DB vs DC

I hate holidays. If for nothing else, I hate them because it means the few days leading up to them are the longest days at work ever. This is because all of the people who have been here for a few years have earned enough days of vacation to leave about a week and a half before the actual holiday. I think most of my office has off for the entire month of December. Me, being a humble employee with less than one year of service, does not have this luxury. So I sit here, in my cube, in the deafening silence. Today wasn’t so bad. I had stuff to do and also had a meeting about the new profit sharing plan they’re implementing, so that took up some time. Tomorrow also shouldn’t be too horrible. Residual stuff to do from today. It’s Wednesday that is going to be absolutely terrible. My manager is off as is her manager. Actually, her manager is off all week. I am guessing there will be about 5 people here on Wednesday. And by that time I will have pretty much nothing to do. The middle of the month tends to drag because not much is happening in my world. I’m not looking forward to it.

Now about this new profit sharing thing here at work… Formerly they had a defined benefit pension plan. With my vast accounting knowledge, I can tell you that these kinds of plans are a pain in the butt. But actuaries like them a lot because they keep them employed, coming up with complicated formulas and pulling numbers out of the air and all. The company finally decided that it was time to change. This was not particularly a big surprise to me. DB plans are kind of like the original version Nintendo. Or maybe even the Atari. They’re old news. What’s big and hot are the DC, Defined Contribution, plans. Otherwise known as your 401(k). These are much easier to manage and a lot of the responsibility is put on the employee rather than on the employer. Of course, the employer is still responsible for ensuring that the money they say they’re putting aside for the employees is really there (there have been quite a few debacles around that subject lately), but there are no funky formulas and the company isn’t the one putting up all the cash. Pretty nice deal for their side, eh? Understandably, this is causing a bit of a ruckus among employees who have been with the company for a while but not long enough to be grandfathered under the old plan. This doesn’t affect me as I’ve been here less than a year. I am not even vested in the pension plan and will therefore not even be included in the people who will have their service years frozen.

I’ve digressed. My original plan was to talk about the new profit sharing program. Now, when I worked as an intern over at Presto Products, I was very familiar with their profit sharing program. Heck, I did all the payout estimates and booked the accrual each month for three years. I knew what elements were measured and what the payout percent would be for each level attained. I must say, they had a pretty good program. If the company did well, employees could get quite the bonus. This bonus was in the form of a check sent out in February. Cash. Moola. That employees could spend right away on whatever they wanted. Good deal. Now, this new “profit sharing” plan that Bemis has come up with is different. This incentive will come in the form of contributions to the accounts you have elected for your 401(k) to go to. You can’t touch this money until you retire. It’s based on % growth of EPS year to year. At a minimum, everyone will earn 2% (of your wages, that is.) At a maximum, 5%. I don’t know. It’s not smart to complain about “free” money, but it seems like we’re getting a bum deal somehow. I know Americans in general really need to learn how to save and it’s good that the company is trying to help secure comfortable retirements for their employees. I guess it’s not fair to compare one company to another, but it just seems like something is off. Maybe I came into this company with too much knowledge about what kind of benefits other people get…

In any case, I’ve bumped my 401(k) contribution up to 8% to get the maximum company match starting January 1st. That’s another point I could grumble about (they contribute, at max, 2.5%) but I won’t. I can’t complain too much or I might get in trouble. :)