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To: Bald Eagle who wrote (15337)	9/30/1998 6:34:00 PM
From: shane forbes	Read Replies (1) \| Respond to of 25814

DVD news - look at these titles - NOW we are talking! DIV.. what was it again - DIV...X as in axed? (evil me - actually heard a DIVX commercial on radio today!): Also Thursday, Paramount Pictures announced its second batch of DVD titles. On Nov. 10, the company will release Star Trek: Generations, Mission: Impossible, John Grisham's The Rainmaker, The Ghost and the Darkness, and Night Falls on Manhattan. On November 24 comes The Hunt for Red October [shane's add: killer film <g>], The First Wives Club, Breakdown, and Switchback. This week, the DVD Forum conference in Brisbane, Calif., will feature keynote speeches from Intel and IBM executives, as well as consumer-electronics vendors Toshiba, JVC, and Sony. The conference will also have the first demo of DVD Audio, which is expected to offer more storage and higher audio fidelity than compact discs, as well as discussions on the conflicting recordable-DVD formats [never miss an opportunity for this conflicting crud stuff]. --- -- ot -- But count how many companies are starting up DB pension plans these days. Or better check out the trend of both the number and assets in DC plans vs. DB plans over the last few years (from the PBGC). Or check the stock prices of companies that cater to DB plans such as UAM vs. a TROW that has about half in 401(k) and IRA money. Certainly for small companies the lures of 401(k) plans and stock options make much more sense than a traditional DB plan. This is not to say that DB plans are not useful. But they are not amenable to people moving from job to job. Since they tend to be Final Average Pay (FAP) plans the pensioner's age 65 benefit gets thrashed when he moves to a new company (since the benefit from the old company will be at the old FAP and that is pathetic when retirement is several decades away - for example employee age 25 at hire, salary $35,000 at hire, stays at Company A for 40 years. Then his benefit at age 65 may be something like 0.01540350,000 = 210,000 per year until he dies. Let's say instead of doing this he works for Company B for 20 years and then Company C for the next 20 years, then his benefit at 65 will be 0.015 * 20 * 100,000 + 0.015 * 20 * 350,000 = 0.015 * (20 * 100,000 + 20 * 350,000) = 135,000. Compare 135,000 to 210,000 and you will see what I mean by when I say the benefits get thrashed when people change jobs under a DB plan arrangement. [the key is that under company A the benefit is 0.015 * (20 * 350000 + 20 * 350,000) and this is a lot more than 0.015 * (20* 100,000 + 20 * 350,000)!] {for illustration I used a 1 year FAP - unrealistic - it makes things worse than the typical 5 year FAP - also used a 6% sal. scale and assumed only a 6% raise when employee left company B - again this is skewing results against the trad. DB plan - but again this was for illustrative purposes.) To wit DB plans lack the portability feature of a 401(k) type plan. Can't move the employer's liabilities from plan to plan since the employer owns them and it is not transferrable. Also in the grand scheme of things in a global economy the bigger companies have to be lean and mean - new DB plans (with FAS 87 liabilities) are like anchors round the neck. The company has to pour money in like there is no tomorrow over the intermediate term and they have to deal with big liabilities (and pouring in more money) if the assets do not move with them in the ensuing years. To wit slaughtered earnings. Also check out some of the bigger union type plans and see how much of the reported earnings are because of the pension plan doing well in recent years - this is lower quality earnings). In the US many of them survive because to terminate them under many circumstances the company gets hit with massive penalties (I think 10% + they have to distribute the assets to the pensioners in certain circumstances as well). Also I should add that the larger pension plans have monster asset bases and many of them do not need employer contributions for a long long time (because the assets are long term in stocks and the stock market has done some real kick-butt stuff over the last decade to 15 years) - this means the pension benefits are "free" or have no "intrinsic cost". Not to say that they DB plans do not have a place - unions love them so does the gov't employee and so do upper mgt. For the simple reason that the risk is on the employer and these are long term jobs. But the crux of it is that I do not think the world is one of long term employment anymore (esp. in the US - which is going the service economy route - a service economy by its nature is not a long term employment thing). My personal opinion is that DB plans are eminently useful because they shift the risk to the employer and that is a good thing since no one should assume that the US economy is going to grow magnificently forever and money mgt. should not be the privy of amateurs (the typical 401(k) participant - they also do the idiotic index fund a tad too much!). Further the average 401(k) participant will likely screw up if you give them a long enough period of time - right now we are too young in the 401(k) phenomenon. I just think they have a lot of things going against them that makes them archaic for the next millenium. (maybe the hybrid plans like cash balance make sense but that is another convoluted beast that is neither here nor there) Shane (and I would not worry about Social Security for the next 30-40 years at least maybe 50 if we are lucky - the thing to do is to push out the normal retirement age and up the FICA tax (as painful as that may sound) - putting Social Security money into the stock market is another not too clever method IMHO.)