Saw some chatter about pension getting changed up. It would cause massive attrition for anyone who is only hanging on due to pension related economic considerations. Life is a little bit different for someone sitting in the <6 year bucket (risked pension worth pretty much zero) versus the 12 - 16 year bucket and the 20+ year bucket. Anyone not close to retirement would bail immediately.
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Bump
News?
If the pension is frozen/ended, what will happen if are less than 5 years in? Does that person get $0 or something else?
@lhrt+1obxO12z thanks for the detailed calculation
https://www.theretirementgroup.com/featured-article/exxonmobil-is-cutting-costs-will-a-pension-freeze-be-next
ExxonMobil, along with most other oil companies, is in the process of trying to cut costs to help deal with the economic downturn brought on by the Coronavirus. The pandemic hurt the entire economy, but it came down on the oil & gas industry especially hard. Some companies, like Chevron, have chosen to conduct layoffs to try and reduce labor costs. According to Reuters, Chevron had planned to “cut 10% to 15% of its worldwide workforce as part of an ongoing restructuring at the second-largest U.S. oil producer.” Other oil companies, like ExxonMobil, have chosen to cut benefits instead. ExxonMobil had announced that it would stop matching employees' contributions to their retirement savings plans. Also, a Business Insider article was recently released, claiming that ExxonMobil layoffs could be announced shortly.
But will traditional cost cutting measures be enough? Could a pension freeze be the next step for ExxonMobil?
Companies have been effective at saving money by freezing their pension plans in the past. Verizon froze their pension back in 2005. Alternatively, they offered employees an enhancement to the existing 401(k) plans, which began in 2006. ABC reported at the time, that Verizon hoped to save $3 billion over a 10-year period by switching from a defined benefit (DB) pension plan to an enhanced 401(k) plan.
There has been a growing economic trend in which corporations are attempting to move away from Defined-Benefit (DB) plans & move toward Defined Contribution (DC) plans. The total number of corporate pension plans has steadily declined since the early 1980’s. AARP has stated that “The number of corporate pension plans with 100 or more members has fallen from almost 26,000 in 1983, the peak, to about 8,400 in 2016…That’s a drop of two-thirds in about 35 years.' On top of that, Barron’s reported that, about 60% of the $28 trillion in U.S. retirement assets are found in defined contribution (DC) plans. In the year 2000, when many more companies offered DB plans, that number was under 50%. It’s becoming less common for an employee to work at the same company for 30 years and retire with a nice pension. More corporations are freezing/off-loading DB pension plans in order to more effectively manage the size of their current pension obligations. According to Barron’s, by placing workers in a DC plan, the “corporate pension plan stops accruing new benefits as workers age and salaries rise.'
Barron’s references several companies who’ve decided to recently freeze their defined-benefit pension plans, most notably, General Electric & Lockheed Martin. General Electric is freezing its pension for 20,700 employees and has offered 100,000 former employees a buyout option for existing retirees. The buyout option is another tactic corporations will use to cut costs. According to The Retirement Group, DB plans which provide a life long monthly benefit to retirees, often create huge pension liabilities for the company. However, “by offering both workers and retirees a lump sum, corporations could take the defined-benefit off their books.' For companies like ExxonMobil, this can shift risk from the corporation onto their workers.
Overall, this trend is good for investors because investments become less risky when companies are able to lessen their debt. However, losing DB plans is very bad for employees who often rely on those benefits for their retirement years. Typically, employees in the mid to late portion of their career are hurt the most by a pension freeze. It should also be mentioned that as it stands, ExxonMobil offers one of the best benefit packages of any company in the country. If your pension is frozen it’s a good idea to ask your HR department for an estimate of your pension benefits upon retirement. ARRP suggests asking for estimates on your lump-sum payment & your monthly payout. It’s also wise to ask what the payout would be for a spouse if you were to pass away.
Many people are holding onto their jobs because of the pension. Final salaries are hard to come by these days. If the pension changes, lot will resign or retire… those who can and or have the grit to in any case…
We evaluate the pension program every 3 years to determine its value in our total remuneration package vs competitors. This was last competed in 2022, so for now you keep your pension. All these rumors were started her with no merit, cool your jets. We’ll get rid of you using the PIP long before you have the chance to touch that pension.
Simple math would show that 90 days to Dec 31 is Oct 2 .
This must be an EMTEC engineering SME.
Any news? Are they tryin to end it before end Q4 to bank the "savings"? Another poster mentioned a 90 day warning period so that means not safe until mid Oct
If i look at my benefit statement, the pension benefit value is roughly 15% of the base salary.. how's yours look like? It's hard to imagine they would increase company contributions by thata mount so total compensation will suffer.
The elimination of the pension likely in planning for a long time, just waiting on higher interest rate to minimize the cost.
any other news about this in honor of Labor Day ???
Is there an agenda posted somewhere for the forum?
Are we gonna see another "you asked we listened" blurb about XYZ since benchmarking says something is too generous?
- vacation change
- non conventional RSU timetable (3/7 vs 1/3rd per year)
- hot desking (in b4 "human rights issue" dude-- tacky but not a Geneva breach)
- educational reimbursement
- insurance plans
- charitable matching
- hosting 401k at Voya
- pension <---- are we here?
Could not help but notice in the break rooms, ads showing the EY sessions in the 2nd half of September, regarding topics on optimizing your 401k. Seems pretty suspicious if indeed there is an announcement in the employee forum on Sep 7 related to pensions.
September 7, 2023
Pensions are classified as a benefit, and so there is no legal obligation to retain it or compensate for it when it is stopped. They are very expensive which is why they are a great opportunity for an employer to save staff costs.
If the pension is eliminated or made optional, I believe EM will compensate employees with some other option like restricted stock or increased 401k matching, etc. However, employees will need to realize that the compensation won’t match the existing pension. Depositing guaranteed money in an account earlier requires a discount from pension projections.
It’s not “chatter” or a rumor, but a fact. Just because it’s not what you want to hear, doesn’t make it false.
We have expanded the levels of who can get RSUs to reward the people who actually contribute to the success of the company, the pension isn’t a reward for achievement, it is a form of socialism, giving the same to everyone regardless of their contribution. Pensions are not the model for successful, innovative, fast moving companies that hire the best. If you are contributing to the success of ExxonMobil, you will be rewarded with RSUs and will continue to have the best interests of ExxonMobil as your number one priority. If you are not contributing, you will not make much money at ExxonMobil (and you shouldn’t) and should seek employment elsewhere, i.e. self terminate.
If the pension gets replaced with a defined contribution (park an extra X% into your 401k to replace the pension) it is pretty clear that the end result will not be mathematically neutral. Set aside the assumptions about investment return and look at just cash flows at time zero. If pension is implied to be 10% of salary at time zero, they will not give the 10% to your 401k. It will be much lower otherwise "savings" won't be achieved.
If it get removed or discontinued what happens if you're less than 5 years in? Is it thanks for playing here's your $0, or is it an alternative vesting moment similar to a corporate takeover?
It’s definitely getting shaved next year
This assumes that ExxonMobil will make up the difference when the pension is ki-led, with an equivalent amount of 401k, salary, or both. Spoiler: they will not or “they” won’t see any cost savings. I predict they’ll throw us sone bone like an extra couple percent 401k match and the shareholders will pocket the difference.
If you are young you would be better off canceling the pension and getting extra money to invest your self. Lessons for young people. 1. No one works at a company for 35 years anymore. You will most likely quit or get laid off. 2. Learn about financial independence. If you are at Exxon learn how to invest money so when you do reach 55 you aren’t at the mercy of your employer.
The underpaid CEO wants to adjust everyone else's salary downward to feel being part of the team. Id--t DW has destroyed to soul (employees) of this company
@4evx+1obxO12z even vacation is less valuable and a differentiating perk at XOM, after it now (soon to be) being on accrual basis and not an entitlement basis.
Because the company is unethical and the pension is why people put up with it. Take that away and you’re only left with vacation.
@3yit+1obxO12z Same for the UK, don't think the process is so long here, but guess by end 2023 is the plan.
Seems to be a lot of folks here that have a tremendous amount of faith that the company still cares about its employees even tough you have seen all of the signs that they do not. There is a 90 day notification requirement on any pension changes. I wouldn’t discount the rumors until after mid October. At this point nothing would surprise me!
@3uya+1obxO12z
“If there were any plans to getting rid of the pension, we would have been told about it from DW and managers”
Can any real person be that stu_pid without being an EM manager? Did you hear about the cancellation of the 401k match from “DW and the managers”? Did they tell you in 2020 that there will be a layoff or did they blatantly lie to you?
No complaints if it did, take the buy-out invest it and get a better return and ultimately a bigger pension.
Pension is worth 17% of salary, so if the pension goes away are we going to see a change in pay structure?
Rumor of pension going away is totally bs. If there were any plans to getting rid of the pension, we would have been told about it from DW and managers, not hear about it on a layoff site or newspaper article, that is not the Exxon Way.
@2hmc You’ve just conceded that the claim that started this thread operates like every other BS rumor ever.
Thanks for explaining how/why I’m right. You have a wonderful evening.
Those who are talking about mass exodus etc. Let me remind you that most employees that remain at EM are the ones who have no useful talents and training after years of yes sir, yes ma’am training. The LinkedIn profiles are full of fake activities and claims.
These mere mortals are unemployable and won’t get hired by anyone so they will cling to ExxonMobil no matter how much it kicks them in their rear.
@2hmc So….
No need for evidence, since we can just keep repeating it until it becomes true?
Maybe you should run for public office.
No need to. The chatter will solidify itself either in the local news like the 401k May h discontinuation, or the no layoffs for EM grandiose email and employee forum. Lol.
"There are many companies without pensions so why would EM people leave? Honest question." - because it takes away something that you already have. It is like "Why do my wife leaves me when I go broke and become poor from a millionaire before, there are lots of poor people in the world ?"
I've got < 6 months to go for the five year mark. I fully expect to end up in some dead zone where I can't cash out or rollover and just lose the whole damn thing. If that happens, I'm hitting free agency hard. We're not as highly compensated versus the market as we think we are.
OP, this's what will happen if DW and KM ki-l the pension. All young employees with less than 5 years with the company will leave immediately. This will without a doubt finish showing them that the company doesn't give a rats a-s about their future employment. There are better employment options out there working on more interesting and dignifying stuff. No need to work for the oilman if he doesn't pay a lot. Period. Also, the young ones will not hesitate to jump ships quickly. That's the way they are. For those with 5 to 15 years with the company, well they are fu---d. If they are close to the 15 years they will try to survive anyway they can, so more backstabbing, lies, stealing other people's work etc. etc. That way they will collect some pension. If they are close to the 5 years limit they will most likely resign and take the lump sum. RE employees will just resign and move on. So, no matter how you look at this stupidity by the management committee and drunk KM ExxonMobil will loose a lot of employees. They will just leave. But this is what DW and drunk KM want. They want you out now. They just want to fill their pockets with money and ki-l the company along the way. even today it is practically impossible to find people that want to work for ExxonMobil. Young people just don't even consider ExxonMobil as an employer. It's not in their radar. Period.
@hmm “I suspect the evidence…”
In other words, there’s no evidence, and we’re just circulating rumors. That’s fine.
I expect the worst from any employer and protect myself accordingly. That way, if any of these silly rumors turns out to be true I won’t be blindsided.
@hun+1obxO12z I expect the evidence is that if the current EM offer is better than the industry standard, then it will be removed as soon as is practicable. Towards the end of 2023 then seems like a fair bet.
Anywhere else in the world where the same outperform in EM benefits versus industry standard is demonstrated, will also get the EM benefits realigned without delay. Share your alternative argument of course with your own analysis.
The trouble with the company now is that it treats it's employees like id--ts. Those who have been around for quite a bit of time can understand how the company is now manipulating it's workforce for it's own narrow benefit. I think that's the gaslighting frustration shared, but manipulated to try to divert it's meaning (which incidentally, is a perfect example of the gaslighting that the company now engages in).