interest-free loan that they have been using my money for turns into outright theft, because they do not intend ever to give me that money at all.

The pension money IS NOT THE TAXPAYERS' MONEY. It is the EMPLOYEES' MONEY that the taxpayers have been for years allowing the government to spend for the benefit of either the taxpayers or, even more often, the politicians and their cronies.

I suppose you can tell from my post that I am a state employee.

Edits: I originally typed this (very clumsily) on my Nook, so it was riddled with typos.