My employer (Boeing) froze my pension plan today...

[supernova72]

Takes effect in 2016. We knew this was coming but still a huge change. The salaried non-represented folks at Boeing were the next step after the machinists union voted to end theirs. Will need to evaluate if this effects my retirement date (I'm 53 and can retire early at 55).

Boeing to end pension plans for nonunion employees | Reuters

 

[youbet]

It's interesting that the media calls the action "ending" the pension plan when, in fact, Boeing "froze" the pension plan. Already earned benefits are still intact. DCP plan is in place.

My ex-MegaCorp did the same. It seems to be working out OK. Hopefully since this doesn't take place until 2016 and you're retiring in two years, this will have a zero or very, very small impact on your personal situation.

 

[Midpack]

Sorry to hear that, but it could be worse. My former Megacorp froze our pensions and killed retiree health care in 1994. I'd be surprised if the trend doesn't continue in the private sector, and even the public sector eventually, but we'll see.

 

[ERD50]

I'm curious why you call this a 'huge change'?

If you were looking to retire in two years, how much affect could moving from a DB to a DC plan for two years make to you? How different are the plans? Are there certain 'gates' that you no longer hit?

-ERD50

 

[Chuckanut]

How does the 'new' retirement system compare to the executive retirement system?

 

[Running_Man]

You need to find out, since I know that Boeing has a rule in their pension plan far additional reductions of pension when taken under age 62 if you terminated before claiming the pension, if the plan termination will pay you less if you do not claim before the plan stops accruing benefits. In other words if you turn 55 in December 2015 and were to retire your pension might be $2,000 per month but if you turn 55 in February and retire then perhaps the pension might only be $1,500 per month for the same data. At age 62 both might be $3,500 per month but taken early might be different.

This occured in my company and anyone retiring after the pension was eliminated and not yet 55 got a 50%of the pension if claiming at age 55 versus the 70% if you claimed as an active employee prior to the plan being terminated.

 

[scrabbler1]

Sorry to hear that, but it could be worse. My former Megacorp froze our pensions and killed retiree health care in 1994. I'd be surprised if the trend doesn't continue in the private sector, and even the public sector eventually, but we'll see.

My former company did that back in late 2001. It did grandfather employees who met certain age/service conditions (to continue gathering pension credits in the old pension system) but I was not among them. So mine was frozen. Retiree health benefits were eliminated for new retirees starting in 2002, so there was a rush of people to retire on or before 12/31/2001. They put in a cash-balance system for the frozen pension folks and new hires which hardly offsets the loss of additional pension credits.

 

[Cat-tirement]

My non-COLA pension was frozen four years ago, which provides some additional incentive to ER. I can take it unreduced at age 62. If I start at 60 it's reduced by less than 2%, but I get a supplemental payment of about 20% until age 62. (The theory was to provide a partial bridge from 60 to early SS age.) My calculations seem to show that 60 is the optimum time to start, though I plan to actually retire before then.

 

[Texas Proud]

You need to find out, since I know that Boeing has a rule in their pension plan far additional reductions of pension when taken under age 62 if you terminated before claiming the pension, if the plan termination will pay you less if you do not claim before the plan stops accruing benefits. In other words if you turn 55 in December 2015 and were to retire your pension might be $2,000 per month but if you turn 55 in February and retire then perhaps the pension might only be $1,500 per month for the same data. At age 62 both might be $3,500 per month but taken early might be different.

This occured in my company and anyone retiring after the pension was eliminated and not yet 55 got a 50%of the pension if claiming at age 55 versus the 70% if you claimed as an active employee prior to the plan being terminated.

Are you sure that is correct From what I have learned over the years they cannot change a plan where you would get less than you have already earned... IOW, if you were due $2K per month before the change, you get $2K per month even if the new calculation says you only get $1,500....


Maybe the law only protects the amount at 62 as you indicated.... I do not know....

 

[Derslickmeister]

Pension plan? What's a pension plan?

 

[Running_Man]

Are you sure that is correct From what I have learned over the years they cannot change a plan where you would get less than you have already earned... IOW, if you were due $2K per month before the change, you get $2K per month even if the new calculation says you only get $1,500....


Maybe the law only protects the amount at 62 as you indicated.... I do not know....

Yes I am sure that this exists and is done, the reason it is acceptable is that at full retirement age the amounts are the same. Only by taking an early option are the amounts changed. What I am not sure of is what category Boeing is going to put it's early retirement pensioners in once it freezes the plan.

 

[growing_older]

Are you sure that is correct From what I have learned over the years they cannot change a plan where you would get less than you have already earned... IOW, if you were due $2K per month before the change, you get $2K per month even if the new calculation says you only get $1,500.

I would be interested to know what calculation they use to freeze the pension. In the pensions I was associated with, the formula for determining defined benefit amounts was heavily weighted to salary in the last few years. Usually calculated by a percentage multiplied by number of years of service multiplied by average of final n years salary. This is the formula that can lead to spiking. It also meant that by "freezing" the plan no more years of service could be accumulated and also the "final n years salary" was unknown. So they did an estimation, then discounted for years until you would be able to collect that, and came up with a number that seemed very small compared to what the value of the pension would have been if it was still in place. Actuarially and computationally, they had a paper trail to back up their decisions, but being on the receiving end of the deal it never seemed even remotely fair. They seem to have been allowed a lot of leeway in devising a calculation that would cost them the least.

 

[GravitySucks]

My company froze my pension too. It was one of the he reasons I left at 54. Better pensions and retirement health care were the reason most of us took the jump to management. Also a reason they have to hire college kids for management, no one takes the leap out of the union ranks anymore.

Sent from my Nexus 7 using Early Retirement Forum mobile app

 

[Turboslacker]

I'm still at Boeing too. We expected the pension change was coming soon due to the recent contract with IAM union with a similar shift. Overall not a killer but definitely a reduction in total compensation. They are providing an additional 401k contribution which is nice, but according to my calculations much less personally. I have numbers but it wouldn't be prudent to share in public domain.

It is enough less that Boeing employees will have to adjust either working longer or saving more or live on less in retirement than they had been expecting. Not insurmountable situation, yet impactful nonetheless.

The Company will definitely save Billions as future liability. Good news is that this will help cash flow and earnings. I hope for a nice pop in BA stock. I'm hoping owning BA stock will outperform my loss in pension.

 

[Turboslacker]

Takes effect in 2016. We knew this was coming but still a huge change. The salaried non-represented folks at Boeing were the next step after the machinists union voted to end theirs. Will need to evaluate if this effects my retirement date (I'm 53 and can retire early at 55).

Boeing to end pension plans for nonunion employees | Reuters

Bummer Boeing didn't offer an early retirement incentive. I was scouring the Boeing provided material for this but no luck this time.

 

[Turboslacker]

Sorry to hear that, but it could be worse. My former Megacorp froze our pensions and killed retiree health care in 1994. I'd be surprised if the trend doesn't continue in the private sector, and even the public sector eventually, but we'll see.

That's my next fear. So far retiree health care is incredibly generous with Boeing. Of course paying more out of pocket is likely coming but I hope not entire elimination. Well maybe ACA would work out.

 

[Turboslacker]

Yes I am sure that this exists and is done, the reason it is acceptable is that at full retirement age the amounts are the same. Only by taking an early option are the amounts changed. What I am not sure of is what category Boeing is going to put it's early retirement pensioners in once it freezes the plan.

I ran this on the company benson calculator and don't see a problem. Earliest age at BA for retirement benefits is 55 and the pension payment is in line with what was previously offered assuming accrual stops end of 2015 and retirement starts age 55. BA is being fair on this point.

It is public info now that BA will add 9% of salary to 401k in 2016, 8% 2017, 7% 2018, then between 3-5% remaking years depending on age. Better than a kick in the pants for sure.

 

[ziggy29]

Boeing to end pension plans for nonunion employees | Reuters

It is this sort of thing, IMO, that fuels the union versus anti-union divide. Then again, this works to the advantage of many highly unionized companies, as it makes more and more people resent the deal unions are getting and focus on taking them down rather than bringing themselves up. They'd love to not get their hands dirty while "ordinary people" support taking down the union.

This is a similar dynamic to the entire pension debate, IMO.

 

[ERD50]

It is this sort of thing, IMO, that fuels the union versus anti-union divide. Then again, this works to the advantage of many highly unionized companies, as it makes more and more people resent the deal unions are getting and focus on taking them down rather than bringing themselves up. They'd love to not get their hands dirty while "ordinary people" support taking down the union.

This is a similar dynamic to the entire pension debate, IMO.

I'm not following you. Did you see the OP, the Union already had voted to end their pension?

Or are you saying the way the headline is worded fuels fires? I can see that. On the radio today I heard them say they are 'ending' pensions, which I think people hear as having them pulled from them, rather than 'existing frozen in place', with a new system going forward (as mentioned by youbet in post #2).

-ERD50

 

[Andre1969]

I worked for McDonnell-Douglas, and then Boeing after they took us over, for 7 years. I wonder if that will do anything to my meager $349.21/mo, non-cola'ed pension that I can start receiving in 2035?

 

[utrecht]

Notice that Boeing gave employees a raise. That goes back to public employees arguments that employees with no pensions tend to make more money than people with pensions (public employees specifically).

 

[ziggy29]

Or are you saying the way the headline is worded fuels fires? I can see that. On the radio today I heard them say they are 'ending' pensions, which I think people hear as having them pulled from them, rather than 'existing frozen in place', with a new system going forward (as mentioned by youbet in post #2).

Yes, I'm talking about the headlines. They never seem to miss a chance to push "us versus them" division with every chance they get.

 

[stepford]

Notice that Boeing gave employees a raise. That goes back to public employees arguments that employees with no pensions tend to make more money than people with pensions (public employees specifically).

As one expecting to ER in the next year or two I've run many simulations with Boeing's pension calculator and compared the annual increase in pension with the value of an equivalent annuity. In short for retirement around age 55 the annual increment in the pension is worth about 20-25% of my base salary. So, while the 9% bump Boeing is giving employees in 2016 is indeed "better than a kick in the pants" as another poster put, it's still a heck of a lot worse than many of us had been getting.

FWIW this is little surprise to anyone at Boeing. We'd known this was in the wind for some time. The only real question was the exact date of the freeze. As it stands with Boeing removing a big incentive after January 1, 2016 I'll bet a whole lot of Boeing folks ER right around then. If one of their occasional "early exit" plans is offered around then (essentially a voluntary layoff with severance) then I just about guarantee it.

 

[alaska55]

includes CEO

I just saw a article on cnbc.com it even includes the CEO. I missed the N above!

 

[Dcharles]

Bummer. The " Cradle to Grave" programs offered by mega corps are all but gone now. If you have a pension, feel blessed as these things are out dated and too costly.