Are you "lucky"if you have a secure retirement?

[dave1949]

The company I work for just announced that they are going to freeze the pensions for salary employees in 2017 or 18. I'm just a measly hourly employee and my pension is part of a union contract, I wonder what the big topic of discussion will be at the next contract negotiation?

Very common these days.

First move is to eliminate defined benefit pensions for new hires; then a few years later existing pensions are "froze." Usually this is accompanied by a boost in 401K matching amount, but it is small consolation.

That is exactly what the Honeywell division I worked for in 1990 did with their pension, first the new hires got matching contributions only, then freeze the rest a year or two later replaced by anemic matching. Meanwhile, that division was going down the drain, so I bailed for greener pastures with 12 years and a annuitized pension that I could draw from at age 55, or wait.

 

[Parkanzky]

Yes, the benefits are frozen. But make a guess at how long you will live, make a guess at what future interest rates will be, and see what the present value of those future payments would be. I suspect that the lump sum offered will be less; sometimes it is substantially less.

Bottom line: the deal would not be offered if the company thought it would cost them more.

I'd definitely plug this stuff into a couple online calculators before you make that determination. You may find that the lump sum can beat the fixed income from the pension with very reasonable investment returns. The other advantage is that when you're done with the proceeds from the lump-sum money, your heirs get the rest. The pension likely dies with you.

 

[riptides]

Bottom line: the deal would not be offered if the company thought it would cost them more.

Agree.

Yes, as I said, the soundness of the plan is a consideration.

The trust factor. LOL.

As for an annuity, keeping the pension is, in effect, an annuity- a "guaranteed" future stream of payments for life. If the pension plan appears sound I see no reason to trade one annuity for another, especially in today's low interest rate environment. Those who signed-up for insurance company annuities a decade or two ago are reaping the benefits of plans that never anticipated interest rates would go this low. The insurance companies will not make that mistake again.

Agree, but separation of the company from the pension/annuity "amount" is a variable to be considered, lest one end up under government control.

 

[riptides]

The pension likely dies with you.

Excellent point.

 

[dave1949]

The pension likely dies with you.

Or, at best with a surviving spouse's death. Some defined pension plans offered a surviving spouse for life benefit in exchange for a reduced benefit.

 

[ovrszd]

I scanned mosts posts.

I was a little put off when people kept telling me I was "lucky" to be retiring and having a pension. Luck had nothing to do with it. I worked hard at a job most people don't want to do and the pension at the end was what kept my nose to the grindstone. I also made reasonable decisions. I didn't buy cars above my means, I didn't jet all over the world on vacations I couldn't afford, and didn't spend every dime that came into my hands. Maybe it's fortunate I have simple requirements, but I was brought up by parents who were children of the depression.

So, No you're not lucky. You planned for your future and your retirement and now it's a reality. Luck is buying a lottery ticket and winning millions.

Not knowing your career, I can not speak directly to it. But,, aren't you lucky to be alive and healthy??

Luck ALWAYS has something to do with it, ALWAYS.

 

[JDgreen227]

The pension likely dies with you.

Or, at best with a surviving spouse's death. Some defined pension plans offered a surviving spouse for life benefit in exchange for a reduced benefit.

That was the deal my ex had with our former employer, she got about an 8% reduction in her monthly benefit and if I had survived her I would have gotten about 40% of her pension for my remaining lifetime, after taxes.

 

[ovrszd]

Prenups and marriage intrigue me. That 鍍rust thing, to me it comes down to reading people. And perhaps yourself. It is an interesting subject, and this may sound harsh, but what makes a marriage last? Is it perhaps that the relationship did not really get over some humps that were there in the beginning and were overlooked?

You see and hear people all the time getting married in what I consider very short times and of course in the very 澱est times when they meet the person.

I don稚 subscribe to that way of thinking. So, harsh as it sounds, what makes the 鍍rust between two people, that demands a prenup?

I'm with ya. I don't get it either. It is my belief that if I need a prenup, I'm marrying the wrong person.

 

[mikehaugen]

The company I work for just announced that they are going to freeze the pensions for salary employees in 2017 or 18. I'm just a measly hourly employee and my pension is part of a union contract, I wonder what the big topic of discussion will be at the next contract negotiation?

The issue will be what will they replace it with. If they give you a reasonable contribution to your retirement fund you will probably come out ahead in the long run, especially if you have a few years for it to accumulate.

Very common these days.

First move is to eliminate defined benefit pensions for new hires; then a few years later existing pensions are "froze." Usually this is accompanied by a boost in 401K matching amount, but it is small consolation.

As far as unions go, the big issue at the moment is the solvency of multi-employer plans:
Teamsters pension plan stuck in crisis | BenefitsPro

While having a pension at all is certainly a plus, one had better not plan on it being the cornerstone of one's retirement:
Bill McClellan: Pulling the rug from under retirees : News

I think maybe some of you misunderstood my post. They have stated that the salaried employee's pensions will be frozen. As of right now, I (an hourly employee), am "protected" as my pension benefits are part of our union contract. I am speculating that when the contract expires, that company will try to chop out our pensions as well. I work for a very large corporation, but they are somewhat predictable. As some of you said they will probably offer an alternative that they will try to make sound like a better deal for the employees, and my fellow "brothers" will fall to their knees and accept it.

As of now, my pension is around $32/year or service. It goes up about a dollar per year. I have been with the company for 8 years, and if I were to ride tjis company to retirement I would have about 40 years. That would put me around $60-65 or $2400-2600 monthly. That doesn't sound like much money 30 some years from now. They also match 50% of my contribution up to 6% for a 401k. I don't really know how this stacks up to other places, so I don't know if I should be impressed. All I know is the place I worked after high school matched dollar per dollar, but I don't remember the limit.

 

[ovrszd]

OFF TOPIC...and feel free to start a new thread. Thank you.

I think it's on topic because it's been discussed as a measure of success/failure by several posters including yourself. And I think marriage should be one of the most critical decisions when young and trying to establish a retirement plan. In today's world prenups seem to be a part of marriage for second or third timers. So it is a reflection of a person's perspective about what it takes to ultimately be successful financially. It's extremely important to you, for example, in your determination to remain financially successful in regards to your retirement.