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Old 10-20-2015, 08:41 PM   #21
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There is no way I can see a 50% reduction in the value of a pension because someone worked 31 years instead of 29 years...

There is something else in this story that we just do not know....

It could be that there is an option to start pmts early and you get a big haircut, but not a 50% reduction for less than 2 years.... makes no sense...
For some DB plans, 55/30 are magic numbers.

It's quite possible that normal retirement age is somewhere between 60-70 and anything before that is considered early retirement (thus subject to a reduction factor or has a much lower benefit factor). However, I think quite a number of DB plans make an exception for 55/30 so there's no early retirement penalty.

For example, I get 57% pension if I retire at 53/30. However, if I resign at 53 and wait to claim pension until I turn 55, I get 65%. If I do TMY and retire at 55/32, I get 70%
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Old 10-20-2015, 09:26 PM   #22
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Originally Posted by hnzw_rui View Post
For some DB plans, 55/30 are magic numbers.

It's quite possible that normal retirement age is somewhere between 60-70 and anything before that is considered early retirement (thus subject to a reduction factor or has a much lower benefit factor). However, I think quite a number of DB plans make an exception for 55/30 so there's no early retirement penalty.

For example, I get 57% pension if I retire at 53/30. However, if I resign at 53 and wait to claim pension until I turn 55, I get 65%. If I do TMY and retire at 55/32, I get 70%

I am not in a DB plan.... and I am sure there are many versions out there.... but from what I have read, the numbers are based on age+service... so a 53+30= 83, a 55+30=85 and 55+32= 87....

Spreading out a lump sum over 2 less years does make a difference... that is from 1 to 2.... Having the lump sum bigger also makes a difference... that is 2 to 3.... now, 70/65 is 1.17, or a 17% difference... remember that SS goes up by 8% a year if you wait, so that 17% difference is in the ball park..... the OP said his went from 50% to 25% or a 50% difference for 2 years....

I can see a 17% difference when you start two years earlier or have two more years of service... I just do not see a 50% difference...
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Old 10-20-2015, 10:39 PM   #23
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I am not in a DB plan.... and I am sure there are many versions out there.... but from what I have read, the numbers are based on age+service... so a 53+30= 83, a 55+30=85 and 55+32= 87....

Spreading out a lump sum over 2 less years does make a difference... that is from 1 to 2.... Having the lump sum bigger also makes a difference... that is 2 to 3.... now, 70/65 is 1.17, or a 17% difference... remember that SS goes up by 8% a year if you wait, so that 17% difference is in the ball park..... the OP said his went from 50% to 25% or a 50% difference for 2 years....

I can see a 17% difference when you start two years earlier or have two more years of service... I just do not see a 50% difference...
As you said, DB plans vary. It really all depends on the company/agency's plan documents.

For example, ours don't follow age+service. It's minimum 55 years of age and minimum 30 years of service to avoid penalty. 54+31=85 doesn't cut it. Neither will 57+28=85. The 30 years service is also a hard limit for early retirement for our plan. If I leave with just 29 years of service, I'd have to wait until I'm in my 60s before I can take pension. Heck, retiring at 54.75 means pension is just 64% instead of 70%. That's a 9% increase for just one measly quarter.

Again, please note, the 65% is if I delay claiming pension to 55 so that's without penalty (just 2 years less service). If I claim pension at 53, pension is 57%. For my specific DB plan, sure, it's just a 23% difference (70/57-1). However, I have seen plans with much steeper early retirement penalties (e.g. 1.0-1.5 multiplier before normal retirement age, 2.0-2.5 for normal) so I'm not really all that surprised with the OP's situation.
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Old 10-21-2015, 05:49 AM   #24
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is it that your early retirement benefit (55/10 or whatever) gives no reduction to the accrued benefit at 55 but if you terminate prior to age 55 you get a 50% haircut on the accrued benefit at 55?

Yes, it is how you are describing it, except it is a 55/20


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Old 10-21-2015, 05:56 AM   #25
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Thanks to everyone for the helpful comments. I will hold off on hitting the panic button for 4 months until my review. I was glad to hear someone say this is not unusual for people at this age.

I really am lucky to even be having this as a stressor. Most people do not have these DB plans as a benefit.


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Old 10-21-2015, 06:03 AM   #26
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Hzw-rui describes the situation well. If we leave prior to 55, even by a week, the early retirement provision would not be applicable.

We need to have 20 years of service instead of 30.


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Old 10-21-2015, 09:53 AM   #27
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Thanks to everyone for the helpful comments. I will hold off on hitting the panic button for 4 months until my review. I was glad to hear someone say this is not unusual for people at this age.
Sorry to chime in late, but I would caution against being complacent and waiting for the next review. If you have had a bad review after a long history of good ones, a second bad review could be used as indicator that you should be terminated and start whatever easing out process they have, assuming it hasn't already started. Instead I would suggest taking the next four months to really shine at work. Come in early and leave late, often the only actual clue anyone uses if you are working hard or not. Check all your assumptions about how the pension actually works without consulting HR - who is often NOT your ally. Consult a lawyer briefly to understand your options.

In the bad old days, I know our employee software had reports to show which employees were close to meeting pension milestones, and they were sometimes used inappropriately. Do you know of other employees who were pushed out near pension qualifying dates? It's natural to be apprehensive near such a big cliff in qualifying for benefits you really really want, but just because it feels paranoid doesn't mean they aren't out to get you.
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Old 10-21-2015, 10:42 AM   #28
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[QUOTE=growing_older;1647139]Sorry to chime in late, but I would caution against being complacent and waiting for the next review. If you have had a bad review after a long history of good ones, a second bad review could be used as indicator that you should be terminated and start whatever easing out process they have, assuming it hasn't already started. Instead I would suggest taking the next four months to really shine at work. Come in early and leave late, often the only actual clue anyone uses if you are working hard or not.....

+1 Your most recent work efforts will often have a disproportionate effect on the review. Use that to your advantage and really put your best foot forward on the next few months.
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Old 10-21-2015, 10:50 AM   #29
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Originally Posted by hnzw_rui View Post
As you said, DB plans vary. It really all depends on the company/agency's plan documents.

For example, ours don't follow age+service. It's minimum 55 years of age and minimum 30 years of service to avoid penalty. 54+31=85 doesn't cut it. Neither will 57+28=85. The 30 years service is also a hard limit for early retirement for our plan. If I leave with just 29 years of service, I'd have to wait until I'm in my 60s before I can take pension. Heck, retiring at 54.75 means pension is just 64% instead of 70%. That's a 9% increase for just one measly quarter.

Again, please note, the 65% is if I delay claiming pension to 55 so that's without penalty (just 2 years less service). If I claim pension at 53, pension is 57%. For my specific DB plan, sure, it's just a 23% difference (70/57-1). However, I have seen plans with much steeper early retirement penalties (e.g. 1.0-1.5 multiplier before normal retirement age, 2.0-2.5 for normal) so I'm not really all that surprised with the OP's situation.


I have read your post and the post by the OP.... I would like to get this straight.... because this seems like it is against the laws that I know...


You are saying that if you are let go one day before reaching 55 years of age or one day before reaching 30 years of service (however they define these years), then you lose the ability for full retirement at 100% pension? And that your pension will be reduced to 65 to 70ish %?

I ask this because you say there are hard limits... so if it is hard then one day will screw you up.... I also ask because I know companies used to do this many years ago... my dad was laid off to try and prevent him from earning a pension back in the 60s... he needed a minimum of 10 years service to qualify.... they thought they had laid him off in time, but their records were wrong and he was just over 10 years... he sued and won his case....


Since this was common practice, laws were passed moving the time down in order to qualify for full pension... now it is a 5 year cliff or a percent per year that has to be 100% after 7 years.... I absolutely can be wrong since people are saying that I am, but I do not see how this can not be litigated just like back in the day....


One more question.... are these public plans (gvmt or teacher) If so, I have no idea what is and is not legal on these kinds of plans...
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Old 10-22-2015, 03:38 AM   #30
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I have read your post and the post by the OP.... I would like to get this straight.... because this seems like it is against the laws that I know...

You are saying that if you are let go one day before reaching 55 years of age or one day before reaching 30 years of service (however they define these years), then you lose the ability for full retirement at 100% pension? And that your pension will be reduced to 65 to 70ish %?

I ask this because you say there are hard limits... so if it is hard then one day will screw you up.... I also ask because I know companies used to do this many years ago... my dad was laid off to try and prevent him from earning a pension back in the 60s... he needed a minimum of 10 years service to qualify.... they thought they had laid him off in time, but their records were wrong and he was just over 10 years... he sued and won his case....

Since this was common practice, laws were passed moving the time down in order to qualify for full pension... now it is a 5 year cliff or a percent per year that has to be 100% after 7 years.... I absolutely can be wrong since people are saying that I am, but I do not see how this can not be litigated just like back in the day....
You're talking about vesting rights. I believe that's what the law you're describing addresses.

The reduction penalty for early retirement is a different matter. If you work for 10 years, then you still get the full 10 years service credit even when you ER. It's just that you'll be subject to an early reduction factor or might have a lower benefit factor. Early retirees are expected to collect pension for a longer time compared to normal retirees thus, the pension system needs to offset all those extra years of pension with a reduction of benefits (similar to claiming SS at 62 instead of FRA).

Once you're vested, you're eligible for pension. They can't take that right away from you. How much of a pension you receive will depend on when you claim the pension. The numbers are probably going to be different if you claim at 45, 55 or 65 even if the years of service is the same.

Not really sure how exact our retirement system is in calculating age and service years. At the very least, I know there's granulation up to a quarter. Dunno how the system treats days and weeks. As for being let go before minimum age (say 53/30), I can still receive full pension. I'll just have to wait until I turn 55 to claim the pension in order to avoid the ER penalty. That means I'll be on my own for expenses for 2 years. Now if I were let go at 52/29, I'll have to wait until I'm 62 to claim full pension. I don't have the option to claim it any earlier than that so that's 10 years of living expenses I'll have to fund from investments or another job.

Quite likely, the OP can still receive full pension. Caveat with that is he's probably going to have to wait to claim the pension (deferred retirement) so that could mean 2-12 more years of having to live off investments alone.

Here's an example of one pension plan's rules:
https://www.opm.gov/retirement-servi...n/computation/
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Old 10-22-2015, 06:41 AM   #31
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My situation is not related to vesting. It is a special provision in our DB plan allowing for an enhanced payout at 55/20.

Thank you for all the advice re: plans for staying employed over the next 23 months. To clarify, I have not had any bad reviews up to this point in my 29 years, so I am not expecting one.
However, I am cautious and was looking for advice in the case that I was given a bad review.


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Old 10-22-2015, 09:28 AM   #32
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Is it possible for you to transfer to a different area of the company where you don't feel over your head or uncomfortable? Give your statement, it seems a poor review might be possible.
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Old 11-01-2015, 03:42 PM   #33
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Yes, I am looking into that. Thanks


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Old 01-29-2016, 07:41 PM   #34
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It's been 3 months since my last post and I now have a new manager. Things have stabilized. My annual review is coming up in a few weeks and I do not expect any problems.

I am now feeling pretty good about being able to stay employed for another 19 months. I am taking courses and taking extra initiative a work to show my worth. I really appreciate the suggestions from posters and did take them to heart.

I think it would make sense for me to wait until yearly bonuses are paid in March 2018( I qualify for ER in our pension plan in September 2017).

I was reading some posts about keeping to yourself about retirement plans. That makes a lot of sense. I expect my bonus would be much smaller if management knew my plans. It is a discretionary payout.




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clarification
Old 01-07-2017, 06:57 AM   #35
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clarification

I have been speaking with our benefits area re: our pension plan options. I think I confused readers by saying that I would get greatly reduced benefits if termination prior to 55. The bottom line is that the benefits are simply delayed until my NRD.

Anyway, things are good at work now and I am very optimistic all will go well until I turn 55 in September.

DW is planning to work until 2020 so I need to find some p/t w*rk in the interim.

Off to go look at some winter rental places in Florida. It's freezing here in New England.
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Old 01-07-2017, 07:09 AM   #36
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I have been speaking with our benefits area re: our pension plan options. I think I confused readers by saying that I would get greatly reduced benefits if termination prior to 55. The bottom line is that the benefits are simply delayed until my NRD.

Anyway, things are good at work now and I am very optimistic all will go well until I turn 55 in September.

DW is planning to work until 2020 so I need to find some p/t w*rk in the interim.

Off to go look at some winter rental places in Florida. It's freezing here in New England.
Good news. Thanks for the update.
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Old 01-07-2017, 08:29 AM   #37
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That's great news!

I had a situation from a company I worked for in the '90's that I thought was bad, but actually turned out ok... I had worked at the company which had a DC Pension (Defined Contribution). I left 2 months before my 10 year anniversary. I was fully vested, but the Pension is "locked" until I am 65, instead of 55 if I had worked there the last 2 months to my 10 year anniversary. The good news is it's been in varying interest eating instruments since then (set at the beginning of each plan year) and the average has been 5.21%. I just consider this value (currently $84k) as part of my AA in the total. will be a nice adder when I hit 65.

Sometimes things work out ok despite out concerns.
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Old 01-07-2017, 11:13 AM   #38
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Thanks for following up, fishvt. So often, people disappear after their OP, even when others have spent time making observations and offering suggestions.
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Old 09-13-2017, 11:30 AM   #39
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Thanks for following up, fishvt. So often, people disappear after their OP, even when others have spent time making observations and offering suggestions.


As a follow up to this thread, I turned 55 today and can now retire at 52% of my current salary. Yahoooo. This provides me with many options. Now I just need to figure out what to do next.
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Old 09-13-2017, 11:48 AM   #40
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Great news. Good luck in your retirement!!
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