I hear so many people talking about how great the pension is. Have you actually looked at the numbers? It wouldn’t take much invested in stocks to beat the pension. Especially true if you are young. Add on top of this the risk of actually making it to retirement eligibility without being fired or PIPd and I am scratching my head why people see it as such a great benefit. I’d rather have more money now in hand to invest vs a carrot dangled out years in the future that isn’t even that great.
12 replies (most recent on top)
As far as upstream technical workers are concerned, the EM pension used to be an excellent benefit under the following parameters:
- Retirement at age 60 or over
- 35-38 years of service (excellent) or at least 25 (good)
- CL28-29 and salary around 300K at retirement
The new EM:
- Forced early retirement for REs - through PIP for the regular workers and through “directions” for the lower management (remember all the supervisors, STCs and “advisors” who took the “voluntary” package in February 2021 while grinding their teeth; the company had them by their RSUs)
- No technical worker is supposed to be here anymore before becoming NRE at 52.
- Salaries are going down, through a nice combination of no/minimal raises and higher inflation. The idea is to get the same work done by people with two CL lower than in the past.
Conclusion: for technical workers and probably lower management as well, expect no more than 25 years of service or less and no access to regular pension (age 55 or more). All you’ll get from the pension is a buy-out from the plan (which is now encouraged), meaning a very heavily discounted cash amount, no more than a fraction of the 1.7-3 M under normal conditions (see above).
In Belgium it is about 350k Euro for the pension (if you take lump sump)...not bad compared to employees in Prague or Budapest :)
The pension is free to the employees not costing you anything, minimum could be from 1m to much more, sounds like a great deal to me. How many companies out there are still giving pensions?
@2xpb+1erE8HuU Would you be comfortable sharing what your lump pension was? I often hear the average is in the 2-3m range. This is of course dependent on CL and years of service.
PIPs are not “double what they used to be”. It’s not just a matter of numbers - 3% vs. 8%. In the past the PIP was about getting rid of young employees considered not to be “a good fit for the company”. It has never been used to systematically target well-performing experienced employees, proven to be the core of technical expertise.
The reason why the company doesn’t need to radically change the pension system is that the system… has already been radically changed. If you’re a technical, un-sponsored employee (an already redundant description) you will be eliminated one way or another before you reach 52 (NRE protected status) and you will not get a normal, full pension.
EM pension is now only for the managerial class, and maybe not even for lower management. That’s the new, post 2020 reality, the new company “strategy”. Get used to it, that’s why the oversized PIPs will keep on coming.
It is not what it used to be since raises are not what they used to be and PIP’s are Double from
What they used to be and the “No layoff” culture is gone. If those who remain are the “best and brightest” - surely they are capable of making independent investments. My spouse works in an entirely separate industry, no company sponsored pension, and the net worth he brings to the table is more than the EM Pension + 401k. Perspective.
I hired on 35 years ago and retired recently. While at EM we maxed out our 401k directing every thing into the US stock based fund In retirement we are now financially independent based on our EM 401k + an EM pension + social security. This three legged stool provides us with a degree of financial diversification. Based on my years in retirement, I made the correct decision with respect to securing our financial future. We could not be happier. Now, every day, for the rest of our life, is a weekend. Ha!
Yes, we could have taken a lump some and put it in stocks; but again, a three legged stool provides diversification that we are happy with.
The pension promised can go away with a simple swipe.
The new CFO knows all about it.
If you’re in your late 20s/early 30s, roll a 5-10 year vested pension into a traditional IRA, invest your vacation payout, new company’s sign on bonus, and surplus of your company relo assistance, that should be $85-100k. Invest that for 30 years in low cost index funds and bo-m you’ll have an extremely high chance at having ~$750k in today’s buying power at 60.
@1kdx+1erE8HuU Most companies do give free money to invest in stocks. It's called higher base pay and bonuses.
Some people are incapable of saving and investing money on their own. Don't even try to get them to comprehend compound growth! This is America after all. For these people, "if" the pension doesn't change/pause before they retire, the pension is extremely important for their retirement.
Give me free money to invest in stocks and you’ve got a deal. D-mb