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Old 03-25-2015, 04:47 PM   #21
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Originally Posted by soupcxan View Post
So megacorp has a pension benefit projector. If I retire in 20 years at 55, I would get a $900k lump sum at today's discount rates. If I work until 65, I get $1.2m. I'm kind of surprised that it doesn't increase more for 10 extra years of work.

If I can average a 2% raise, the 55 lump sum goes up to $1.4M and the 65 lump sum is $2.5M. Which sounds like a decent amount of money, until I remember that it's in 2035 or 2045 dollars, which are not worth all that much in today's terms.

Is this pension worth sticking around for?
Only you can answer the question about it being worth sticking around for, as as other point out, much more needs to factored in to answer that.

As far as additional lump sum for 55-65, dig deeper and deeper, contact corporate level benefits department, consult plan documents - I was not satisfied until I was able to replicate the available benefit projections by using the 'pension formula' in a spreadsheet. Understanding how longevity and early retirement plays in that formula is crucial.

And just an added thought, as others have also pointed out--and I have also become jaded (frozen pension accrual) by being similarly affected--assuming nothing will change in 10 or 20 years is countin' chickens before they are hatched.
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Old 03-25-2015, 09:46 PM   #22
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Originally Posted by meierlde View Post
NOte the following quote from the PBGC web site:
"Your maximum guaranteed amount is based, in part, on your age on the plan termination date (or the date the sponsor entered bankruptcy, if applicable) or, if you were not in pay status on that date, the date you begin receiving benefits from PBGC."
....
So whatever reduction you get due to starting early will not necessarily be reflected in what is guaranteed by the pbgc if a number of years elapse between when you start the pension and the time it goes belly up.
Correct!

Thanks for clarifying for everyone.

-gauss
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Old 03-26-2015, 08:05 AM   #23
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My pension plan definitely discourages ER. You get 100% of your pension benefit if you start receiving payments at 60. They're substantially reduced if you leave earlier than that. It's punitive, really.
Is it if you "leave earlier" or if you start receiving benefits earlier? Big difference.

For my plan, while I left a long time ago I could have started receiving benefits at age 55 but they increase the longer I wait because I would receive benefits for a shorter period of time. The last time I looked at it, the discount for starting between 55-60 was more severe than if you start between 60-65.
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Old 03-26-2015, 08:39 AM   #24
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why?

it's very possible his megacorp is committed to providing DB income
Yes anything is possible, but the trend has been decidedly otherwise, so "very" might be a stretch...'if you can't do a search yourself.'
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File Type: gif DB-DC%20Trends%202011%20Fig1.gif (48.6 KB, 15 views)
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Old 03-26-2015, 09:17 AM   #25
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^ seen the graph, know the stats


regardless, some companies remain committed to DB plans
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Old 03-26-2015, 09:47 AM   #26
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^ seen the graph, know the stats


regardless, some companies remain committed to DB plans
I searched, and the numbers are higher among the megacorps (Fortune 500), I guess the next Q is what % of the population works for MegaCorps (looks like you could work backwards from Midpack's graph)?

Nearly a quarter of Fortune 500 companies still offer pensions to new hires - The Washington Post

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Old 03-26-2015, 09:49 AM   #27
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correct, the decline is stabilizing
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Old 03-26-2015, 10:55 AM   #28
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^ seen the graph, know the stats


regardless, some companies remain committed to DB plans
About 7%, "very" didn't suggest you know the stats, for the benefit of the OP.
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Old 03-26-2015, 10:56 AM   #29
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^ good grief
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Old 03-26-2015, 10:57 AM   #30
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^ indeed
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Old 03-26-2015, 01:45 PM   #31
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I felt that I should never count on a pensions. After all, who says it is going to be around in 30 or 40 years.


Likewise, I didn't think that I would see a nickel out of social security. Just another one of those taxes.


Grew some brains and figured I should try put away some money in the 401k. Tough to do when paying bills and raising a family.


Fast Forward about 20-25 years-


Had an opportunity to start a second career path. Retired with decent pension, great social security earnings, medical plan in retirement.


I probably should have listened to all of those folks that said it was stupid to think that pension and health benefits would be there. Maybe I should have jumped ship to the hot new startup that had more cash but crappy benefits?


Oh well, here I sit with income sources that lock me into paying a lot of taxes for as many years as I am around. I guess we all have our own problems to deal with.


(As much as it grates upon folks here to pay taxes, I guess I don't see a lot of downside.)
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Old 03-26-2015, 01:50 PM   #32
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...(As much as it grates upon folks here to pay taxes, I guess I don't see a lot of downside.)
Having to pay taxes is a true double edged sword in that I feel blessed to be in the fortunate position where I have enough income to pay but then when I think about the clowns morons in DC and how my money is being spent it makes me quite mad.
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Old 03-26-2015, 02:10 PM   #33
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Looking at that chart I see that my Megacorp would still be considered to offer a "hybrid" pension even though they will freeze their DB pensions at the end of this calendar year - right when I intend to ER, what a coincidence. In any case, while I think while most employees here welcome the little defined contribution plan our overlords have offered as some small compensation for the loss of our pensions, few would consider this plan a "pension" - hybrid or otherwise. It's just a little additional 401-K like vehicle offered to keep us from bolting en masse.

Early polling of my coworkers suggests this desired effect might not be realized...

On a different point I have an issue similar to the initial one raised by the OP: when to start taking the pension. While contributions to the plan do freeze at the end of this year payouts grow about 5.5% per year each year I defer for the first few years. Looking at SPIA calculators the equivalent value of the pension doesn't increase, but there are some tax benefits to deferral. It largely comes down to how I'd like to have my assets divided among taxable/401K/Roth/Pension. Still mulling my options here.
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Old 03-26-2015, 02:16 PM   #34
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...when I think about the clowns in DC and how my money is being spent it makes me quite mad.
That's insulting to clowns...
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Old 03-26-2015, 03:06 PM   #35
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That I can live with, but clowns are too nice to be picked on.
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Old 03-26-2015, 03:21 PM   #36
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More and more there is a movement to cash balance pensions, over final average salary pensions, partly because few folks make whole careers at one company. (for whatever reason). In addition the final average formula tends to make finacial planning for the company harder.
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Old 03-26-2015, 04:41 PM   #37
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I have to agree with what appears to be the majority opinion here, most companies are abandoning DB plans. My last employer (4 or so years ago), which is a $60 billion+ privately held Megacorp, started the abandoning process in about 2002 or so, and as I understand it now has completely dropped it. I know few people now that work for companies (outside of guvment) that have DB pensions. Unfortunately, just seems to be dying thing of yesterday.

I tell my 23 and 25 YO DD's that they need to be sure to fend for themselves, the companies won't do it.
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