private pension promises

[MJ]

I though I would start a related thread.
I am scheduled to receive my non-cola pension in 8 years from my former employer which is privately held. The pension is a "defined benefit" plan and meets all ERISA requirements. Although I hope the company will survive, from year 8 to 25 when I could use the extra money, that is a long long period of time. I was wondering if there is a formula that can determine what % of the pension I could look forward to collecting if the company doesn't make it? Even 50%, would be nice pocket money to have.

I currently have my pension flag on my spreadsheet temporarily turned off so my monthly pension is not reflected in my future income. I do turn the flag on occasionally just to make me feel better.

 

[haha]

I was wondering if there is a formula that can determine what % of the pension I could look forward to collecting if the company doesn't make it? Even 50%, would be nice pocket money to have.

I can't really answer your question- but I believe that it is not a linear reduction. Way more gets shaved off the large pensions. In the airline bankruptcies, the pilots really get whacked, not the baggage handlers.

Which is as it should be, since few taxpayers funding this bailout will have anything like the wealth or pensions of a pilot.

You can probably go to Pension Benefit Guaranty and get a pretty fair idea of how you would come out.

H

 

[JR Andrews]

Really It Should be in the fine print on your pension enrollment forms or the updates I am sure they send you annually. A pension plan can not get approved without having something in the bylaws planning for an occasion where the company may default. Check out the discolsures and your questions should be answered.

 

[Mr._johngalt]

Really It Should be in the fine print on your pension enrollment forms or the updates I am sure they send you annually.  A pension plan can not get approved without having something in the bylaws planning for an occasion where the company may default.  Check out the discolsures and your questions should be answered.

I am sure this post is correct. Personally, I avoided the "fine print"
my whole life and never got into any trouble I couldn't work out of
due to this. Maybe I couldn't have been an attorney after all. I am surely combative enough, but,
I was a lousy student and parsing each phrase and term in a hundred page
document doesn't do it for me.

JG

 

[Michael]

Half is probably a reasonable ball park figure, but it could be more if your pension is very small, and doesn't include any extras.  Some people get 100% of their pension from the PBGC, and some lose 2/3 of it.  I know people who have received estimated payments from the PBGC for years because the formula they use to calculate payments is so complex.

There is no COLA on PBGC payments, so 8 years of 4% inflation will erode 1/4 of what ever remains of your pension, after the PBGC cuts it down to size.  It will get worse from there.

I attended a meeting after our place shut down.  An old man hobbled up to the microphone, and said that he was receiving $200/month pension.  Inflation had completely destroyed his pension.  If you live a long time, defined benefit pensions become useless.

 

[ats5g]

See the Frequently asked questions at the PBGC website.

#11 and on should be on point, especially the
Maximum Monthly Guarantee

- Alec

 

[MJ]

Thanks for the replies.

My pension is only $12k. I figure in 8 years it will be worth approx $8.5k in today's dollars and yes I know it's still downhill from there. But as I said, it's still would be decent pocket money for 10 to 15 years even if at 50% of that.

 

[Michael]

I would think there is a good chance you will get the whole thing, as long as there are no special payments for retiring early or such. You won't really know until the time comes, because their formulas are so complicated that it takes them years to figure out how much to give people after they take over a plan. They give estimated payments until they figure it out.