My Megacorp is changing our retiree medical

[Telly]

When I went out the megacorp door in a big bang, I grumbled about how I missed any retiree medical $ at all by being over a year too young to qualify. But not to worry, shortly thereafter they powered down retiree medical, not by pulling the plug cleanly, but by diddling it in and out of the socket for awhile. The retirees who were using it, were SOL, including a few that had cancer. Welcome to the Machine.

 

[stepford]

As a soon-to-be-former employee of Supernova72's Megacorp I am just crossing my fingers, clicking my heels 3 times and hoping their generous retiree medical program lasts the next 10 years until I'm Medicare eligible. The Corp is about as Mega as it gets, so I think there's a pretty good chance, but as many of those above have pointed out, nothing's for sure these days.

 

[supernova72]

As a soon-to-be-former employee of Supernova72's Megacorp I am just crossing my fingers, clicking my heels 3 times and hoping their generous retiree medical program lasts the next 10 years until I'm Medicare eligible. The Corp is about as Mega as it gets, so I think there's a pretty good chance, but as many of those above have pointed out, nothing's for sure these days.

I'll keep my fingers crossed for you Stepford!

Yes, if size matters Megacorp wise, it should be around for awhile I would think. If I go 2016 or later I'm guessing it will go up a bit each yr but hey still a good thing.

 

[gerntz]

Our payments for employer retiree med bennies basically were identical to Medicare such that nothing really changed when we went on Medicare. Benefits were similar too. Net, great deal.

 

[supernova72]

Super,

I took the VLO package with your megacorp two years and never looked back. I wasn't eligible for the retirement medical.

Actually that's not true. About a year ago same said megacorp offered me a pension buyout option that would have been a sweet deal for me. I accepted the offer, then they later retracted it.

So is the retirement medical benefit guaranteed? Don't count on it.

Zedd. Sorry for the delay. I recall that Oct 2014 buyout offer as well to employees who "had worked at Mega and eligible for the pension" at some point. So it sounds like the lump buyout was pulled back then huh?

 

[Teacher Terry]

Ripper1 -that is one contest that I am happy to lose to you)

 

[zedd]

Zedd. Sorry for the delay. I recall that Oct 2014 buyout offer as well to employees who "had worked at Mega and eligible for the pension" at some point. So it sounds like the lump buyout was pulled back then huh?

It wasn't the lump sum offer that was retracted. Rather they offered then retracted an early pension commencement option. The offer as compared to the same early commencement date per TotalAccess, their online pension system, was a really attractive deal. I took their offer to imply that they really wanted me to accept that option.

Their explanation was, whoopsie we made a mistake. I was ready to sue their whoopsie off. Cooler heads convinced me that it wasn't worth the effort as it would have had to be heard in federal court.

 

[Terryjm51]

Pension frozen somewhat 2012. Still grows about 4% a year until 60
Can take lump sum or annuity
Can take insurance today at 53 around 500 a month for one at 60 about 150 a month. All stops at 65 Medicare will take over. I feel lucky today, it could be worse, brother is retired 61 and pays 1300 a month for insurance


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[supernova72]

It wasn't the lump sum offer that was retracted. Rather they offered then retracted an early pension commencement option. The offer as compared to the same early commencement date per TotalAccess, their online pension system, was a really attractive deal. I took their offer to imply that they really wanted me to accept that option.

Their explanation was, whoopsie we made a mistake. I was ready to sue their whoopsie off. Cooler heads convinced me that it wasn't worth the effort as it would have had to be heard in federal court.

____
Interesting on the mistake. There are now two incentives to retire before 2016 IMHO. But even if you go in 2016 and on they started a new 401K add on (VIP+) that will put an additional 9% into a separate 401K. 8% for 2017 ER so maybe the incentive is closer to one (retiree medical at $20 a month). Cheers.

 

[Exrook]

____
Interesting on the mistake. There are now two incentives to retire before 2016 IMHO. But even if you go in 2016 and on they started a new 401K add on (VIP+) that will put an additional 9% into a separate 401K. 8% for 2017 ER so maybe the incentive is closer to one (retiree medical at $20 a month). Cheers.

They just announced a lump sum plan for our Megacorp for those who retire after April 2016. No details until January, so may not be an option based on the December 2015 deadline for the health care decision.

 

[supernova72]

They just announced a lump sum plan for our Megacorp for those who retire after April 2016. No details until January, so may not be an option based on the December 2015 deadline for the health care decision.

Interesting indeed. I just heard that the IAM machinists who had worked at this Megacorp (but have not drawn yet) received letters on lump sum pension buyout. I think that deadline is either Oct 1st or Oct 31st.

 

[scrinch]

My megacorp retiree medical plan is more-or-less a gold plan, with a cost of about $2500/mo for 3 of us. The company subsidy will be about $900/mo, so my share will be $1600/mo. I'm pretty sure that ACA will be more attractive than this to me. I wonder if big companies will start to just contribute their share and let retirees use use exchange plans rather than company-administered plans? That is, if they don't eliminate retiree medical altogether.

 

[Greencheese]

My megacorp retiree medical plan is more-or-less a gold plan, with a cost of about $2500/mo for 3 of us. The company subsidy will be about $900/mo, so my share will be $1600/mo. I'm pretty sure that ACA will be more attractive than this to me. I wonder if big companies will start to just contribute their share and let retirees use use exchange plans rather than company-administered plans? That is, if they don't eliminate retiree medical altogether.

I've seen some companies already do that with current employees and I foresee that being the case for the retirees in the future as well. Same reason as pensions shifting to 401K contributions, keeps the costs fixed for the company.

 

[Exrook]

They just announced a lump sum plan for our Megacorp for those who retire after April 2016. No details until January, so may not be an option based on the December 2015 deadline for the health care decision.

Here is how they are explaining why they have decided to offer a lump sum option:

"This new payment option provides advantages to you and to Megacorp. Taking a lump sum gives you more direct control over when, how and where you invest your funds when you retire. You will be able to roll the lump sum into an individual retirement account (IRA) or other eligible retirement plan that accepts rollovers, including the Megacorp 401k, and manage the investment yourself. You will be able to include the lump sum in your estate planning and pass any remaining money to the heir(s) of your choice. Allowing you to take a lump-sum payment also will reduce Megacorp’s growing pension liabilities, making us more competitive in the long term."

While they are pitching it as a good deal for the employee, they are honest in why it is a good deal for Megacorp.

 

[supernova72]

They just announced a lump sum plan for our Megacorp for those who retire after April 2016. No details until January, so may not be an option based on the December 2015 deadline for the health care decision.

I did see the announcement later in the day yesterday so thanks for the heads up. I'm glad they are being upfront about on the "why" part which is understandable.

"Paying out the entire benefit in a lump sum to those who elect it will reduce Megacorps pension obligation, making the company more competitive in the long term"

They've been reporting financials GAAP, and non-GAAP for a few years now (including pension, excluding pension). Last I heard the pension obligation was $50B+.

Be interesting to see the discount factor used. The one last year for former employees was ~30%.

 

[stepford]

It'll have to be a pretty generous lump sum for me to bite. The majority of my assets are already in tax deferred accounts and I like the diversification of having an annuity component in my income stream - albeit a minor one as my pension from Megacorp is about 20% of my NW (if I use the value of an equivalent annuity from immediateannuities.com).

Now if, miraculously, Megacorp offers a buyout price that's significantly greater than the value I've calculated then I'd have to consider it, but I'm not holding my breath.

 

[zedd]

It'll have to be a pretty generous lump sum for me to bite. The majority of my assets are already in tax deferred accounts and I like the diversification of having an annuity component in my income stream - albeit a minor one as my pension from Megacorp is about 20% of my NW (if I use the value of an equivalent annuity from immediateannuities.com).

Now if, miraculously, Megacorp offers a buyout price that's significantly greater than the value I've calculated then I'd have to consider it, but I'm not holding my breath.

FWIW the lump sum offer from my former Megacorp (same employer as OP) was a 30% haircut over what a comparable immediate annuity would cost. Generous they were not

 

[supernova72]

It'll have to be a pretty generous lump sum for me to bite. The majority of my assets are already in tax deferred accounts and I like the diversification of having an annuity component in my income stream - albeit a minor one as my pension from Megacorp is about 20% of my NW (if I use the value of an equivalent annuity from immediateannuities.com).

Now if, miraculously, Megacorp offers a buyout price that's significantly greater than the value I've calculated then I'd have to consider it, but I'm not holding my breath.

My number is about 35% of NW but yea I've done the math too with immediate annuity methodology. Great way to look at it. "How much would I need to put into a lifetime annuity to get the same income stream as my pension will provide..."

There is a story in Money about Megacorps doing this and it said 58% typically take the lump sum. That surprised me it was that high.