Copied from older PRP discussion below but posted Feb 18. Could this possibly be for real? "Sr HR contact said an offer is in the works similar to 18 but with a premium (dont know what that means) if the employee accepts and agrees to the lump sum pension offer. FOMOCO wants to take the pension hit now and to get out of the pension business. No word on if or how this impacts current and recent retirees. Tired of the games. Get on with it Ford."
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"Yes the government will always be there for you and have your back", to bailout pensions, until Bernie Sanders takes charge, then there will no for sure. Hummm
PBGC has a maximum cap that increases with age. It is not a percentage as many think. I felt it was pretty high as it will cover 100% of my pension in 4 years. I was an LL6 and elected early retirement. Ford pays an additional amount, about 25k, until I become SS eligible. Quite a few members of my family were centurians and almost all lived into their late 90s. Bond yields are poor, I was looking for an alternative to make a balanced portfolio. The annuity/pension made sense for me
Not sure how much the PBGC would cover the average stipend Ford pays out monthly.
That being said I agree that a retirement based on multiple sources of income is a good strategy.
@3gbg+13B06HId What in the world are you talking about?
PBGC got a lot of support and survived the great recession. I'm a believer.
A stressed out buddy who was down over 40% in his retirement portfolio with no pension sadly died of a heart driving to Toronto in 2009. This event solidified my belief in diversification.
Yes the government will always be there for you and have your back - yeah right.
In this environment - that is ground that I do not want to stand on. Many things will change in the next 30 years.
Just some basic info ... if God forbid Ford fails and you elect the pension the government has you covered. Read about it here: https://www.pbgc.gov/wr/find-an-insured-pension-plan/pbgc-protects-pensions
Some multi-employer pensions have been cut (teamsters, etc) but you are not at risk at all
"No, It's not for real. The person who wrote this is probably the same person who wrote one similar to this one last year where he/she was saying that Ford was going to make everyone take a lump-sum. That posting also mentioned that he/she was told by someone in HR. This is Fake news. Someone trying to stir the pot!"
Not necessarily. As someone said below for 2020 there has been no official word on PRP or a Offer in thwe works which quite odd by the middle of February.
"If you're salaried non-UAW I wouldn't depend on the pension being there when you retire, or for the rest of your life after retirement. Lots of examples in corporate America of people getting screwed thinking a pension would be there, but when the company is bought or goes belly up, you're screwed."
Not to worry I am taking an offer - if available- in the worst case severance (oh well) - nearly the same 9 mos. salary and 5 mos. Medical, the Lump Sum and riding off into the sunset.
If you're salaried non-UAW I wouldn't depend on the pension being there when you retire, or for the rest of your life after retirement. Lots of examples in corporate America of people getting screwed thinking a pension would be there, but when the company is bought or goes belly up, you're screwed. Start saving now, lower your lifestyle, and hold on for a bumpy ride.
Not buying or selling in this case. That said there has been no decision as of today regarding any PRP for 2020.
If you go to Policies and Programs you will see where in 2019 it says "there will be no PRP offered in 2019"
We can only hope they do indeed offer something.
No, It's not for real. The person who wrote this is probably the same person who wrote one similar to this one last year where he/she was saying that Ford was going to make everyone take a lump-sum. That posting also mentioned that he/she was told by someone in HR. This is Fake news. Someone trying to stir the pot!
What rate of return are you assuming that allows you to start with $2.1M base, draw out $135k/year every year for 7 years, and still have $2.4M base at the end? I agree with your strategy, but personally plan a more conservative withdrawal rate (think 3%). Withdrawing $135k out of $2.1M is almost 6.5%... I agree with your words, "There are always risks, do what your comfortable with".
@1vim, this is not about doing better then ford, but having full control of your money. For allot of folks, your base lump sum can match the annual contribution from Ford, and last to your expected age, with zero interest earned. With a conservative strategy, you will be ahead. There are always risks, do what your comfortable with. But here is a real example: employee retires @ 62 with $2.1m in a 401. Takes out $135k annually for the next 7 years ($945). 8 years later, his base account is $2.4m, plus, if he dies tomorrow, his estate receives the full $2.4m. If you have no other savings but your pension, you’ll probably want the peace of mind of a pension annuity.
Mr. Lump SUM. What makes you and Merrill Lynch think they can do better than Ford... who has had Merrill Lynch in the past. Food for thought....what happens when the market goes down and your retired. Fixed income funds are at the all time low for America. Also remember 1998 or 1999 when Ford borrowed from the Pension fund. Just a thought.
If you have accumulated over $1M in your 401k then pension might make sense in lieu of bonds. You can get data on what inflation has averaged over the past 50 years and use Excel to figure out what is best for you. Look at how long your relatives have lived against the age where the pension is at a break-in point with the lump-sum.
Regarding lump sum - you also have a chance to beat inflation. The monthy pension pay is fixed for life. Your monthy payment will lose half of it spending power in the next 15 years or so.
Something to consider.
If anyone has had to deal with Ford Benefits, taking the lump sum is a good option on several fronts. You need to do the math, but having full control of your money, and the ability to leave to your estate whatever you don’t spend is a major benefit. When you retire, you’ll roll your 401 and lump sum together, get with a wealth management broker (Merrill Lynch), and your set. With proper management, you should die with more then you started with. Would never want to have deal with this company after I retire.
Yes, but they can sweeten an offer so it is more seriously considered.s
Ford cannot force employees to take the lump sum. So this does not make much sense.