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23 stocks they’re throwing out with the bathwater

Chipotle wants to give you a burrito — how to get it
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VOTE: If not Chipotle, where would you eat?

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20 dividend stocks that Wall Street loves the most
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Rubio in freefall in New Hampshire betting
Republican primary: 3 things to watch
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In the U.S., socialism is no longer such a dirty word
Bill Clinton: Sanders is ‘enemy of all things big’

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These ‘Buffett stocks’ are bargains in this market

Why a selloff in European bank stocks is ominous
Bank stocks have taken enough: analyst

What you can expect in Coca-Cola’s earnings

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Hasbro blows past estimates on Star Wars boost
What to look for from Disney: Star Wars, ESPN

Teen gets to keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Chinese herdsman finds 17-pound gold nugget


Randgold raises dividend after record output
Rio Tinto, 5 others quit London Metal Exchange
Anglo American CEO: Tough 2016 ahead
Is the gold rally the real deal or ‘fool's gold’?

China’s forex reserves poised for another record drop
China’s foreign-currency reserves drop $99 bln

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N. Korea faces new sanctions after rocket test
North Korea fires long-range rocket
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Markets »

105.38MDow Volume:
Avg Vol: 128.61M
Unchanged
85
Decliners
4948
Advancers
1459
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 15,986 -219 1.35%
Nasdaq
/quotes/zigman/12633936/realtime 4,270 -93 2.13%
S&P 500
/quotes/zigman/3870025/realtime 1,849 -31 1.66%
GlobalDow
/quotes/zigman/629063/realtime 2,103 -36 1.66%
Gold
/quotes/zigman/33772884/delayed 1,193 +36 3.07%
Oil
/quotes/zigman/2260836/delayed 30.02 -0.87 2.82%
FTSE 100
/quotes/zigman/3173262/delayed 5,689 -159 2.71%
DAX
/quotes/zigman/2380246/delayed 8,979 -307 3.30%
CAC 40
/quotes/zigman/3173214/delayed 4,066 -134 3.20%
FTSE MIB
/quotes/zigman/1482176/delayed 16,441 -809 4.69%
IBEX 35
/quotes/zigman/2759620/delayed 8,122 -377 4.44%
Stoxx 600
/quotes/zigman/2380150/delayed 314 -12 3.54%
Asia Dow
/quotes/zigman/6959860/realtime 2,515 +5 0.18%
Nikkei 225
/quotes/zigman/5986735/delayed 17,004 +185 1.10%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,287 -330 1.34%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.12 +0.00 0.42%
Yen
/quotes/zigman/16008150/realtime/sampled 115.61 -1.26 1.08%
Pound
/quotes/zigman/16008140/realtime/sampled 1.44 -0.01 0.46%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 +0.00 0.28%
DXY Index
/quotes/zigman/1652083/delayed 96.65 -0.39 0.40%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.62 -0.19 0.21%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.74 -0.09 5.14%
German 10y
/quotes/zigman/15866409/realtime 0.22 -0.08 26.83%
Italy 10yr
/quotes/zigman/15866497/realtime 1.70 +0.14 9.21%
Spain 10yr
/quotes/zigman/15866444/realtime 1.76 +0.11 6.81%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.41 -0.15 9.62%
Japan 10yr
/quotes/zigman/15866525/realtime 0.04 +0.01 25.61%
Crude Oil
/quotes/zigman/2260836/delayed 30 -1 2.82%
Gold
/quotes/zigman/33772884/delayed 1,193 +36 3.07%
Corn
/quotes/zigman/25518691/delayed 363 -3 0.89%
DJIA F
/quotes/zigman/48241424/delayed 15,865 -266 1.65%
S&P F
/quotes/zigman/43106711/delayed 1,837 -38 2.04%
Silver
/quotes/zigman/32655632/delayed 15 +1 4.07%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 99.01 -5.07 -4.87%
AAPL /quotes/zigman/68270/composite 94.93 0.91 0.97%
GOOG /quotes/zigman/59527964/composite 671.60 -11.97 -1.75%
BAC /quotes/zigman/190927/composite 12.27 -0.69 -5.29%
C /quotes/zigman/5065548/composite 37.79 -2.07 -5.20%
F /quotes/zigman/264304/composite 11.58 0.13 1.14%
T /quotes/zigman/398198/composite 36.98 0.10 0.27%
BP /quotes/zigman/247026/composite 29.88 -0.58 -1.90%
GE /quotes/zigman/227468/composite 28.02 -0.52 -1.82%
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Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

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Encore
A blog about living in and planning for retirement

What’s Happening With GM’s Pensions?

While the Democratic Party has made the bailout of the automobile companies a talking point in this year’s election campaign, unveiling convention slogans like “Osama Bin Laden is dead and GM is alive,”  I, a pension nerd, have been wondering how General Motors’ offer to transform retirees’ pensions into lump sums has turned out. How many of those offered the conversion actually took it? And were those who took it married or single, high-paid or low-paid, older or younger, healthy or sick?  Some of that information will never be knowable, but I am really curious whether 20 percent or 80 percent of those offered accepted. I hope that the share was closer to 20 percent.

Justin Sullivan/Getty Images

GM, in order to reduce its liability, so that it could be immunized and transferred to The Prudential Insurance Company of America, offered 42,000 of its salaried retirees (those who retired between Oct. 1, 1997, and Dec. 1, 2011) the option of accepting a lump sum or continuing to receive their monthly check from Prudential instead of from GM. GM plans to purchase a group annuity contract from Prudential, under which Prudential will pay and administer future benefit payments to most of the remaining U.S. salaried retirees. The offer was made on June 1, and retirees had to decide by July 20.

To those of us who spend our time advocating the automatic annuitization of at least some portion of 401(k) balances so that people will not outlive their resources, the offer to unannuitize — transform lifetime incomes into lump sums — seems like a step in the wrong direction. Retirees with ongoing monthly pension benefits are much more secure than those who have to decide how to allocate their retirement assets over an uncertain lifespan.   Retirees with a pension will not outlive their benefits, and they do not have to worry about the ups and downs of the stock market.

Taking the lump sum is a really risky business. Once they get the money, they will have to invest it in order to duplicate anything close to what they were receiving from GM. They are likely to end up paying high fees and facing volatile financial markets. Some retirees have suggested they will take their money and buy an annuity directly from an insurance company. However, it is expensive for individuals to buy annuities on their own, which means that they will end up with lower monthly benefits than they were receiving from GM.

Is there anyone who should take the lump sum?  Only those with a serious illness who believe that they do not have much time left should even consider it.  The trouble with counting on death, however, is its unpredictability; even sick people may live longer than they expect to.

Some experts say that wealthy people with lots of other assets, who do not rely on their GM pension as their primary source of income, might consider the lump sum. Still, given today’s tumultuous markets, it is unlikely that even the sophisticated investor will be able to generate more income from their lump sum than from their GM pension.

Those who opt to continue receiving their monthly benefit will get their check from Prudential rather than from the GM plan. Because their income is not coming from a pension plan, their benefits are no longer insured by the Pension Benefit Guaranty Corp.

GM’s move is part of a series of lump-sum buyouts. Ford began offering lump sums to retired salaried employees in August, and industry experts predict that both companies will do the same with their union retirees. Other companies are likely to follow the auto industry and off-load their pension promises.

But retirees have the choice, and if they want a secure retirement, almost all of them should say no to lump sums.  So, I hope the share that accepted GM’s offer was 20 percent or less.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 6)

View all Comments »
    • To Fred: It is very unusual for private sector pensions to be indexed for inflation. So switching from a GM pension to an insurance annuity doesn’t seem to change very much for the annuitant, except the possibility that the insurance company would default. Under either circumstance, the annuitant bears the risk of future inflation. Insurance company default is unusual, but in that event, the annuitant would likely get a haircut since state insurance guaranty associations usually have dollar limits.

      If an annuitant takes the lump sum, it’s likely he’s going to have a big tax bill in the year of the distribution, so will have less capital available to invest for future income.

      The only people for whom this would be a good deal are individuals with very short life expectancies, because getting a lump sum would be better than a brief stream of smaller pension payments.

    • TO Fred: The pension benefits would be taxed as well, not sure what you’re talking about with the age of 82 either since the pension amount is generally pre-tax money and thus no exclusion ratio would be applied anyway. The exclusion ratio on distributions would only pertain to non-qualified money.

    • PensionGuy, what is your point!

    • Many of the retirees had pensions that exceeded the PBGC coverage. Therefore, if GM actually declared bankruptcy, the pensions would have been cut to PBGC maximums, well below their current value. All life insurers are supported by state guaranty associations if the insurer becomes insolvent. No annuitant has yet to lose a dime from an insurer insolvency.

    • And what will happen to those receiving annuity when the inflation kick in, since those are not indexed for inflation?
      What will be the purchasing power of the Dollar 20 years from now?
      The recipients pay regular income tax on those annuities and after age 82, all of the income will be taxable and there will be no more exclusion ratio of the income applied.

      All those workers that took the annuity will be losers and wished they took the lump sum instead.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
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New York Markets Close in:

need to know
Apollo Education Group to be taken private
Cracking down on college financial-aid cheats
BioCryst shars plunge after disappointing study
Volkswagen's quality-control chief resigns
The link between stress and high cholesterol
Confusion in London as bus explodes on bridge
Struggling LeapFrog bought by VTech


Tesla downward revision is among the biggest

Yellen may say goal is not to slow the economy
Latest sign of a softening U.S. jobs market
Expansion won’t die of old age: S.F. Fed study

12th March 1954:  Lynda Sharp pours water over her sister Margot whilst sharing a bath at their home in Chorley Wood, Buckinghamshire.  (Photo by Fox Photos/Getty Images)  
23 stocks they’re throwing out with the bathwater

Chipotle wants to give you a burrito — how to get it
Chipotle closes up shop for a few hours Monday
VOTE: If not Chipotle, where would you eat?

Chesapeake denies bankruptcy plan as shares dive
What are the 8 strongest S&P energy stocks?

20 dividend stocks that Wall Street loves the most
The 20 dividend stocks that Wall Street loves most
Dividend stocks that will give you a raise

Venezuela can’t get Saudis to cut oil production
Only place left to invest if ‘Oilmageddon’ hits
Iran sets crude oil export volumes for Europe
Mark Mobius no longer investing in Petrobras


Rubio in freefall in New Hampshire betting
Republican primary: 3 things to watch
Voter turnout in each U.S. state (24/7 Wall St.)
Americans giving up citizenship at record rate

In the U.S., socialism is no longer such a dirty word
Bill Clinton: Sanders is ‘enemy of all things big’

How Clinton can rebound after New Hampshire

Blunders may reveal real flaws in Clinton and Rubio
All those terrible things Hillary Clinton has done

Geithner gets investment aid from J.P. Morgan

These ‘Buffett stocks’ are bargains in this market

Why a selloff in European bank stocks is ominous
Bank stocks have taken enough: analyst

What you can expect in Coca-Cola’s earnings

Hasbro blows past estimates as Star Wars boosts revenue
Hasbro blows past estimates on Star Wars boost
What to look for from Disney: Star Wars, ESPN

Teen gets to keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Chinese herdsman finds 17-pound gold nugget


Randgold raises dividend after record output
Rio Tinto, 5 others quit London Metal Exchange
Anglo American CEO: Tough 2016 ahead
Is the gold rally the real deal or ‘fool's gold’?

China’s forex reserves poised for another record drop
China’s foreign-currency reserves drop $99 bln

New refugee crisis is looming at Turkey’s border

N. Korea faces new sanctions after rocket test
North Korea fires long-range rocket
The 6 most corrupt countries in the world



/conga/frontpage.html 367366

Markets »

105.36MDow Volume:
Avg Vol: 128.61M
Unchanged
82
Decliners
4954
Advancers
1458
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 15,984 -221 1.36%
Nasdaq
/quotes/zigman/12633936/realtime 4,270 -93 2.13%
S&P 500
/quotes/zigman/3870025/realtime 1,849 -31 1.67%
GlobalDow
/quotes/zigman/629063/realtime 2,103 -36 1.66%
Gold
/quotes/zigman/33772884/delayed 1,193 +35 3.06%
Oil
/quotes/zigman/2260836/delayed 30.01 -0.88 2.85%
FTSE 100
/quotes/zigman/3173262/delayed 5,689 -159 2.71%
DAX
/quotes/zigman/2380246/delayed 8,979 -307 3.30%
CAC 40
/quotes/zigman/3173214/delayed 4,066 -134 3.20%
FTSE MIB
/quotes/zigman/1482176/delayed 16,441 -809 4.69%
IBEX 35
/quotes/zigman/2759620/delayed 8,122 -377 4.44%
Stoxx 600
/quotes/zigman/2380150/delayed 314 -12 3.54%
Asia Dow
/quotes/zigman/6959860/realtime 2,515 +5 0.18%
Nikkei 225
/quotes/zigman/5986735/delayed 17,004 +185 1.10%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,287 -330 1.34%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.12 +0.00 0.43%
Yen
/quotes/zigman/16008150/realtime/sampled 115.61 -1.26 1.08%
Pound
/quotes/zigman/16008140/realtime/sampled 1.44 -0.01 0.46%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 +0.00 0.31%
DXY Index
/quotes/zigman/1652083/delayed 96.65 -0.40 0.41%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.62 -0.19 0.21%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.74 -0.09 5.14%
German 10y
/quotes/zigman/15866409/realtime 0.22 -0.08 26.83%
Italy 10yr
/quotes/zigman/15866497/realtime 1.70 +0.14 9.21%
Spain 10yr
/quotes/zigman/15866444/realtime 1.76 +0.11 6.81%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.41 -0.15 9.62%
Japan 10yr
/quotes/zigman/15866525/realtime 0.04 +0.01 25.61%
Crude Oil
/quotes/zigman/2260836/delayed 30 -1 2.85%
Gold
/quotes/zigman/33772884/delayed 1,193 +35 3.06%
Corn
/quotes/zigman/25518691/delayed 363 -3 0.89%
DJIA F
/quotes/zigman/48241424/delayed 15,872 -259 1.61%
S&P F
/quotes/zigman/43106711/delayed 1,838 -38 2.00%
Silver
/quotes/zigman/32655632/delayed 15 +1 4.04%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 98.99 -5.09 -4.89%
AAPL /quotes/zigman/68270/composite 94.89 0.87 0.93%
GOOG /quotes/zigman/59527964/composite 671.74 -11.83 -1.73%
BAC /quotes/zigman/190927/composite 12.27 -0.69 -5.29%
C /quotes/zigman/5065548/composite 37.79 -2.07 -5.19%
F /quotes/zigman/264304/composite 11.58 0.13 1.14%
T /quotes/zigman/398198/composite 36.98 0.10 0.26%
BP /quotes/zigman/247026/composite 29.87 -0.59 -1.94%
GE /quotes/zigman/227468/composite 28.03 -0.52 -1.80%
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5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

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