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Old 02-07-2012, 10:13 AM   #21
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Wording is important here. I don't understand how you could have 'lost half your pension' that you put in over 30 years (unless you were a high earner - max PBGC payout is $54,000 a year as of 2011). Perhaps they cut the formula for what you would earn going forward (which would not affect what was already earned)?

I'd sure like to know if my Corp pension is subject to being cut in half. Everything I read tells me that the PBGC would make me 100% whole regardless of company actions. -ERD50
I think what okapi meant is that the benefit formula was skewed to later, pre-retirement years and they curtailed the plan so okapi's benefits were frozen at the base of the slope so the pensions benefit was half of what it would have been if the plan were not curtailed.

This can also happen with conversions of defined benefit plans to cash balance plans as well. The young don't suffer because they don't have a lot of pension credit built up and they have time on their side, these just about to retire are usually grandfathered or are close to maxing out on pension credits, but those 10 years from retirement get stuck with the worst of both worlds.
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Old 02-07-2012, 11:14 AM   #22
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If you want to know the details of how, read the book. The companies learned how and did take money out of pensions through spin offs, mergers that allowed conversions of pension plans. I lost about 40% of my pension. I worked five years under a converted plan and earned no additional pension because the of the conversion method. These cases are still going thru the courts form 10+ years ago.

The 2006 Pension Protection Act corrected some of the stuff with conversions, but Congress would not address what happened prior saying that is up to the courts.

The PBGC does guarantee private pensions. The companies pay insurance for this and if the PBGC does not have enough money, yes the TAX payers kick in. But most earned pensions are larger than the PBGC guarantee so pensions are cut. This happened to the Airline employees and Steel workers at LTV / Republic Steel and others.

Today if you retire and can get a lump sum, it will be limited by the PBGC if the Plan is underfunded. So you will get a partial lump and a monthly benefit. Once the plan is properly funded you maybe able to get the remaining in a lump.

The executives used legal tricks to protect their executive plans, just like they dipped into pension plan funds for severance benefits and other non pension expenses.

Bottom line, pensions are a just promises that did not get kept always. The same is happening for the public plans.

Below is the maximum pension info from the PBGC.

PBGC Maximum Monthly Guarantees for 2012*
Age 2012 Straight-Life Annuity 2012 Joint and 50% Survivor Annuity**
65 $4,653.41 $4,188.07
64 $4,327.67 $3,894.90
63 $4,001.93 $3,601.74
62 $3,676.19 $3,308.57
61 $3,350.46 $3,015.41
60 $3,024.72 $2,722.25
59 $2,838.58 $2,554.72
58 $2,652.44 $2,387.20
57 $2,466.31 $2,219.68
56 $2,280.17 $2,052.15
55 $2,094.03 $1,884.63
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Old 02-07-2012, 11:26 AM   #23
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Originally Posted by cashbalancetrouble View Post
If you want to know the details of how, read the book. The companies learned how and did take money out of pensions through spin offs, mergers that allowed conversions of pension plans. I lost about 40% of my pension. I worked five years under a converted plan and earned no additional pension because the of the conversion method. These cases are still going thru the courts form 10+ years ago.

The 2006 Pension Protection Act corrected some of the stuff with conversions, but Congress would not address what happened prior saying that is up to the courts.

The PBGC does guarantee private pensions. The companies pay insurance for this and if the PBGC does not have enough money, yes the TAX payers kick in. But most earned pensions are larger than the PBGC guarantee so pensions are cut. This happened to the Airline employees and Steel workers at LTV / Republic Steel and others.

Today if you retire and can get a lump sum, it will be limited by the PBGC if the Plan is underfunded. So you will get a partial lump and a monthly benefit. Once the plan is properly funded you maybe able to get the remaining in a lump.

The executives used legal tricks to protect their executive plans, just like they dipped into pension plan funds for severance benefits and other non pension expenses.

Bottom line, pensions are a just promises that did not get kept always. The same is happening for the public plans.

Below is the maximum pension info from the PBGC.

PBGC Maximum Monthly Guarantees for 2012*
Age 2012 Straight-Life Annuity 2012 Joint and 50% Survivor Annuity**
65 $4,653.41 $4,188.07
64 $4,327.67 $3,894.90
63 $4,001.93 $3,601.74
62 $3,676.19 $3,308.57
61 $3,350.46 $3,015.41
60 $3,024.72 $2,722.25
59 $2,838.58 $2,554.72
58 $2,652.44 $2,387.20
57 $2,466.31 $2,219.68
56 $2,280.17 $2,052.15
55 $2,094.03 $1,884.63
Thanks. Is the age the age at the time pension payments commenced (were first collected)?
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Old 02-07-2012, 12:21 PM   #24
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If you want to know the details of how, read the book.
Facts are better than nuanced 'details'. And that's a fact


Quote:
Originally Posted by cashbalancetrouble View Post
The PBGC does guarantee private pensions. The companies pay insurance for this and if the PBGC does not have enough money, yes the TAX payers kick in.
FACT: The tax payers have never 'kicked in'. Yes, this might happen in the future, but that is speculation, and there isn't really any reason to think they would need to. Private pensions are becoming a thing of the past, the liability must be dropping, and they could raise the premiums if needed.

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Originally Posted by from wiki
The PBGC is not funded by general tax revenues. Its funds come from four sources:

Insurance premiums paid by sponsors of defined benefit pension plans;
Assets held by the pension plans it takes over;
Recoveries of unfunded pension liabilities from plan sponsors' bankruptcy estates;[4] and
Investment income.


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But most earned pensions are larger than the PBGC guarantee so pensions are cut. This happened to the Airline employees and Steel workers at LTV / Republic Steel and others.
I don't believe that your statement "most earned pensions are larger than the PBGC guarantee" is true. Only 'high earners' get cut. I'm guessing my Mega-Corp pension was pretty typical for someone starting in 1975 and working 28 years, my AFE was a bit above $100,000, and my pension at 65 YO will ~ $3,333/month (no inflation adjustment between now and then). I'd need a pension ~ 40% higher to even begin to be capped. While $100,000 probably doesn't put me in the 1% group, I doubt that 'most' private pensioners are getting 40% more than me. Yes, some pilots (high earners) were cut.

If you can provide a reference for 'most were cut', I'd like to see it. Or is this the kind of 'detail' that the book gave you? Maybe I should be more worried about my future pension than I am?


Beyond that, I think you are confusing 'cuts to benefits already earned' and 'cuts to the rate at which future benefits are earned'. The latter does happen, and it happened to me. The company simply renegotiated the benefits I earned in the future. Just like I renegotiated my salary every year. We both could take it or leave it, the past was not altered.

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Old 02-07-2012, 01:59 PM   #25
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Yes pb4uski that is exactly what happened.You explained it much better than I could have.Thanks.
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Old 02-07-2012, 02:10 PM   #26
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I think what okapi meant is that the benefit formula was skewed to later, pre-retirement years and they curtailed the plan so okapi's benefits were frozen at the base of the slope so the pensions benefit was half of what it would have been if the plan were not curtailed.

This can also happen with conversions of defined benefit plans to cash balance plans as well. The young don't suffer because they don't have a lot of pension credit built up and they have time on their side, these just about to retire are usually grandfathered or are close to maxing out on pension credits, but those 10 years from retirement get stuck with the worst of both worlds.
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Yes pb4uski that is exactly what happened.You explained it much better than I could have.Thanks.

Then you pension was not cut in half. What you had earned is what you got... what you were HOPING to earn was cut...


But, this does not make sense either... you said you had worked 30 years... how much can be cut after that amount of time.. I would be interested to see what you were told your benefits would be if you kept working to 65 prior to the change and after the change... and what you would get if you retired 'now' prior to the change and after the change... (I know the answer to the second question... there is no change... it is against the law to cut already earned benefits, unless you go through BK)..
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Old 02-07-2012, 02:18 PM   #27
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If you want to know the details of how, read the book. The companies learned how and did take money out of pensions through spin offs, mergers that allowed conversions of pension plans. I lost about 40% of my pension. I worked five years under a converted plan and earned no additional pension because the of the conversion method. These cases are still going thru the courts form 10+ years ago. //snip

And this is where the semantics come into play... you say you lost 40% of your pension... but I would say you lost the potential growth of your pension if it had not been changed... IOW, if you left the company the day they made that change, by law you would get the higher of your old pension or your cash value. Sure enough, a lot of companies did not calculate the cash value at the benefit of the employee.... you did not have to stay with the company if you did not want to. But you did... and your pension will not reflect the extra time... I just disagree that you lost 40% of your pension under this example... you just did not earn any more pension benefits for those years...


To me, this is also the problem with gvmt spending.... if you pass a bill that says we will spend $1 billion even though you know it will not be spent... and then turn around and pass another bill to cut that $1 billion, you can claim to have cut $1 billion from spending... it was never going to be spent, so I disagree that spending was cut by $1 billion... same for your pension...
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Old 02-07-2012, 02:43 PM   #28
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JUST PLAINBILL, Yes, the year you retire.

ERD50 Technically the taxpayers may not have done a bailout like the others so far, but this excerpt from last year may shed light. The PBGC is a federal entity.

The Pension Benefit Guaranty Corp., which covers retiree benefits when companies go bankrupt and their pensions fail, says its deficit for fiscal 2011 was the largest in its 37-year history.
The deficit increased to $26 billion in fiscal 2011 which ended September 30. The PBGC has posted losses in 30 out of the 37 years of its existence, according to its filings.
The PBGC says in a statement that its $26 billion shortfall is a $3 billion increase from the $23 billion reported last year. The PBGC says it has just $81 billion in assets to cover $107 billion in pension obligations.
The PBGC is a federal unit that backs the pension benefits of private pension plans covering an estimated 44 million of America’s workers and retirees in more than 27,000 private-sector pension plans. To get federal coverage, companies pay insurance premiums to the PBGC.
The economic downturn and corporate bankruptcies have helped create the record shortfall. Pension plans are also most widespread in the manufacturing sector which has been hit hard; notably hurting are the auto, airline and steel industries.


Read more: Record Deficit for the Pension Benefit Guaranty Corp. | Fox Business

As for my use of 'most', I probably misspoke out of disgust for the whole sore issue of pensions.

If you would read the book, you will see how the whole conspiracy took place to lie, cheat and 'I FEEL' steal from the promised benefit pool. At least go watch or listen to the author's interviews. Fortunately, a large percentage of companies were not like these crooks and hopefully you will be getting what you deserve.

In my case, the company promised over 45 employees their pensions would be equal after the conversions. This was simply not the case when you got into the fine print that they did not tell you about as required. A few companies have been caught at this but it takes along time for the courts.
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Old 02-08-2012, 08:40 AM   #29
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Need to peg best of possible options - Editorials - The News

I thought we had better protection regarding pension funds in Canada, but apparently it varies province to province. When I first took a job at MegaCorp the last thing I thought about was the pension plan as it seemed so far away.
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Old 02-08-2012, 09:12 AM   #30
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Pulp and patience | Inside the News: Nova Scotia | CBC Nova Scotia

more news about the pension
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Old 02-08-2012, 09:26 AM   #31
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The executives however still get bonuses NewPage Corp. trying to stop inquiry, calling its executives
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Old 02-08-2012, 01:43 PM   #32
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...
ERD50 Technically the taxpayers may not have done a bailout like the others so far, but this excerpt from last year may shed light. The PBGC is a federal entity.

The Pension Benefit Guaranty Corp., which covers retiree benefits when companies go bankrupt and their pensions fail, says its deficit for fiscal 2011 was the largest in its 37-year history.
The deficit increased to $26 billion in fiscal 2011 which ended September 30. The PBGC has posted losses in 30 out of the 37 years of its existence, according to its filings.
The PBGC says in a statement that its $26 billion shortfall is a $3 billion increase from the $23 billion reported last year. The PBGC says it has just $81 billion in assets to cover $107 billion in pension obligations.
The PBGC is a federal unit that backs the pension benefits of private pension plans covering an estimated 44 million of America’s workers and retirees in more than 27,000 private-sector pension plans. To get federal coverage, companies pay insurance premiums to the PBGC.
The economic downturn and corporate bankruptcies have helped create the record shortfall. Pension plans are also most widespread in the manufacturing sector which has been hit hard; notably hurting are the auto, airline and steel industries.
I'm curious what light you feel your excerpt sheds? Here is how I read it:

The PBGC says it has just $81 billion in assets to cover $107 billion in pension obligations.

Right, they are themselves 'under-funded' by whatever formula they use. But they still have $81B in assets. I read on their site (don't have the links handy) that they pay out ~ $5.5B annually, and take in $2.4B in premiums from companies. So in round numbers, and keeping things static for simplicity, it would take 81/(5.5-2.4) years for them to burn through their assets if they made zero return - calculator tells me that is .... over 26 years. While that isn't a good number for all sorts of reasons, it does give us some ballpark perspective.

Long before that happened, they could raise premiums. There are many options that could/should be taken before any 'bailout'. For me, the light is not shining in the direction of 'bailout' in any way.




Quote:
As for my use of 'most', I probably misspoke out of disgust for the whole sore issue of pensions.
Apparently you did, as what you said was not factual at all. As I said, I like facts

Perhaps you could tell us just what actual % of those people who received PBGC payouts took cuts from what they would have received? And what the average and median % cuts were? Someone who is 'only' receiving $4,653.41 instead of $4654.00 could be counted as someone who got their pension cut (Oh, the Humanity!), but in reality it wouldn't mean much. But depending how one might want to present the 'story', I could tell you how that statistic would be used (a 'nuanced detail' for sure). Now that would be a useful and interesting fact.


Quote:
If you would read the book, ...
But the recommendation comes from someone who admits to distorting the facts 'out of disgust for the whole sore issue of pensions.'. It is clear to me that the book is telling you what you want to hear. Does the book present the numbers as I outlined above? As I said before, I have the facts, I don't see that any good can come from distortions or nuanced 'details'. If you have some facts that tell a different story from what I feel I know, please share. As I said before, I am owed a private pension - if I should be more worried than I am, I would want to know.

FYI - I am disgusted with the pension system also. But IMO, pensions should not exist at all - they were a bad idea. A 'promise' is ripe with unintentional and intended failures to deliver. I would much prefer that I just get the money, and do with it as I see fit. A 'forced savings plan' would be needed as there are too many grasshoppers, but the money would have your name on it, no promises to rely on.

-ERD50
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Old 02-08-2012, 02:31 PM   #33
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Is Your Pension Guaranteed? What does the PBGC Guarantee?

It says here that the most PBGC can pay out is $54,000 per pension it takes over, so if your pension was higher than that, you will see a cut..........
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Old 02-08-2012, 02:43 PM   #34
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Yes. Wisconsin Retirement System is set up quite differently than most others. Those invested in the core funds will see -4 to -4.5% this yr while the variable fund investors will see -8%. We've been thru this for the last couple years so we just reduce our expenses and live with it. Technically it only affects Dh's pension since mine is set up differently.
And as I understand the Wis system, your DH's pension cannot be reduced below the original amount. That is, increases subsequent to retirement (based on investment gains in the fund) can be taken back due to investment losses, but the original value of the pension is protected.

I like the Wis system. Increases are based on fund investment performance instead of inflation based or fixed percentage increase amounts. And, importantly, past increases can be taken back during tough times to protect the integrity of the fund. There seems to be a logical recognition that payouts are related to investment performance ("the economy") but with a floor that guards a pension recipient from going below the original pension amount.
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Old 02-09-2012, 03:26 PM   #35
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ERD50

I did a little more research for you. You should look into the bailout of GM and how the bailout was used to prop up the MEP pension for the union workers at Delphi and the SEP pension was left to have 30 to 70% cuts. Looks like this would count as a taxpayer bailout of the MEP pension before it got to the PBGC.

If you take a look at the 2013, FEB 2 PBGC report to Congress, it strongly implies a direct taxpayer bailout may be needed rather than raise the premiums on those companies still having pension plans. Eventually all the remaining plans could not afford the insurance.

Also look at the PBGC annual reports to get a idea of the magnitude of the problem and the size of the staff. I never thought the were that big.

One interesting thing I found on the PBGC insurance guarantee is the difference of the MEP and SEP guarantee. The multiple employer plans are a lot lower. This would have been a big problem for the union employees in the auto industry with out the buyouts etc.

Also a look into the Supreme Court ruling in Amara vs Cigna. It highlights some of whats covered in the book.

Sorry for no links but they are a pain.
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Old 02-09-2012, 04:01 PM   #36
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ERD50

I did a little more research for you. You should look into the bailout of GM and how the bailout was used to prop up the MEP pension for the union workers at Delphi and the SEP pension was left to have 30 to 70% cuts. Looks like this would count as a taxpayer bailout of the MEP pension before it got to the PBGC. ...
I don't think we can use the GM situation as an indicator of anything. Normal rules were broken (ask the bondholders). If you dig deeper, I think you'll find that any pension cuts accepted were offset by other things. If they would have treated this as a normal BK, and let the PBGC do it's thing, there would have been a price to pay elsewhere. I don't think I could go further w/o raising political hackles.

As far as MEP being insured to lower levels, thanks for that info, I was not aware. However, it would seem that there is more to that - why is it lower? What is the big picture here? Maybe it's assumed that not all the multiple employers would go BK? I dunno, would need to research, and don't ave the time now. But common sense tells me there is more to the story.

Quote:
If you take a look at the 2013, FEB 2 PBGC report to Congress, it strongly implies a direct taxpayer bailout may be needed rather than raise the premiums on those companies still having pension plans. Eventually all the remaining plans could not afford the insurance.

Also look at the PBGC annual reports to get a idea of the magnitude of the problem and the size of the staff. I never thought the were that big.
I'll look when I have time, but my numbers were from their report - they have 81B on hand, ~ 25 years worth of payments above premiums. Speaking mainly off the top of my head - I think it would be best to raise premiums now. It would likely be a modest increase, and they should do it now before too many companies drop out altogether (if that is really a legitimate concern).


Quote:
Sorry for no links but they are a pain.
Yes, facts and references are a tad more work than just sayin' stuff (Just pulling your leg a bit, I know we don't always have time, but it does help to provide a link).

-ERD50
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Old 02-09-2012, 04:02 PM   #37
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Also CBT, this does not address the question of the people who claim they lost 40% or half their pension after working 30 or so years... no numbers were provided on how they came up with that haircut percent...

So far, I have not ever seen someone who actually lost earned pension payments that they have earned (not potential future benefits, but earned to the day the change was made)... yes, I have seen a few people who lost future benefits they were hoping to get, but not vested earned benefits... (of course, this statement does not include BK companies)...
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Old 02-09-2012, 06:31 PM   #38
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