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Corporate Retirements and Healthcare
Old 04-01-2010, 02:59 PM   #1
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Corporate Retirements and Healthcare

I'm betwixt here and wonder if all you people who retired or will retire from that ubiquitous Megacorp might answer a question.

I'm a public school employee who has been in the business almost 40 years. I will get a good pension of about 70-75% of the highest three years, but I will have to pay for my own healthcare. I got Social security too, and that kicks in next May, when I will retire from the public system.

Now...... There are many people who wish to strip the public employees, who dutifully educated their youngins and in the early years made very little money to do it, of their pensions because they don't want to deal with defined benefit plans. These people say that the corporate world doesn't provide pensions anymore, and that they don't provide healthcare.

However...... On this forum, I have repeatedly heard of people retiring from Megacorp with nice pensions and even life-time healthcare. My sister in law will retire in about 15 years and works for mega-bank-corp. Even now at 10 years younger than me, she makes double my salary, and will have a pension that is higher than anything I ever made. And it was only very recently that mega-bank-corp removed her fully paid health care for life.

Which is it?

Z
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Old 04-01-2010, 03:17 PM   #2
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Which is it?
Which is what? Is there a question in your post, or are you just trying to stir the "public vs private" pot? We've already got a thread like that one.
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Old 04-01-2010, 03:24 PM   #3
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Are you asking why more Megacorp types without nice pensions and health benefits aren't on the early retirement forum? If so, you answered your own question.
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Old 04-01-2010, 03:54 PM   #4
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I'm also having trouble parsing out the question in the midst of the other anecdotal (two) evidence, and over-reaching claims.

You don't appear to really want an answer to your question when you frame it with unsupported claims about what 'many people' wish, or what 'those people' say. But if you do, a self-selected poll isn't going to give it to you. You need some real data - median numbers for the retirement benefits provided by corporations versus the private sector in comparable jobs. And that will always be questionable as it as it is tough to get comparable data on salary, job security, who worked 'harder', who had more upside potential, and other benefits/concerns over their careers. But it would be a start. Do you really think you don't already know the answer?

Maybe the BLS has something, and you could post it here?

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Old 04-01-2010, 04:07 PM   #5
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Originally Posted by Zarathu View Post
I'm betwixt here and wonder if all you people who retired or will retire from that ubiquitous Megacorp might answer a question.

I'm a public school employee who has been in the business almost 40 years. I will get a good pension of about 70-75% of the highest three years, but I will have to pay for my own healthcare. I got Social security too, and that kicks in next May, when I will retire from the public system.

Now...... There are many people who wish to strip the public employees, who dutifully educated their youngins and in the early years made very little money to do it, of their pensions because they don't want to deal with defined benefit plans. These people say that the corporate world doesn't provide pensions anymore, and that they don't provide healthcare.

However...... On this forum, I have repeatedly heard of people retiring from Megacorp with nice pensions and even life-time healthcare. My sister in law will retire in about 15 years and works for mega-bank-corp. Even now at 10 years younger than me, she makes double my salary, and will have a pension that is higher than anything I ever made. And it was only very recently that mega-bank-corp removed her fully paid health care for life.

Which is it?

Z

While there are exceptions, the vast majority of private employee aren't covered by a Defined Benefit roughly 1/3 of medium and large companies, According to this study, 23% of current retirees and 16.8% current private workers are covered by a DB plan, the average pension for private sectors is $6,000 vs $13,000 for public employees.

You sister mega bank eliminated health care, 15 years is a long time there is absolutely no guarantee that won't cut back on her pension also. So while it is absolutely the case you can make more money in the private sector, the median and average public makes more money. I'll also so that I don[t know of any private sector job that provides the amount of vacation that teacher get.
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Old 04-01-2010, 04:37 PM   #6
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What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?

Just trying to figure it out.
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Old 04-01-2010, 05:13 PM   #7
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Originally Posted by Zarathu View Post
What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?

Just trying to figure it out.
Although I have a DB pension and retiree HC (retired in 2000) neither is currently offered by my former Mega Corp. Older employee's had 7 years to retire on the old plan. Many friends report same at their former employers.
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Old 04-01-2010, 05:17 PM   #8
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The mega-corp I retired from had 100% paid health care for retirees up until 7 or 8 years before I retired.

When I left, the deal was that one could remain a member of the group, but we have to pay 100% of our policy cost. This strikes me as an excellent compromise. It allows the company to escape from imprudent promises made during flush times, but benefits the retirees by retaining the bargaining power and protections of belonging to a big group. Since we are paying 100% of the cost, I am hopeful that the company will not just drop us altogether.
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Old 04-01-2010, 05:32 PM   #9
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Originally Posted by Zarathu View Post
What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?

Just trying to figure it out.
For health care, here's info as of 2003. I'd estimate the trends have continued. Of course, everything is about to change. From that link:
Quote:
The availability of employer-sponsored health insurance for retirees is shrinking.b The availability of employer-sponsored health insurance is much broader for current full-time employees than for retirees and varies by economic sector and size of the employer. With the exception of large governments, the percent of full-time employees who worked where health insurance was offered to retirees fell from 1998 to 2000.22
The decrease in the offer rate to retirees varied by size of firm. For retirees age 65 and over, from 1998 to 2002:
  • Among firms with less than 50 employees, the availability of retiree coverage declined from 5.6 percent to 2.1 percent.
  • Among firms with 100 to 999 employees, the decrease was from 18.7 percent to 9.2 percent.
  • Among firms with 1,000 or more employees, the decrease (from 41.2 percent to 41.1 percent) was not significant.8
  • Of course "offering insurance" means a lot of different things--everytthing from a "free ride" to "you can buy insurance yourself at our group rates"
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Old 04-01-2010, 05:44 PM   #10
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The teachers I know who are retired have health care plus their pensions. You are lucky to get SS in addition--I think our teachers are not part of SS--so you may end up with 100 percent of your last year's pay. I don't think you can compare your pay/benefits/retirement to someone in the private sector as the cultures are so different (tenure, collective bargaining, hierarchies, final-years-compensation-manipulation, etc., and I imagine your sister works year round, too, and probably doesn't have an 8-hour-a-day work schedule. But of course they could have chosen to go into teaching, like you could have chosen to go into the private sector).

I only worked for small firms but DH's company stopped its pension plan in 1988 and went to employer contributions to what now is a 401(k); because he was vested, he receives a pension that is probably 50 percent of what he earned back then. Also because he was vested, we get health care subsidized by about half, I think. We weren't expecting that and the company tells us it can be stopped at any time; since only a small percentage of people are eligible for it (people who were fully vested by 1988), maybe we are under the radar.

Upper management people probably have retirement compensation packages that aren't comparable to teachers or lower level private sector people. I think our retired school superintendents had some nice retirements!

You probably had a wonderful career since you stayed in "the business" almost 40 years--good for you!
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Old 04-01-2010, 06:02 PM   #11
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Originally Posted by Zarathu View Post
What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?

Just trying to figure it out.
I retired from a company with just under 30 years of service with just under 100k employees (around the world).

I held a low/mid white-collar position (e.g. non-union). I did not retire with a defined benefit program (e.g. pension). My pension was up to me, by offering a 401(k) and doing a partial match.

During my wo*king years, I had to contribute (around $200/mo) for medical coverage for my DW/me.

Today, in retirement I do have a company sponsored health care plan (I am pre-Medicare) but coverage costs just under $500/mo for coverage that I contribute to.

In other words, being in the private (e.g. not government sponsored) workforce did little for me as far as preparing for retirement and giving me support in retirement.

I do realize that I am better off than most, since I did make a good salary. However, it was up to me to ensure that I prepared for my future. Additionally, I do realize that there are those that pay much more than I do for medical coverage in the same situation.

BTW, in our company, all non-management personnel (regardless of level) had the same level of "benefits", realizing that most senior VP's and current unit heads were working under contracts that defined their benefits; that only applied for a few folks, however.

Those that were part of the local union (many variations around the world) did have a pension program, but as far as I'm concerned they earned it (due to working conditions) and comparing their standard current pension benefits (depends on current contract) against what I was able to do with my own investing? I'm much better off, IMHO.
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Old 04-01-2010, 06:09 PM   #12
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Well my megacorp pension at age 55 and 25 years service will be about 30% my salary. Would go to about 40% at age 60. So public pensions are a much higher percentage of pay than we get.

Pay probably may be higher at megacorp and there is a 401k in my case also. But I will not be swimming in money in retirement. Should have enough though. My dw has nothing for pensions or 401k so I am retiring two.

Will get near max SS also if it doesn't go broke.
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Old 04-01-2010, 06:25 PM   #13
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CNN Money says about 10% of corporations offer only DB plans, 30% offer a mix of scaled back DB and 401K; down from 60% DB in the 80s.
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Old 04-01-2010, 06:29 PM   #14
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Quote:
Originally Posted by Zarathu View Post
What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?

Just trying to figure it out.
Frank just retired from Megacorp with a small pension, a 401K, company stock, and continued access to his group medical.

He has to pay both the company part and his part of the medical, though. So, his pension just about exactly covers his medical insurance payments.
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A slightly different angle...
Old 04-01-2010, 06:59 PM   #15
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A slightly different angle...

OK, I think we understand that it is tough to compare private to public - all sorts of factors come into play. So how about looking at trends, rather than absolutes? Something like this:

A) How many in the public sector have seen significant cuts to the retirement package for current employees/retirees?

B) How many in the private sector have seen significant cuts to the retirement package for current employees/retirees?

For B, our MegaCorp has made numerous significant cuts. I'd have to go look them up to count them all (and I may later). As was discussed in other threads, these cuts only affect the years going forward, they don't retro-actively cut. But they do affect you even as you are working, or are in retirement.

In the other thread on Illinois State pensions, those cuts are for *future* hires, so that does not count in this definition.

I don't know, but just judging by the reaction I've heard from some public sector people I know ('they can't cut *our* benefits!'), I don't think it is common. Again, data would be better than anecdotes, but what about it?

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Old 04-01-2010, 08:31 PM   #16
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I think you are missing a couple of points.

1. Posters to this board aren't typical. It is the availability of good retirement benefits or pensions that enables many to ER, whether public or private.

2. Many here retired or will retire under programs that are no longer being offered. My DH is going to retire soon. He has a choice of lump sum or a non-cola pension that pays about 2/3 of his base salary. He has subsidized retiree medical care for him and family (it is still costly though). However, for younger or newer employees they don't have all these benefits.

3. Having said that, his younger brother who was a public employee retired several years ago because his retirement benefits were even better....
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Old 04-01-2010, 09:48 PM   #17
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I think our retired school superintendents had some nice retirements.
No need to guess. Illinois superintendents salaries are a matter of public record. Their pensions, with spiking, approximate their salaries.

Click on the "top 200" sort and take a peak.

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Old 04-02-2010, 08:38 AM   #18
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Originally Posted by Zarathu View Post
What I asked.....(it seemed straightforward to me).... is whether Mega corp is still offering the pensions and health care in retirement, or whether IT REALLY IS A THING OF THE PAST? Or is it a thing of the past only for lower management, or middle management, but upper management is still getting it?
When I hired in with Megacorp #1, a DB pension and retiree health insurance was part of the deal. My dad worked there, and he got it all (and with a sweetened early retirement incentive kicker). But 10 years into it, they pulled the plug on the pension and on retiree health insurance. My pension was frozen at puny levels and there would be *zero* health insurance in retirement.

Keep in mind that those were 10 of the most important years toward being able to retire early with a large pension, now gone. I can't exactly use a time machine, go back 10 years, and work for the government. No, I got screwed. I left a couple years later, and my current Megacorp #2 (like most) offers neither. I will add that Megacorp #2 offers fantastic health insurance and a very good 401K with a fairly generous match -- but as far as the health insurance goes, it still requires "golden handcuffs" to the j*b.

So yeah, I will have a pension, but one based on only about 10 years of service (and the lowest earning years of my career), to the point where I'll get a non-COLA'd $630 a month starting in 2030 (with the 100% survivor option). Certainly better than nothing, but not likely to provide more than 15-20% of my income needs in retirement... and even less if inflation spikes since that $630 today will still be $630 in 2030 and beyond.

And in my current j*b I would have gladly taken 10% less pay for a decent pension under the right circumstances. But without job security one wonders if it's a good deal at all, so there's that counterpoint.

The reason I'm pretty insistent that we only change the pension deal for new hires is that I don't think anyone should get screwed like I did. But I also believe that public sector labor costs simply can not keep rising faster than the private sector tax base, since the latter funds the former.
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Old 04-02-2010, 09:05 AM   #19
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When I hired in with Megacorp #1, a DB pension and retiree health insurance was part of the deal. My dad worked there, and he got it all (and with a sweetened early retirement incentive kicker). But 10 years into it, they pulled the plug on the pension and on retiree health insurance. My pension was frozen at puny levels and there would be *zero* health insurance in retirement.
This is similar to how things worked at our house. I made it through MegaCorp (27 yrs) and will receive a DBP equal to about 40% (non-COLA) of my final pay if I wait until 65 yo to start it. (Withdrawing from RE savings to cover until then.) I get access to retiree health insurance which costs $398/mo (Me only. DW pays for her own through another source.) I feel fortunate to have those levels of benefits. My son also worked for MegaCorp. He was there for 10 yrs during which the pension system was changed to a cash balance type and then frozen altogether. Retiree health benefits were cancelled for those below a certain level of seniority. 401k matching was eliminated. Profit sharing (paid into the 401k) was eliminated. He left MegaCorp and now works for a MiniCorp but the benefits there are no better.
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The reason I'm pretty insistent that we only change the pension deal for new hires is that I don't think anyone should get screwed like I did. But I also believe that public sector labor costs simply can not keep rising faster than the private sector tax base, since the latter funds the former.
You have a generous outlook. I hope the economy can support it and working families feel they are receiving good value for their expenditure.

Another angle that could work is that our current employees continue to receive their current level of retirement benefits so their planning is not upset midstream. But, their wage increases could be reduced going forward and be applied to increased pension fund contributions. If this caused an issue with attracting and retaining qualified employees, obviously it wouldn't work. But currently, with long lines of job seekers, it's not likely to be a problem for years to come.
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Old 04-02-2010, 09:35 AM   #20
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The mega-corp I retired from had 100% paid health care for retirees up until 7 or 8 years before I retired.

When I left, the deal was that one could remain a member of the group, but we have to pay 100% of our policy cost. This strikes me as an excellent compromise. It allows the company to escape from imprudent promises made during flush times, but benefits the retirees by retaining the bargaining power and protections of belonging to a big group. Since we are paying 100% of the cost, I am hopeful that the company will not just drop us altogether.
As an educator(I'm a elementary school counselor), I have two maybe three options until medicare. First, I can stay with the current group policy. The company has an option called 1st Health which allows full pay into the district policy, and then coverage pretty much anywhere in the country. Second I can opt for a policy a bit more expensive offered directly by the State retirement Funding system. Finally, the state is looking to offer some kind of statewide group policy to the educators to reduce districts costs, and retired educators should be able to connect to that policy if they pay the whole premiums.

At 65, all these polices lapse. The state retirement system offers a supplementary medicare policy at about $150 a month(300 for spouse too).

But basically I have to pay into the policies at whatever rate the district pays or the state would have to pay.

Z
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