Worried about termination prior to ER DB Pension

[fishvt]

I am looking for some advice re: my situation at work. I work for an old mid-sized insurance company . I have worked here for 29 years at various levels, but am currently work in IT.

I have always gotten very good yearly reviews but lately I feel I am in over my head and may get some bad reviews.

The issue is that our DB plan allows for a payout at 55 that would represent about 50% of salary. I have 23 months until I turn 55.

If I get let go prior to 55 I would only get 25% of my salary.

My question is, if I were to get fired would it make sense to contact legal counsel? I know my job is an "at will" job, but it would seem unfair to fire someone just prior to the major jump in retirement benefits.

Any thoughts or advice would be helpful. I struggle with this every day and it is really stressing me out. I know I am lucky to have a DB plan at all, but the thought of losing half of it, while so close, is distressing.

Thanks.

 

[Senator]

If I get let go prior to 55 I would only get 25% of my salary.

My question is, if I were to get fired would it make sense to contact legal counsel?

You may be able to avoid collecting benefits until age 55, or later, and still get a larger amount.

It never hurts to get legal advice. For ~$250 you will know if it is worthwhile pursuing more. Maybe it will help negotiate a package or ??.

Odds are, you will be there for a while. Paranoia about job security generally sets in that is seldom justified.

Worse case, get another job for a few years.

 

[pb4uski]

Welcome. Your best option is to step it up so you don't get fired. Alternatively, is it possible for your to downshift to another job in the company or to part-time for 23 months (or more if you wish)? In many companies, over 1,040 hours a year is treated as full-time for the purpose of the DB plan.

What would your payout at age 55 be if you left now and deferred drawing benefits to 55? or 60? or 65?

 

[athena53]

I'm probably the last person who should weigh in on dealing with corporate BS- I took a week to decide to throw in the towel when I was up to my hips in it last year. But hey, talk (and type) is cheap.


Is there any way you can mitigate the "over your head" part? More training, more people, a more realistic timeline? You may be better off being proactive and asking for more support.

 

[soupcxan]

You need to read your pension plan documents for the details of how this is handled. Terminating employment at 52 and starting to take your annuity at 52 are independent events. If you don't start the annuity at 52 you should be able to avoid the haircut on your payout.

However there may be other differences between a retiree and a terminee such as eligibility for health care.

 

[marko]

My question is, if I were to get fired would it make sense to contact legal counsel?

Thanks.

There seems to be all sorts of new laws that favor older workers getting fired/laid off just before pension time. Getting legal counsel is always a good idea. Find one that specializes in worker law.

There's also a difference between what the law says and what you can get: My BFF was fired two weeks after returning to work from a heart attack. He sued and received a nice settlement.

 

[poorcarver]

Years ago that was the oldest trick in the book, terminate a long term employee a year or so before pension eligibility. Not so easy now.

 

[MBAustin]

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!

 

[marko]

Years ago that was the oldest trick in the book, terminate a long term employee a year or so before pension eligibility. Not so easy now.

Not so easy now but not unheard of. Best case: makes a good argument in court.

After 27 years doing the same job, my SIL was suddenly getting bad reviews and was at risk of being terminated. Her company (large national grocery chain) made no attempts to disguise their plan to "deal with the benefits problem" (Obamacare) by getting rid of as many full timers as possible.

She threatened to call her lawyer...the next day it was as if a switch had been flipped. Like magic, everything went back to normal; as if nothing had happened; completely backed away.

 

[harley]

You might want to check with HR, too. I don't know how it is in your company, but in many Megacorps there were rules like if you were terminated (unless for cause) you were given a year on your age and years of service. That was to mitigate the possibility of a lawsuit for ageism. Unless you've been embezzling or downloading kiddie porn you should be able to play the "work to improve" game for a couple of years. It was really hard for the companies to fire employees, which is why so many of them use contractors these days. Again, not sure how it works where you are, but worth checking into.

 

[mystang52]

Obvious first step is do what you can to keep doing your job at least at the minimum "passing" requirements. Second is see what happens at your next review.
If your review is less than satisfactory, be certain to rebut each point of criticism. NEVER concede that a given criticism is valid. If a criticism is valid, and you have absolutely no rebuttal, just make no mention of it.

I wouldn't "fight" or talk tough, unless a bad review leads to a warning or outright threat to your employment. Then I would fight back. These strategies just might buy you the 2 years you need.

I also agree that if you do get a bad review you should consult with an attorney.
Everyone has different experiences, but I respectfully disagree with Harley. HR department is not there to protect employees, it is to protect the employer. If you are being targeted for termination, HR already knows and seeking them out will not help you (in my opinion).

 

[JoeWras]

I also agree that if you do get a bad review you should consult with an attorney.
Everyone has different experiences, but I respectfully disagree with Harley. HR department is not there to protect employees, it is to protect the employer. If you are being targeted for termination, HR already knows and seeking them out will not help you (in my opinion).

+1

 

[jim584672]

You need to find out your vested date. I started in 1986 and was vested 1991. Put in 28 years. I can take the pension from 55-65.

Your pension rights usually don't disappear, except for gross misconduct.

 

[akck]

In general, most companies follow a process for terminating employees. While the process usually is shorter for difficult employees, the normal process can take even a couple of years. Since you've not had any bad reviews, you should be in the latter group. The process starts with a bad review. Assuming you have annual reviews, you have a year to improve. Be aware that some companies may shorten the review cycle here, but most will informally track your progress. Once they start documenting your progress, you're on the track for termination and you should figure you have 6 months to improve. Hopefully this won't happen until your second bad review. In any case, they should create a plan for improvement and as long as you're showing progress, you should be safe untIl you're vested.


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[Big_Hitter]

The issue is that our DB plan allows for a payout at 55 that would represent about 50% of salary. I have 23 months until I turn 55.

If I get let go prior to 55 I would only get 25% of my salary.

is it that your early retirement benefit (55/10 or whatever) gives no reduction to the accrued benefit at 55 but if you terminate prior to age 55 you get a 50% haircut on the accrued benefit at 55?

 

[harley]

Everyone has different experiences, but I respectfully disagree with Harley. HR department is not there to protect employees, it is to protect the employer. If you are being targeted for termination, HR already knows and seeking them out will not help you (in my opinion).

Oh, if I implied that, I must have been drunk. I just meant check the rules as to whether they would automatically push you beyond the age limitations if you were terminated close to retirement age. I'm well aware HR exists to "serve and protect" the company, not the employee. But they can let you know what the rules are.

I didn't get the impression from the OP that he was being targeted for termination, just that he thought he might be getting bad reviews. Two different things, IMO. Personally I think anyone should be able to hang on for two years with a combination of extra effort and gaming the rules.

 

[braumeister]

Not so easy now but not unheard of. Best case: makes a good argument in court.

Certainly, and should be easy.
"OP has shown a printed copy of an email describing the changes in the job and asking for training. So why didn't you provide that training?"

 

[JoeWras]

Oh, if I implied that, I must have been drunk.

Harley, "What is Happening?"

 

[Texas Proud]

I just do not believe OP's stmt on what would happen to his pension...

There is no way I can see a 50% reduction in the value of a pension because someone worked 31 years instead of 29 years...


There is something else in this story that we just do not know....


It could be that there is an option to start pmts early and you get a big haircut, but not a 50% reduction for less than 2 years.... makes no sense...

 

[Big_Hitter]

I just do not believe OP's stmt on what would happen to his pension...

There is no way I can see a 50% reduction in the value of a pension because someone worked 31 years instead of 29 years...


There is something else in this story that we just do not know....


It could be that there is an option to start pmts early and you get a big haircut, but not a 50% reduction for less than 2 years.... makes no sense...

ERISA prohibits "backloading" benefit accruals but I'm not sure that applies to early retirement benefits - so if a participant terminates before early retirement eligibility (however that's defined in the plan document) they can take a huge haircut - however, I agree, this haircut seems a tad draconian

 

[hnzw_rui]

There is no way I can see a 50% reduction in the value of a pension because someone worked 31 years instead of 29 years...

There is something else in this story that we just do not know....

It could be that there is an option to start pmts early and you get a big haircut, but not a 50% reduction for less than 2 years.... makes no sense...

For some DB plans, 55/30 are magic numbers.

It's quite possible that normal retirement age is somewhere between 60-70 and anything before that is considered early retirement (thus subject to a reduction factor or has a much lower benefit factor). However, I think quite a number of DB plans make an exception for 55/30 so there's no early retirement penalty.

For example, I get 57% pension if I retire at 53/30. However, if I resign at 53 and wait to claim pension until I turn 55, I get 65%. If I do TMY and retire at 55/32, I get 70%

 

[Texas Proud]

For some DB plans, 55/30 are magic numbers.

It's quite possible that normal retirement age is somewhere between 60-70 and anything before that is considered early retirement (thus subject to a reduction factor or has a much lower benefit factor). However, I think quite a number of DB plans make an exception for 55/30 so there's no early retirement penalty.

For example, I get 57% pension if I retire at 53/30. However, if I resign at 53 and wait to claim pension until I turn 55, I get 65%. If I do TMY and retire at 55/32, I get 70%

I am not in a DB plan.... and I am sure there are many versions out there.... but from what I have read, the numbers are based on age+service... so a 53+30= 83, a 55+30=85 and 55+32= 87....

Spreading out a lump sum over 2 less years does make a difference... that is from 1 to 2.... Having the lump sum bigger also makes a difference... that is 2 to 3.... now, 70/65 is 1.17, or a 17% difference... remember that SS goes up by 8% a year if you wait, so that 17% difference is in the ball park..... the OP said his went from 50% to 25% or a 50% difference for 2 years....

I can see a 17% difference when you start two years earlier or have two more years of service... I just do not see a 50% difference...

 

[hnzw_rui]

I am not in a DB plan.... and I am sure there are many versions out there.... but from what I have read, the numbers are based on age+service... so a 53+30= 83, a 55+30=85 and 55+32= 87....

Spreading out a lump sum over 2 less years does make a difference... that is from 1 to 2.... Having the lump sum bigger also makes a difference... that is 2 to 3.... now, 70/65 is 1.17, or a 17% difference... remember that SS goes up by 8% a year if you wait, so that 17% difference is in the ball park..... the OP said his went from 50% to 25% or a 50% difference for 2 years....

I can see a 17% difference when you start two years earlier or have two more years of service... I just do not see a 50% difference...

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.

 

[fishvt]

is it that your early retirement benefit (55/10 or whatever) gives no reduction to the accrued benefit at 55 but if you terminate prior to age 55 you get a 50% haircut on the accrued benefit at 55?

Yes, it is how you are describing it, except it is a 55/20


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[fishvt]

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.

I really am lucky to even be having this as a stressor. Most people do not have these DB plans as a benefit.


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