It’s called de-risking. It’s another ploy by Ford to minimize their pension liabilities. Do you really believe that their warning of lump sum reductions was to help employees get their best retirement plans? This was just to get the ones it was too late to layoff out. Read up on de-risking. It puts all the risk of the ups and downs of 401ks on the employee. Mathematically most will end up with less overall (depending on your personal circumstances of course). If you get a financial adviser…there’s 2% of your growth gone. That 2% is paid by Ford if you take a pension.
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Also, for those that took the pension lump sum payment, this is the perfect time to invest. The stock market is down and bond interest rates are relatively high. How many times does that happen.
The email was a hint, shame on you who did not read between the lines. Anyone with a pension is going to be spun off with Ford Blue, aka Visteon the sequel.
Those of you banking on having a monthly annuity payment need to have a honest conversation with someone from the components group that was spun off back in 2000.
No, OP, it was not a scam. The email went out because the company wants you to retire. They don't want to pay your salary and they don't want to pay for your healthcare. Why do you think the retiree healthcare plan changed? The email was to point out that lump sums were at a high value as an incentive for you to leave, but you were too smart for them.
Lump sum is a way better option. Even if you want a pension type payment, you can take the lump sum and give it to an A+ rated insurance company and put it in an immediate annuity. The immediate annuity will pay >25% more than your pension payment and it will pay 100% to your spouse if you die versus the 65% that the Ford pension pays.
IDK why are we still arguing about this? There is not a single solution that can apply to all cases. Yes, OP is right that FMC was pushing for people to take the annuity. Not because of the "altruism" of BF/JF, but because they want to minimize liabilities.
Is it a scam? I don't think so. Some people will do better with the lump sum, others with the annuity. Yes, the company is heading towards bankruptcy, but the pension is well funded. However, the ones waiting for the annuity are now facing a big risk. They will be forced to retire in a few months, when FMC will convert the pension into 401K, or risk losing 25-30% of their pensions.
The ones that took the lump sum saved 20-25% of their pensions, but the market is not great now. They risk making a mistake and losing money. The ones that prefer an annuity are still earning a paycheck (until they are kicked to the curb next year), and still can retire with an annuity later on.
Anyone that thinks an annuity is better than a lump sum is a MO--N!
Control your OWN destiny. Get your money now while you are still alive. Vs. betting on living long enough to make the annuity come out in your favor. Same mo--ns that think you should wait until 70 to draw SS. ROFL do the math.
One last thing, the annuity Ford provides never ever includes a COLA. So your $2000/month from Ford today will be worth a fraction of that in 20 years. Especially with you mo--ns electing Dems and their high inflation!
So get your lump sump, invest it, and watch it grow over time while the annuity automatons slowly age into poverity!
If you're paying 2% to an advisor, it's the advisor that is scamming you, not Ford! Investing is not difficult. Do it yourself or use a robo advisor.
My advisor was honest and said the return for a monthly pension would probably be higher than what I could get investing in a lump sum. My biggest concern was the reliance on Ford for the next 30+ years. Changes in Ford's pension policy NEVER benefit the retiree. My pension also exceeds pension guarantee limits. I want the direct control of my money. I also want to leave an inheritance.
Never was I happier to get scammed.
VBIAX vanguard balanced 0.07% expense ratio.
“Set it and forget it” Ronco Popeil rotisserie chicken cooker
who is paying an advisor 2%.. Vanguard is .3%
Sounds like a lot but they invested in things I could have only dreamed of.
I would not let Jim or Bill hold my lunch money.
If you can't handle the lump sum investing yourself take the annuity. You need to know how to invest properly in both good and bad markets. This is not difficult if you have experience. It is the best option people had until Nov 30th this year.
Ford Motor is the risk, unless you are looking forward to the government's bailout pension when Ford goes bankrupt.
@uqz+1k8MuWwJ... stellantis may not have the cash on hand to do it
Those who left in 2019 and invested in vanguard balanced stock/bond index got
21% return 2019, 16% return 2020, 14% return 2021, and -15% so far YTD.
Pretty good, all things considered. Super low expense ratio and no financial adviser needed. Financial advisers have to
1 correctly time the market
2 correctly pick correct stocks/bonds
Index funds beat some 70% of managed mutual funds. What can your financial adviser promise you? Challenge him with how he has beaten common benchmarks for index funds above and beyond his fees and trading expenses.
It ain’t rocket science.
https://www.morningstar.com/funds/xnas/vbinx/performance
Considering that the lump sum prior to Nov 30 was 20% overvalued based on current interest rates, it was an obvious choice. Some scam, it gave me an immediate 20% return. No doubt there are people that blew their lump sum from 10 years ago. Of course, a pension from 10 years ago isn't worth much after last year's inflation.
I don’t think there will be a recession any time soon. People are still out in mass at Somerset Mall spending money. Go up and down 16 mile in Troy or Hall road and see how full the restaurant parking lots are. I don’t know where people are getting their money, but it doesn’t look like it’s going to stop.. slowing maybe but still spending more than in years past. I thought Christmas 2022 would break the consumer but it’s not….
If you beat the house (6%), you look like a genius. So far, those that left in in 2019 are down 30-40%. It may go up or down.
Why anyone would hire a financial advisor is still a mystery to me….the previous commenter is spot on with option 5 being the right move (at least prior to Dec 1).
If you haven’t figured out how to manage your own money by your 50s…. what gave you been doing all this time?
Let’s look at possible outcomes:
- Employee stays, plans to retire in 2-3 yrs, interest rates continue to rise, further eroding lump sum. This would bring on a recession and likely cause Ford to make further cuts, or
- Employee stays, recession hits, Ford freezes pension or converts to 401k at the reduced lump sum amount, they have the power.
- Employee retires Nov 30… takes annuity/monthly payment, dies within a few years, thereby losing out.
- Employee stays, works 2-3 more years, suffers under the company,s current leadership and uncertainty, rates stay the same… takes 3 yrs to make up the reduced lump sum.
- Employee, being a salaried worker and well educated by this time in his/her life, retired nov 30, took the lump sum, saving it from being cut 20-25%, purchases his own annuity or puts it into a Vanguard 60%stock/40%bond index fund, 0.02 expense ratio, and can get on enjoying their life in retirement or marketing their skill to another company or industry. The same well educated employee has a 401k and also maybe some outside Roth IRAs. No financial manager needed. 2-3 years of enjoying life and ones family. At this age we will see fewer sunsets than we have seen.
These life lessons are on you, the employee. You control your destiny. Option 5 looked good to lots of us.
In 2022 Lump sum was the best option until Nov 30th. After Nov 30th (until interest rates go down to low levels) monthly pension is better because Lump sum is reduced by ~25% which is a lot.
My understanding is Stellantis is trying to retire older folks but is not offering lump sum. So if it’s so good for the company why doesn’t Stellantis offer it?
Yes most people would be better off taking a pension. But there is a phenomena where people think they are better than the average bear and thus they will be the exception that does better with their lump-sum.
Financial advisors nearly always say take the lump sum as they have a vested interest.
Most people do not understand the true cost of fees compounded over time. 1% fee would rob you of 220k over 20years if you had a 1M lump sum. 2% would rob you of almost 500K. I have lost count of how many people I have shown compounding interest calculators to.
It is heartbreaking to watch people who took their 500k-1M lump sum in 2019 and in 2022 are looking for full time jobs or taking SS early because they didn’t anticipate a market correction and adjust their spending habits.
Yes there are people for which the lump sum is a good choice. And there is a benefit to getting your money out of Ford if you don’t trust them and/or your pension exceeds Pension guarantee limits.