Vanguard drops medical benefits for retirees

[Go-NoGo]

Vanguard cancels Retiree medical benefits on current and retired employees:

Vanguard dropped a financial bombshell on current employees and retirees, saying Monday that the popular benefit it funded to pay for health-care premiums was canceled as of the same day.
..

A spokeswoman for Vanguard added this statement: “After a careful analysis of program limitations, utilization rates, and market trends, Vanguard made the decision to close out this program in favor of more effective opportunities to support crew, now and in the future. Vanguard is helping crew and retirees through this transition and will continue to offer competitive retirement and other benefits through existing programs.”

https://www.inquirer.com/business/v...l-account-benefits-employees-hr-20211005.html

If your FIRE plans depend on Megacorp medical benefits, be very aware that they can and will cancel if they want to.

Does anyone know how VG as a corporation is doing? I imagine not too well if they have to resort to this.

 

[skyking1]

ouch! no matter how they were doing this is going to put a hit on them again.

 

[CardsFan]

Read the update. They cancelled it yesterday and reinstated today. What a publicity nightmare, all of their own making.

 

[skyking1]

thanks

 

[Go-NoGo]

Read the update. They cancelled it yesterday and reinstated today. What a publicity nightmare, all of their own making.

First they cancelled benefits immediately as of Oct 4, 2021.
Then based on employee blowback they "recalibrated" to the end of 2022.
They "recalibrated" again and said original decision was reversed and was being reviewed.

Sad state of affairs at VG

 

[Bflotomny]

SCUM!

 

[MRG]

Vanguard cancels Retiree medical benefits on current and retired employees:







https://www.inquirer.com/business/v...l-account-benefits-employees-hr-20211005.html



If your FIRE plans depend on Megacorp medical benefits, be very aware that they can and will cancel if they want to.



Does anyone know how VG as a corporation is doing? I imagine not too well if they have to resort to this.

I'd encourage people to READ the article.

 

[Time2]

I would gladly increase my management fee 0.01% up to 0.05% for better service, and I think that I would get better service from happy employees.
I'll call and wait online to tell one of their agents.

 

[ivinsfan]

SCUM!

Well 8K in cash for a couple for each year working at Vanguard is a lot of money IMO.


It clearly says the program could be terminated at any time. So just because the employees think it's mean doesn't mean management is scum..


No matter what something will get changed but I agree a little more notice would have been nice ...


I notice no one mentioned the 40K per employees in the program would be paid before Jan 1.

 

[athena53]

It clearly says the program could be terminated at any time. So just because the employees think it's mean doesn't mean management is scum..

Investors want lower expense ratios. So they tried to cut expenses.

I agree it's a rude shock and I'm happy for the employees that they reinstated it, but yes, something similar happened to my brother after he retired. It was a Berkshire sub and they had previously paid 100% of retiree health insurance till age 65 and they just stopped. Three years later he and DSIL have reached Medicare age after paying through the nose for ACA coverage (no subsidies). It's a good reminder to people counting on this type of benefit that unless it's protected by an iron-clad contract such as a union agreement, it can be taken away.

A previous employer of mine (although I did not retire from there) just froze the retiree health insurance benefit at whatever level it was when they stopped paying retiree health insurance premiums a few years ago- similar to Vanguard's fixed benefit. That was a far kinder tactic. It cost them some but they eliminated the cost to them of future premium increases.

 

[CardsFan]

While I fundamentally agree with your post, see my comments below:

Well 8K in cash for a couple for each year working at Vanguard is a lot of money IMO.

Yep. It is, but the company proposed it.


It clearly says the program could be terminated at any time. So just because the employees think it's mean doesn't mean management is scum..

Correct. But when a company actually gives you an account, with a balance you can see every year, there is an expectation that if the program ends it means no more contributions to the plan. That is what has happened to most DB plans. They didn't take away what you had, they just did not add more.

No matter what something will get changed but I agree a little more notice would have been nice ...

Making something like this effective immediately is totally unnecessary. Somebody made a very bad decision (IMHO)

I notice no one mentioned the 40K per employees in the program would be paid before Jan 1.

Actually, to be paid in 2022, no later than the end of March. AND taxable. AND, if it actually would have been implemented, a new hire with less than one year would get the same amount as a 35 year retired employee. I suspect that is not the case, but that is what it says.

In the end, all companies need to track the bottom line, but this appears to be not very well thought out.

Appears the blowback changed their minds, for a while.

 

[Brat]

Ever wonder why employers are struggling to fill open positions?

It could be that insurance through the Affordable Care Act could be a better deal for employees.

 

[ivinsfan]

While I fundamentally agree with your post, see my comments below:




In the end, all companies need to track the bottom line, but this appears to be not very well thought out.

Appears the blowback changed their minds, for a while.

Your points are all valid but my devious mind say they will be back next year with something not quite as harsh and say look we listened to you and made changes........

 

[CardsFan]

Your points are all valid but my devious mind say they will be back next year with something not quite as harsh and say look we listened to you and made changes........

I [-]suspect[/-] am almost certain you are correct. They shot themselves in the foot in round one, but they will be back with an "enhanced" offering.

 

[Aerides]

Wow... I mean how many posts do we get here in the "can I retire" vein, where folks mention they are waiting for retiree healthcare to start. Imagine having that plan and retiring, and then it's yanked.. Or being close...or you stayed for those last extra years just for this benefit. And you know those costs were baked into their "total compensation" marketing for years and years...just disgusting.

It's one thing to change course for those employees under, say, 40, but for those already retired? nope, bad. Most smart companies grandfather this stuff, make the rules dependent on tenure and age rather than just slashing for everyone.

 

[ivinsfan]

I [-]suspect[/-] am almost certain you are correct. They shot themselves in the foot in round one, but they will be back with an "enhanced" offering.

And the enhanced offering will probably close to what they wanted in the first place. Probably figured they had to come in hot to actually get what they wanted in the end.



I wish I wasn't so cynical

 

[teetee]

Is it proper for me to generalize this and say if VG leadership treats their employees, especially the ones that stayed with them for a long time this way, I had better take my investment somewhere else?

 

[ivinsfan]

Wow... I mean how many posts do we get here in the "can I retire" vein, where folks mention they are waiting for retiree healthcare to start. Imagine having that plan and retiring, and then it's yanked.. Or being close...or you stayed for those last extra years just for this benefit. And you know those costs were baked into their "total compensation" marketing for years and years...just disgusting.

It's one thing to change course for those employees under, say, 40, but for those already retired? nope, bad. Most smart companies grandfather this stuff, make the rules dependent on tenure and age rather than just slashing for everyone.

Realistically the already retired folks had probably burned through a good bit of money already. It's the accumulating 50 somethings that had a pretty nice pot full to lose. Not saying this is right but it's the way of the world if I had a dollar for everytime posters here told someone don't retire until you have a Plan B in place for HC, I'd have a pretty nice pot full myself.


How many times have posters answered "Oh, that won't happen to me I work for X and their solid?

 

[CardsFan]

Is it proper for me to generalize this and say if VG leadership treats their employees, especially the ones that stayed with them for a long time this way, I had better take my investment somewhere else?

Food for thought (obviously management did not consider this an issue, until maybe they did).

 

[razztazz]

And the enhanced offering will probably close to what they wanted in the first place. Probably figured they had to come in hot to actually get what they wanted in the end.
I wish I wasn't so cynical

Yep. This is not an open & shut case of bad planning/shooting themselves in the foot. It Could very well have been a very well planned case of "Let's see what we can get away with." If it works? "We win", and it will be a "GO" signal to other companies for their own plans. If, as has happened, the people ain't buyin' it? Come back next year but keep pushing it. People will get used to the idea's inevitability and give up.

 

[CardsFan]

Yep. This is not an open & shut case of bad planning/shooting themselves in the foot. It Could very well have been a very well planned case of "Let's see what we can get away with." If it works? "We win", and it will be a "GO" signal to other companies for their own plans. If, as has happened, the people ain't buyin' it? Come back next year but keep pushing it. People will get used to the idea's inevitability and give up.

Re: the bold above. You may be right, but:

When I was working and things changed there was always talk of management planning "this" and then they will do "that".

My response was always something like: You give them too much credit for being that smart and thinking that far ahead. And usually I was right.

 

[razztazz]

Re: the bold above. You may be right, but:

When I was working and things changed there was always talk of management planning "this" and then they will do "that".

My response was always something like: You give them too much credit for being that smart and thinking that far ahead. And usually I was right.

Oh heck, I was in the military so I know that scenario. It's filed under "Don't attribute to malice something that can be easily explained as stupidity." This isn't "easily explained" as stupidity and could be malice (avarice or one of those virtues). That's why I said it's not an open and shut case. There's also the other proverb: I'd rather ask for forgiveness than ask for permission. If they had gone to the affected demographic first I don't think they'd have gotten the answer they wanted.

 

[CardsFan]

Oh heck, I was in the military so I know that scenario. It's filed under "Don't attribute to malice something that can be easily explained as stupidity." This isn't "easily explained" as stupidity and could be malice (avarice or one of those virtues). That's why I said it's not an open and shut case. There's also the other proverb: I'd rather ask for forgiveness than ask for permission. If they had gone to the affected demographic first I don't think they'd have gotten the answer they wanted.

Gotcha. Could be either.
Since I don't have a dog in the hunt, Ill just watch

 

[MRG]

Is it proper for me to generalize this and say if VG leadership treats their employees, especially the ones that stayed with them for a long time this way, I had better take my investment somewhere else?

Do what you want but of you don't think 99.99999% of organizations today would do something similar I'm going to be offering some ocean front property. It's in Kansas so it's centered for easy cheap transport.

I watched back offices march out thousands from technology advances, many long term employees. Megacorp picked up our 1% investment fees for 40 years until they stopped. While I was still working I suddenly wasn't eligible for stock options....... stuff changes

 

[friar1610]

I understand business decisions and bottom lines. But I have to admit that I think much less of Vanguard because they treated their “crew” like this. Even though they quickly rescinded their decision, the fact that they made it in the first place speaks volumes about the “new” Vanguard’s values. Good to know this as I make decisions about where to do business in the future.