Thread regarding Allstate Corp. layoffs

Pension Liabilities

Is anyone aware of any strategic initiatives being considered to shore up pension liabilities?

Considering that bond interest rates in several European countries have already dropped into negative territory, there is a significant probability that US treasury rates (as well as aggregate corporate bond rates) may very well follow suit – perhaps, it's just a matter of when and not if.

Should interest rates in the US follow the same course as some other major countries, pension liabilities may easily double from their current state, resulting in a significant impact on the company's financials.

I'm eager to hear the perspective of anyone having in-depth knowledge around this topic.

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| 1935 views | | 13 replies (last )
Post ID: @OP+10mHB9bg

13 replies (most recent on top)

10-yr treasury sitting at 0.83% as I’m writing this.
Negative rates will soon follow. Why is Tom not taking action to shore up this liability?

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Post ID: @3uien+10mHB9bg

The 10-year treasury rate just dropped below 1% today.

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Post ID: @3rcjp+10mHB9bg

Yes, but you have to declare and be gone by November 30th to take advantage of the new rate.
Re: the “possibility of your lump sum doubling over the next year or two....”. That’s simply not realistic or based in fact. Depending on the rate movement, you might see a 10% impact, still a significant increase, in the most severe rate movement.

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Post ID: @Rlah+10mHB9bg

Yes, but you have to declare and be gone by November 30th to take advantage of the new rate.
Re: the “possibility of your lump sum doubling over the next year or two....”. That’s simply not realistic or based in fact. Depending on the rate movement, you might see a 10% impact, still a significant increase, in the most severe rate movement.

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Post ID: @Rjch+10mHB9bg

Aren't the Aug 2019 rates used for the Dec 2019 - Nov 2020 lump sums? So you want to wait until Dec or later due to the new rates. Right?

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Post ID: @Rwcd+10mHB9bg

There is also the possibility that rates continue dropping. Perhaps even into negative territory.

Imaging seeing your lump sum doubling over the course of the next year or two. It’s quite possible.

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Post ID: @Qeqx+10mHB9bg

Which means, any retirement eligible employees that are vested in the legacy defined pension benefit will be looking hard at an 11/30 retirement date. For those with a significant lump sum (long term managers) the decision to not retire could result in six figure impact to lump sum disbursements. Like working the following year for free.

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Post ID: @Qyls+10mHB9bg

IRS just released segment rates for August. A quick calculation indicates a 13% lump sum increase over last year. :)

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Post ID: @Pdqp+10mHB9bg

Yes, the November 30th date will see a significant increase in retirements of tenured employees, if they’re smart.

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Post ID: @ctlq+10mHB9bg

10-yr treasury rate just dipped below the 2-yr rate. Those with 30+ years of service will see a significant increase in their lump sum should they retire next year.

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Post ID: @brss+10mHB9bg

The Allstate traditional pension is handled by Northern Trust and not under the control of the company at all. It's completely separate. I am not sure what that organization does but they have been in the pension industry for a very long time.

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Post ID: @1qfq+10mHB9bg

That wasn’t the question.

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Post ID: @1kvv+10mHB9bg

alot of companies are targeting older employees as pensions are almost always backloaded primarily companies that only still have the pension for employees that are grandfathered in because most companies stopped offering that benefit to new hires in the past 15 years

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Post ID: @bjs+10mHB9bg

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