Worried about termination prior to ER DB Pension

[fishvt]

Hzw-rui describes the situation well. If we leave prior to 55, even by a week, the early retirement provision would not be applicable.

We need to have 20 years of service instead of 30.


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[growing_older]

Thanks to everyone for the helpful comments. I will hold off on hitting the panic button for 4 months until my review. I was glad to hear someone say this is not unusual for people at this age.

Sorry to chime in late, but I would caution against being complacent and waiting for the next review. If you have had a bad review after a long history of good ones, a second bad review could be used as indicator that you should be terminated and start whatever easing out process they have, assuming it hasn't already started. Instead I would suggest taking the next four months to really shine at work. Come in early and leave late, often the only actual clue anyone uses if you are working hard or not. Check all your assumptions about how the pension actually works without consulting HR - who is often NOT your ally. Consult a lawyer briefly to understand your options.

In the bad old days, I know our employee software had reports to show which employees were close to meeting pension milestones, and they were sometimes used inappropriately. Do you know of other employees who were pushed out near pension qualifying dates? It's natural to be apprehensive near such a big cliff in qualifying for benefits you really really want, but just because it feels paranoid doesn't mean they aren't out to get you.

 

[mystang52]

Sorry to chime in late, but I would caution against being complacent and waiting for the next review. If you have had a bad review after a long history of good ones, a second bad review could be used as indicator that you should be terminated and start whatever easing out process they have, assuming it hasn't already started. Instead I would suggest taking the next four months to really shine at work. Come in early and leave late, often the only actual clue anyone uses if you are working hard or not.....

+1 Your most recent work efforts will often have a disproportionate effect on the review. Use that to your advantage and really put your best foot forward on the next few months.

 

[Texas Proud]

As you said, DB plans vary. It really all depends on the company/agency's plan documents.

For example, ours don't follow age+service. It's minimum 55 years of age and minimum 30 years of service to avoid penalty. 54+31=85 doesn't cut it. Neither will 57+28=85. The 30 years service is also a hard limit for early retirement for our plan. If I leave with just 29 years of service, I'd have to wait until I'm in my 60s before I can take pension. Heck, retiring at 54.75 means pension is just 64% instead of 70%. That's a 9% increase for just one measly quarter.

Again, please note, the 65% is if I delay claiming pension to 55 so that's without penalty (just 2 years less service). If I claim pension at 53, pension is 57%. For my specific DB plan, sure, it's just a 23% difference (70/57-1). However, I have seen plans with much steeper early retirement penalties (e.g. 1.0-1.5 multiplier before normal retirement age, 2.0-2.5 for normal) so I'm not really all that surprised with the OP's situation.

I have read your post and the post by the OP.... I would like to get this straight.... because this seems like it is against the laws that I know...


You are saying that if you are let go one day before reaching 55 years of age or one day before reaching 30 years of service (however they define these years), then you lose the ability for full retirement at 100% pension? And that your pension will be reduced to 65 to 70ish %?

I ask this because you say there are hard limits... so if it is hard then one day will screw you up.... I also ask because I know companies used to do this many years ago... my dad was laid off to try and prevent him from earning a pension back in the 60s... he needed a minimum of 10 years service to qualify.... they thought they had laid him off in time, but their records were wrong and he was just over 10 years... he sued and won his case....


Since this was common practice, laws were passed moving the time down in order to qualify for full pension... now it is a 5 year cliff or a percent per year that has to be 100% after 7 years.... I absolutely can be wrong since people are saying that I am, but I do not see how this can not be litigated just like back in the day....


One more question.... are these public plans (gvmt or teacher) If so, I have no idea what is and is not legal on these kinds of plans...

 

[hnzw_rui]

I have read your post and the post by the OP.... I would like to get this straight.... because this seems like it is against the laws that I know...

You are saying that if you are let go one day before reaching 55 years of age or one day before reaching 30 years of service (however they define these years), then you lose the ability for full retirement at 100% pension? And that your pension will be reduced to 65 to 70ish %?

I ask this because you say there are hard limits... so if it is hard then one day will screw you up.... I also ask because I know companies used to do this many years ago... my dad was laid off to try and prevent him from earning a pension back in the 60s... he needed a minimum of 10 years service to qualify.... they thought they had laid him off in time, but their records were wrong and he was just over 10 years... he sued and won his case....

Since this was common practice, laws were passed moving the time down in order to qualify for full pension... now it is a 5 year cliff or a percent per year that has to be 100% after 7 years.... I absolutely can be wrong since people are saying that I am, but I do not see how this can not be litigated just like back in the day....

You're talking about vesting rights. I believe that's what the law you're describing addresses.

The reduction penalty for early retirement is a different matter. If you work for 10 years, then you still get the full 10 years service credit even when you ER. It's just that you'll be subject to an early reduction factor or might have a lower benefit factor. Early retirees are expected to collect pension for a longer time compared to normal retirees thus, the pension system needs to offset all those extra years of pension with a reduction of benefits (similar to claiming SS at 62 instead of FRA).

Once you're vested, you're eligible for pension. They can't take that right away from you. How much of a pension you receive will depend on when you claim the pension. The numbers are probably going to be different if you claim at 45, 55 or 65 even if the years of service is the same.

Not really sure how exact our retirement system is in calculating age and service years. At the very least, I know there's granulation up to a quarter. Dunno how the system treats days and weeks. As for being let go before minimum age (say 53/30), I can still receive full pension. I'll just have to wait until I turn 55 to claim the pension in order to avoid the ER penalty. That means I'll be on my own for expenses for 2 years. Now if I were let go at 52/29, I'll have to wait until I'm 62 to claim full pension. I don't have the option to claim it any earlier than that so that's 10 years of living expenses I'll have to fund from investments or another job.

Quite likely, the OP can still receive full pension. Caveat with that is he's probably going to have to wait to claim the pension (deferred retirement) so that could mean 2-12 more years of having to live off investments alone.

Here's an example of one pension plan's rules:
https://www.opm.gov/retirement-services/fers-information/computation/

 

[fishvt]

My situation is not related to vesting. It is a special provision in our DB plan allowing for an enhanced payout at 55/20.

Thank you for all the advice re: plans for staying employed over the next 23 months. To clarify, I have not had any bad reviews up to this point in my 29 years, so I am not expecting one.
However, I am cautious and was looking for advice in the case that I was given a bad review.


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[ivinsfan]

Is it possible for you to transfer to a different area of the company where you don't feel over your head or uncomfortable? Give your statement, it seems a poor review might be possible.

 

[fishvt]

Yes, I am looking into that. Thanks


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[fishvt]

It's been 3 months since my last post and I now have a new manager. Things have stabilized. My annual review is coming up in a few weeks and I do not expect any problems.

I am now feeling pretty good about being able to stay employed for another 19 months. I am taking courses and taking extra initiative a work to show my worth. I really appreciate the suggestions from posters and did take them to heart.

I think it would make sense for me to wait until yearly bonuses are paid in March 2018( I qualify for ER in our pension plan in September 2017).

I was reading some posts about keeping to yourself about retirement plans. That makes a lot of sense. I expect my bonus would be much smaller if management knew my plans. It is a discretionary payout.




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[fishvt]

clarification

I have been speaking with our benefits area re: our pension plan options. I think I confused readers by saying that I would get greatly reduced benefits if termination prior to 55. The bottom line is that the benefits are simply delayed until my NRD.

Anyway, things are good at work now and I am very optimistic all will go well until I turn 55 in September.

DW is planning to work until 2020 so I need to find some p/t w*rk in the interim.

Off to go look at some winter rental places in Florida. It's freezing here in New England.

 

[travelover]

I have been speaking with our benefits area re: our pension plan options. I think I confused readers by saying that I would get greatly reduced benefits if termination prior to 55. The bottom line is that the benefits are simply delayed until my NRD.

Anyway, things are good at work now and I am very optimistic all will go well until I turn 55 in September.

DW is planning to work until 2020 so I need to find some p/t w*rk in the interim.

Off to go look at some winter rental places in Florida. It's freezing here in New England.

Good news. Thanks for the update.

 

[Pilot2013]

That's great news!

I had a situation from a company I worked for in the '90's that I thought was bad, but actually turned out ok... I had worked at the company which had a DC Pension (Defined Contribution). I left 2 months before my 10 year anniversary. I was fully vested, but the Pension is "locked" until I am 65, instead of 55 if I had worked there the last 2 months to my 10 year anniversary. The good news is it's been in varying interest eating instruments since then (set at the beginning of each plan year) and the average has been 5.21%. I just consider this value (currently $84k) as part of my AA in the total. will be a nice adder when I hit 65.

Sometimes things work out ok despite out concerns.

 

[Peter]

Thanks for following up, fishvt. So often, people disappear after their OP, even when others have spent time making observations and offering suggestions.

 

[fishvt]

Thanks for following up, fishvt. So often, people disappear after their OP, even when others have spent time making observations and offering suggestions.

As a follow up to this thread, I turned 55 today and can now retire at 52% of my current salary. Yahoooo. This provides me with many options. Now I just need to figure out what to do next.

 

[littleb]

Great news. Good luck in your retirement!!

 

[Bamaman]

I understand that it is the U.S. Government the requires big companies to allow long term employees to retire at age 55 before getting into their defined pensions. It is in the regulations.

Sure workers may be eligible for the full defined pension at age 55, however they are going to throw you into a Life Expectancy Table and starting the pension so early might reduce the pension 40% or maybe more. ER kicks you pretty hard in the pocketbook on defined pensions.

For many, defined pensions are not an issue with so many companies and even government entities switching to 401k type retirement programs.

 

[brett]

I would do four things.

Consult with a lawyer who specializes in this area. I did at one point in my career and it was money well spent. But I asked around in order to find the right counsel

Speak openly with your boss. Your situation may be different. I spent many years in management. I applaud people who speak up and are not afraid to ask for help. I view it as a strength not as a weakness. Just as I think about those who are not afraid to think out of the box or provide contrary views

Absolutely keep everything in writing. Get hard copies of all of your reviews, commendations, whatever. Keep a file at home with all of this and keep it up to date. Document meeting and if appropriate send out meeting summaries to those in attendance.

Get hold of your pension plan document. Not the summary but the document AND the amendments. Take your time, go through it (the legalese and pension speak can be challenging at first). Understand the provisions, conditions, payouts, etc. Understand your entitlements. When I retired my employer did not include management bonuses in my pensionable earnings for db purposes. We had been through several mergers but the DB plan was not changed. Reading through the document and amendments, plus writing to company counsel resulted in an increase of just under 35 percent to my pension payout. Don't rely on your company to tell you what you are entitled to. Work your own numbers and then compare.

 

[Blue Collar Guy]

As a follow up to this thread, I turned 55 today and can now retire at 52% of my current salary. Yahoooo. This provides me with many options. Now I just need to figure out what to do next.

Just saw this thread I read thru it, glad you made it.

 

[flintnational]

I was a manager for most of my 30+ year career. If someone felt that they were in over their head and came to ask for help, they got more than the benefit of the doubt from me and most often we were able to work out a solution (reassign responsibilities within the group to match skills better, provide mentoring, additional management support like weekly check-in discussions, etc.). If they tried to hide it and thus it became noticeable (missed deadlines, sloppy work, excuses, others complaining about it, etc.), it usually got ugly and those were the folks who ended up on "the list" when layoff times came around. Of course, YMMV depending on your manager and your corporate culture, but seriously consider talking with your boss. Best is if you have some ideas about how you could improve your performance. Good luck!

Good advice.

FN

 

[badatmath]

OLD Thread revived. OP has made it! Congrats OP

 

[bingybear]

I also agree that if you do get a bad review you should consult with an attorney.

I worked for companies that at times set targets for review results. If you worked in a group with 8 reports to the lowest level manager, 2 (25%) might have to get the lowest rating. If you worked in a strong group, these low performers could be some of the best people. I'm not sure what getting a lawyer does to help in these cases. They were good at documenting their reasons and their processes.

OP... Are you over your head due to not being familiar with the technology, too much work, or what? If a technology issue, is there a co-worker who would get you up to speed? I had many co-workers note that I should teach because I would discuss how to do things with any of them. Some people are just this way. Some corporate cultures are not supportive of this as they expect everyone to magically know every thing.

If you work in a good corporate culture, your manager may be able to help by adjusting assignment or training/mentoring to help you catch up on technology issues. At least look at the reasons given for the low rating and see if you can correct those.

I would work a few more hours a week is 40 is not enough to accomplish the task.

For reference, I'll get SS (hopefully), but no pension.

good luck.