In 2022 the saved lump sum calculation was 64k higher than it will be in 2024.
Wtf?
24 replies (most recent on top)
The comments about legacy AT&T Wireless are fully wrong. Legacy AT&T Wireless people came into Cingular under the Cingular plan which was 5% pension contribution from salary and bonus. It is a cash-n-carry plan which can be annuitized if you are stupid enough to do that (no beneficiaries if you and your spouse get wiped out together). For these folks there is no reduction. I am legacy Wireless and my cash balance didn't drop a penny. Don't confuse AT&T Wireless with legacy blue AT&T Labs in NJ. They may have a different plan.
When interest rates are high, lump sums are lower. When interest rates are high, you can earn more on your money. When rates are low, you need more money to earn the same amount.
“ If you are not in SE, the interest rate impacts your lump“
Incorrect. If you have a cash balance pension you are not impacted by those changes (such as those Mobility managers that got in before pension benefit was ceased).
If you are not in SE, the interest rate impacts your lump. Higher interest rate lower lump. Everyone knew 2022 would be higher than 2023, probably 2024. We all received e-mails warning us. This is not a WTF.
Incorrect.
Age is only a factor for the annual company deposits. Earnings x age factor + interest.
Every 5 years your age factor increases.
You also have to figure in your life expectancy table. As you get older the number of years they think you will live decreases so your lump Will calculate smaller.
“ …my 401k in the toilet…”
Your should be seeing your 401k rebounding 10 -14% over the last year. If you’re not, you need to have a good look at your holdings and/ or enlist some professional guidance. You should absolutely not still be seeing your balances decrease.
“ That is why SO many managers bailed at the end of 2022 so they would take the 30-40% hit on their lump sum if they stayed in 2023“
Perhaps. But keep in mind that many managers that stayed were not impacted by the segmented rate changes, as they had a cash balance plan that those changes didn’t impact. Hopefully folks were smart enough to understand what SPD they are under. Reading posts here I sometimes have my doubts.
“ former AT&T Wireless gets crazy $$$ pension with huge balance“
This is incorrect. I too am legacy orange, management but I managed legacy blue management after acquisition. You are correct that legacy orange Cingular like us are cash balance and not impacted by those changes that impacted others with pension that didn’t leave last year. You are incorrect, in that, legacy blue does not have pension. So I don’t know what the guy sitting next to you history is, maybe there was some other legacy company involved. But if he was straight up legacy blue management, he did not have a pension benefit.
The pension didnt change for monthly payments those who left 2022 took the lump sum. Those who refuse to leave that have 40 plus years of service lost so much they will never recover the money and are basically working for free now til we all get our papers. I dont feel sorry for over 40 plus years of service who dont give younger ones a chance to retire.
“ It never fails to surprise me that some continue to try to blame President Biden for interest rate increases implemented by the republican chair of the Federal Reserve.”
Said like a loyal Libby Bootlicker.
The Federal Reserve HAD to increase interest rates to control rampant inflation caused by Bidens out of control spending.
Because you stayed with the company
It never fails to surprise me that some continue to try to blame President Biden for interest rate increases implemented by the republican chair of the Federal Reserve.
OP here, I’m in my mid 40’s, and no where near retirement. You think I was even thinking about quitting for my pension? GTFO!
Now I have to deal with losing 30% of my pension, my 401k in the toilet, forced back into the office, dealing with layoffs, and my job is moving to Dallas?
What a disaster. F you Biden and Stankey!
That is why I left in Nov 22. I left with a good sum that would have been reduced by $300k if I didn’t. Sooner than I would have liked. Now I am figuring out wha to do with my life
Former T…got the notifications and yes lose would have been $ignificant by staying into 2022. Left end of 2021 with my lump sum that was awesome due to tanking interest rates. The loss would have been more than severance and unemployment combined. Add the potential loss of health care and this really became a mathematical easy question to answer. This is why so many left. We were forced (email sent as they stated to TARGET AUDIENCE) to leave. Most probably left with 7 figure 401k’s as well. No regrets.
I think the HR Benefits department flubbed on the email notification for this last year. I am orange (former Cingular gets Cash Balance Pension, 5% of monthly pay) and my cubicle mate was blue (former AT&T Wireless gets crazy $$$ pension with huge balance). When I got the email saying I’d lose 30% of cash payout due to rate changes I called fidelity 50 times to save my much smaller balance. He said he never got any emails. He never called Fidelity. He did not retire by November. In January, he checked his cash value balance and said he lost “a year and a half’s pay” in the drop. I think HR notified the orange employees about the changes (which did not impact us) and neglected to inform the blue (who did lose 30% of cash value balance).
Hello
That is why SO many managers bailed at the end of 2022 so they would take the 30-40% hit on their lump sum if they stayed in 2023.
The pension is tied to interest rates. During the pandemic interest rates were almost zero. That artificially and significantly increased pension lump sums for 1 year. After inflation started rising lump sums significantly decreased. The monthly annuity is up but you could lose that as T sells those off. You will never get your pension lump sum back to that level unless you can make it to 65. That’s really doubtful for anyone at T.
Bond buying and artificially low interest rates have been going on since 2009. The fed was surprised inflation took so long. Covid did affect things too.
In response to the OP...
"In 2022 the saved lump sum calculation was 64k higher than it will be in 2024.
Wtf?"
Where the heck have you been? Check your email from T around September 26th or so of 2022... T was under pressure to announce it even though Fidelity knew about it several months earlier.
In the end, you lost anywhere from 30-40% of your pension if you didn't leave, some by November 30th and some by December 31st.
Sigh.
AT&T uses the November interest rate to determine the lump sum payout for the next year. (FYI, that rate (segment rate) is reported mid-December.)
Here is a long but good explanation; though realize that rates quoted are out of date and changed after publication and will change for future years' calculations. FWIW, this year's rates are closer to last year's trending, but maybe a slight bit better; nowhere near the better rates of previous years.
https://www.theretirementgroup.com/featured-article/att-interest-rates-likely-decline-in-2022
Why did the lump sum value of my pension decrease?
That area you've been living under the rock must be comfortable.
GATT Rate or more technically 30 year treasury rate. In other words your pension lump sum is inverse of interest rates. Thank the new administration for high inflation and making US dependent on foreign oil again. It’s why a lot of people retired early last couple of years because of the 30% drop in their pension if they stayed.