Staying with the company for the possibility of a pension plan?

[Spanky]

Would you stay with a company when it might be acquired by another company that offers a defined pension (1.63% x number of years of service x average of 5 years of salary)? The number of years of service with the existing company will count toward the pension plan. The benefits are subject to an offset based on the Age 65 Primary Social Security Benefit (I am not sure what the offset might be).

[AltaRed]

Not without it being an attractive company for other reasons. Nowdays, defined benefit pensions are an endangered species and the likelihood of one lasting for the remaining years of your life is getting riskier all the time.

Note the steel, airline and auto industries. Would you have thought their financial capability would be in the trouble they are in today 25 years ago in 1980 or so?

[Spanky]

Quote:

Originally Posted by AltaRed Note the steel, airline and auto industries. Would you have thought their financial capability would be in the trouble they are in today 25 years ago in 1980 or so?

That's true. Defaulting pension plans appear to be a trend. The company doing the acquisition is JNJ, a large company. The liklihood of defaulting is small though not impossible.

[Brat]

I will throw another consideration... what if down the road your division is sold off?

Stick through the transition.* Typically the new company will want to eliminate functions performed elsewhere.* If you are laid off large firms often provine a nice severance package.

The world has changed, trust nothing that you cannot control!

[Spanky]

Brat,

It's entirely plausible that JNJ will sell its acquisition within a few years if the acquisition does not meet JNJ's needs (or expectations). It is hoped that the diversture will not have happened by retirement.

Spanky

[Nords]

Quote:

Originally Posted by Spanky It's entirely plausible that JNJ will sell its acquisition within a few years if the acquisition* does not meet JNJ's needs (or expectations).

One of the reasons my FIL took an ER lump sum was because CBS had been bought by Westinghouse, and there was significant paranoia concern that the CBS pension fund would be ripped off to fix the Westinghouse plan.

"We'll take care of you", "we won't let that happen", blah blah but in today's environment that seems like a very legitimate concern. It probably was then too!

[frayne]

Quote:

Originally Posted by Spanky That's true. Defaulting pension plans appear to be a trend. The company doing the acquisition is JNJ, a large company. The liklihood of defaulting is small though not impossible.

Probably what workers of Delta, Delphi, United, Steelworkers, etc., etc., etc., thought as well. Never count on promises made today being kept by others down the road. I believe US industry is going through a globalization process and the playing field is being leveled, unfortunately by US workers losing pensions, health care and other benefits. Hang on to what you have and don't count on promises down the road as you maybe sorely disappointed.

[renferme]

I retired 1.5 years ago; at the end of this year, my company is ending the pension.
Doesn't affect me, but both my son and my wife continue to work there.
Their pensions are vested but will not grow beyond the end of this year.
.
To replace the pension: the company will contribute up to 15% of salary into the 401k, depending on employee age and years of service. In the case of my wife, she'll get 10% and my son 7% added to their 401k each month.
.
A bit of ciphering on my part determined that they're getting screwed in the long run.

[Texas Proud]

Quote:

Originally Posted by Spanky Would you stay with a company when it might be acquired by another company that offers a defined pension (1.63% x number of years of service x average of 5 years of salary)? The number of years of service with the existing company will count toward the pension plan. The benefits are subject to an offset based on the Age 65 Primary Social Security Benefit (I am not sure what the offset might be).

It is according to how many years you are trying to protect.... If you have worked for only a few years then the money you have coming is small

But, if you have 20 years in the company then of course stay until you have the pension and then do whatever you want... find a new job, RE... whatever..

The offset is sometimes dollar for dollar... that means if you pension calculates to $30,000 then you will get $30,000 from the company and Social Security... the more SS pays the less the company pays.. the offset can be a lower percent than 100%... but when our company had a plan many moons ago it was 100% offset..

[SteveR]

I ER'd from my previous company within weeks of getting my ticket punched for ER eligibility. I took another job and am working without a defined benefit plan but my wife only has 2 years to go to get her ER with a small pension. We are just taking the free cash from the company match on our 401Ks and once she can retire we will have full medical in retirement. I think it is well worth the two more years to get that alone. The pension she will get will be less than 30% of her current pay but that will be enough for the house payment and some adult beverages each month.

Like the others have said, it all depends on what you get vs what you have to deal with in the meantime. I don't get anything from my current employer beyong the 401k match and they have no retirement plan for anything but since I am covered for medical and have a small non-COLA pension, it does not matter. I like the job and the area and that is all that matters right now. When it sucks too much, I will ER again or find another job for a while....it all depends on what I want to do.

[tryan]

The earlier you FIRE the less value a pension will have.

In my case it's ~$800/mo at 65 - or 1/2 that a 55. Not inflation adjusted ... so it probably won't pay the electric bill by the time I collect (20+ years from now).

Certainly not worth sticking around for.

[Spanky]

Quote:

Originally Posted by tryan The earlier you FIRE the less value a pension will have. In my case it's ~$800/mo at 65 - or 1/2 that a 55. Not inflation adjusted ... so it probably won't pay the electric bill by the time I collect (20+ years from now). Certainly not worth sticking around for.

You are right about that. Why stay for the amount especially the company default its pension payment all together.

It is amazing that while many pension fundinds are dwindling because of declining profits (or loss), executive compension continues to rise.

http://moneycentral.msn.com/content/P119362.asp