Purely supposition on my part but I think at least part of what you’re seeing is setting the stage for the end of the defined pension plan. Once the reductions have occurred, hitting the tenured older age group the hardest, the cash out liability is greatly reduced to a smaller population of employees with little tenure. With severance “complete” SF can “comfortably” let the other shoe drop. A typical Tippy play.
19 replies (most recent on top)
@S15vx7Q-1nru - I recall a lot of rumors at that time that Ed stepped in and saved the pensions as it had always been part of SF and it's commitment to it's employees. Ed's gone & I don't see anyone giving a rats a-- to preserve what was in our corporate DNA.
My supervisor who’s retiring said I wouldn’t count on the pension it’s was to be phased out a along time ago when they did the enterprise structure study in the early 2000’s. If you look at the benefit site it says the pension projection is a estimate. They can can at anytime I agree with the frozen option I hope maybe. I can here it now we have too make this change to keep us competitive in the future.
https://bottomlineinc.com/money/retirement-accounts/8-things-your-employer-doesnt-want-you-to-know-about-your-retirement-benefits
Executive level and above at State Farm have a pension in addition to the pension all employees have. See if that one gets frozen when ours does. It’s only a matter of time.
I would think, and hope, they would apply an age + service calculation. If you’ve got enough years plus service and the sum of those meets some predetermined cutoff, you’d be fine. Otherwise, I wouldn’t count on a large sum of cash. It’s all speculation; just make it part of your calculus.
Read SPD for the plan. Not the high level HR documents but the plan itself. Essentially they can change the plan anytime they’d like and, with that, what calculation they might use to offer a cash lump sum should they decide to terminate it.
There's a post over at Glass Door that says anyone hired after Jan 1st 2018 does not have pension offered as part of their benefits package. Anyone know if this is actually true?
And another question: They cannot legally compel us to accept a lowball buyout offer, can they? I would think they cannot.
I read on another post titled, "Anyone else just not give a sh...t anymore" that pensions would be frozen at the end of 2018 and if your under 55 a buyout would be your only option. I've got 21 years in field proximity and not close to 55!! This can't be happening! How can they do this..Has anyone else heard any thing about this?
And that’s the point. Most won’t/don’t stay long enough to even become tenured. They’ll move on to the next job after honing their skills at SF. Sure, there will be a 401K but the long term pension liability will be erased soon.
New hub employees don't give a crap for pension since they don't plan on working for SF more than a few years. They'd rather have more compensation or 401k they can roll.
I’m hearing its getting frozen for everyone then offer a enhanced 401k incentive match.
A buy out is usually only for those under a certain age, usually 55. Those over the given age will receive their benefits as promised and the company will set aside funds to cover those obligations. The company will then use a formula such as "the rule of 70" to divide out the pension amounts not needed for those over 55 and make payments to the vested employees. Payments are usually calculated based on a combination of your age & number of years of credited service.
I had friends that left a number of years ago that were contacted with low offers for a buy out of their pension benefits. Hope they don't lowball any potential buyout... Want to take bets???
I'm not really sure what formula SF used to generate the offer my buddies received. I think they were only vested enough to earn like $350 a month upon retirement, and State Farm offered them about $8,000.
That's less than 2 years worth of pension. Granted, if the 8,000 was invested, it would grow, but this is a lifetime benefit we're talking about here.
They'd better come up with better offers than that or nobody is going to bite.
What does a typical pension buy-out look like? Is there a formula used like severance?
I wouldn't be surprised to see them attempt to offer as many cheap pension buy-outs as they can. They tried this with a couple of my friends (ex-employees with only 6 years tenure) a couple of years ago, but my friends told them to take a hike. The buy-out wasn't worth it.
I can see them either converting to a defined contribution or as the prior poster noted, stop offering to non-vested employees. I don't see them cashing everyone out seeing how they are carrying a $7billion dollar surplus.
What they’ll do is stop offering it to employees hired after a certain date. My current company did that but anyone who was vested or started vesting gets to keep their benefit
I predict by end of year