How does this work?

[pb4uski]

I just read a news report the Andrew McCabe was fired tonight.... two days short of his 50th birthday and that the firing may impact his pension. The article also states that he served the FBI for over two decades.

His dismissal, just days before he was set to retire, puts his full pension and benefits package in jeopardy and is an inglorious end to career of almost 22 years with the bureau.

I don't particularly care about the politics at all but wonder how 2 days could make huge difference in his pension?

The private-sector pensions that I'm familiar with have cliff vesting after 5 years and while some DB plans have benefit formulas that are backloaded.... I don't think that a couple days less of service would make much of a difference.

How can this be? Or is it just he won't qualify to receive early benefits and will need to wait to receive deferred benefits? (and reporters are too stupid to know the difference).

https://www.npr.org/2018/03/16/5716...-fbi-deputy-director-just-short-of-retirement

 

[Jerry1]

I have been trying not to listen to the news, but my guess is that his pension is dependent on leaving the positon (his job, the government) in good standing. Plus, a few days ago, I heard he would lose "some" of his pension/benefits. Maybe some are tied to performance and others are guaranteed/vested as you are thinking.

 

[easysurfer]

When I was working, megacorp changed their pension rules to favor younger workers. I would have had full retirement benefits under the old rules like retire health benefits, but instead did not qualify, unless I worked til I was 50, which I chose not to.

In the situation you mentioned, I don't think the reason was to save $ for the government, but for other reasons. But that's just my opinion. In my case, sticking it to the older workers that qualified under the older pension formula, I'm sure helped megacorp's bottom line.

 

[Debinnov a]

When I was working, megacorp changed their pension rules to favor younger workers. I would have had full retirement benefits under the old rules like retire health benefits, but instead did not qualify, unless I worked til I was 50, which I chose not to.

In the situation you mentioned, I don't think the reason was to save $ for the government, but for other reasons. But that's just my opinion. In my case, sticking it to the older workers that qualified under the older pension formula, I'm sure helped megacorp's bottom line.

I heard a report that said it had to do with him being terminated before his 50th birthday on Sunday. Is it possible he had to reach that age and still be employed to get the pension?

 

[Alan]

Please keep responses focused on the mechanics of pension reduction or loss, when fired from a job, and please steer clear of the reasons why he was fired.

 

[soupcxan]

I listen to NPR but they rarely get economic/finance reporting correct. NPR reporters don't understand NPV.


This article has more detail about exactly what he could lose because of the firing, but admits it's complicated and not exactly certain:


https://www.cnn.com/2018/03/16/politics/andrew-mccabe-pension-if-fired/index.html

 

[Which Roger]

At my MegaCorp, there was no pension if you left before age 50.

 

[badatmath]

My employer will not allow you to get reitree health if you leave on the "wrong" day.

 

[Gumby]

In my w*rk, there are certain key dates that are "cliffs" for benefits. Thus, for example, you must complete 5 years' service to get even a tiny, delayed pension at 65, and you must complete 10 years' service to get retiree health care. There is also a discount applied for retiring before the normal retirement age, but it is a graduated reduction, not a cliff. (That one will apply to me)

 

[Lsbcal]

Please keep responses focused on the mechanics of pension reduction or loss, when fired from a job, and please steer clear of the reasons why he was fired.

Dang, just when I was getting ready to air my 2 cents.

 

[stepford]

From my quick scan it appeared that being fired wouldn't cause him to lose his pension outright, but lose access to a special law enforcement ER pension beginning at age 50. Instead he would still receive his "normal" pension at age 57 or 62 (there was some ambiguity about the exact age at which he could begin). Still a loss of hundreds of $K, but not quite the financial disaster that an outright pension revocation would be.

 

[Alan]

The rules at my Megacorp were based on the “80” point rule. You had to be at least 55 years old and if age + years of service was => 80 you started your pension immediately plus you got retiree health insurance. Otherwise no HI and the pension was deferred until normal retirement age of 62. The value of the actual pension was calculated only on years service regardless on if you had made 80 points. Getting those 80 points meant you could start receiving your pension before age 62 and have HI.

 

[wdberry62]

This article sheds a little more light on it. Appears as if he was entitled to some type of enhanced early retirement benefits on his 50th birthday (Sunday), but if fired prior to that date he would not receive those benefits. He'd have to wait until a later age milestone.

https://www.cnn.com/2018/03/16/politics/andrew-mccabe-pension-if-fired/index.html

 

[ExFlyBoy5]

This article sheds a little more light on it. Appears as if he was entitled to some type of enhanced early retirement benefits on his 50th birthday (Sunday), but if fired prior to that date he would not receive those benefits. He'd have to wait until a later age milestone.

https://www.cnn.com/2018/03/16/politics/andrew-mccabe-pension-if-fired/index.html

I didn't read the article, but you are on the right track. It's part of the federal LEO retirement system. Here is a breakdown for those that are curious (that isn't from a "news" source):

https://fas.org/sgp/crs/misc/R42631.pdf

In general, law enforcement personnel are subject to mandatory retirement at age 57, or as soon
as 20 years of service have been completed after age 57. The maximum age of entry, which is
intended to ensure full retirement benefits upon reaching mandatory retirement age, is typically
age 37. Under both CSRS and FERS, law enforcement personnel are eligible for their enhanced
benefits at the age of 50 provided they have completed the minimum requirement of 20 years of
service. Under FERS, law enforcement personnel with 25 years of service are eligible for
retirement regardless of age

 

[pb4uski]

At my MegaCorp, there was no pension if you left before age 50.

That can't be right...

In a defined benefit plan, an employer can require that employees have 5 years of service in order to become 100 percent vested in the employer funded benefits (called cliff vesting). Employers also can choose a graduated vesting schedule, which requires an employee to work 7 years in order to be 100 percent vested, but provides at least 20 percent vesting after 3 years, 40 percent after 4 years, 60 percent after 5 years, and 80 percent after 6 years of service. Plans may provide a different schedule as long as it is more generous than these vesting schedules. (Unlike most defined benefit plans, in a cash balance plan, employees vest in employer contributions after 3 years.)

 

[H2ODude]

At the risk of poking Porky I wouldn't be surprised if somebody out there started a "Go Fund Me" account for him that made up the difference!

 

[pb4uski]

It looks like he'll be able to take a congressional staff job for a pay period and qualify per a recent Washington Post article.

 

[Bamaman]

Many companies with Cadillac benefits like United Parcel Service and Ford Motor Company require you be 55 years of age to retire. There are governmental regulations setting terms of retirement.

My Megacorp waited until 30 years employed and 55 years old--and sent every employee packing with ability to buy cheap healthcare, big severance pay and unemployment.

 

[USA]

Retiring from federal service in a position with law enforcement coverage requires a minimum of 20 years AND age 50. Since he was SES, he also looses out on a paid relocation upon retirement. Time will tell how it shakes out.

 

[easysurfer]

The megacorp I was in, I think the rule of 75 for years of service + age. Til they changed the age to 50 no matter what. Thus folks who started at megacorp early got jobbed out of qualifying for full benefits before 50.

But I still say leaving earlier, when I did was one of the best decisions for myself in life.