I heard a rumor that they are rethinking further benefits cuts, due to pushback. Non-union U.S. employees tired of taking the brunt of the cuts due to stronger E.U. labor laws and union negotiating in the U.S. Rumor is several functions in U.S. are considering unionizing, and that has given the executive management pause about their next steps.
Bumped this from another thread on the Xerox board. Does anyone have more info on this? Certainly hope it stays just a rumor.
Someone asked what percentage of health care premiums is paid by Xerox vs employee. I just figured it out for 2018, since I received my W2 showing the total health care plan cost (Box 14d).
Xerox paid 75.5%. I paid 24.5%. I have single coverage, age 60.
I can't remember what percentages of health insurance premiums were paid by Xerox vs paid by the employee. Can anyone tell me? I'm on the outside now, and wondering how to assess benefit packages once I've received an offer from another company.
Here’s why lump sum withdrawals matter:
https://www.nytimes.com/2003/08/14/business/a-lump-sum-threat-to-pension-funds.html
Ichan's team does not want to spend a cent on Xerox unless they have to because every cent they spend takes away from their profit as to when Xerox is sold.
Look around, Xerox has not done a good job in hiring and retaining new, younger folks. Thus, Xerox's workforce is much older than an 'average' company. Older employees typically have higher health costs. So, whereas an 'average' company may see a health cost increase of 5% in a given year, Xerox would see 10%. Now, if Icahn will not spend any extra money on benefits, i.e. company costs will be flat, that means 100% of that increase will be passed to employees in the form of premium and/or deductibles, i.e. out-of-pocket expenses. Roughly speaking, I would expect a 25% to 50% increase in these costs for 2019.
On the pension side, the Federal Pension Benefit Guaranty Corporation (PBGC) and not Xerox is responsible for the 80% funding rule on lump sums. Now, the $500 Million that Xerox put into the PBGC in the fall of 2017 before Icahn (I can imagine his reaction to that decision) should have put it on good financial footing for a while. But, if Icahn decided to end the regular annual investment of about $50 Million per year into the plan and if there has been a major increase in lump-sum withdraws, then I can see the concern. I believe the PBGC requires that employers must inform the it and employees that the 80% funding line has been crossed 6 months after it has happened.
To the poster who said " If too many people opt for lump sum payouts in a short period of time it could drive down the funding levels triggering the cessation of the lump sum payout option for the moment.", I do not believe that is correct.
The way I understand it, the company offers Lump Sum withdrawal as long as the funding is above 80% of the liability of the pension plan. (i.e. if the total liability of the fund (add up everybody's pension to get that amount) is lets say for easy math... 100 Million dollars. Then as long as the fund has at least 80 million dollars in it (80%), you can do a lump sum withdrawal.
The fear about everyone pulling their money all at once will drain the fund is bad math. Let's say the fund liability is $100M (like above) and it's funded fully at 100%. If a bunch pf people pull their money by way of lump sum withdrawal, then the liability also is reduced by the same amount of the withdrawals. I.e., the funds liability is $100M, then 20 people who all have $1M in their Pension all decide to take the lump sum option December 1st. if we have $100M, and 20 people withdrawal $1M each ($20M) then the fund only has $80M in it right? But the LIABILITY of the fund is now only $80M, so it is STILL funded at 100%.
What can drive down the funding percentage is if the stocks/bonds/investments/etc that the pension is invested in goes down, then the fund can lose money and THAT can drive the funding percentage down.
Not to say that isn't going to happen (seen the stock market lately?) but the fear that everyone pulling their money out is going to destroy it for the rest of those with a Pension is unfounded.
My .02, worth every penny.. :-)
@VNc6Oju-1ubt -- ""Benefits" for the rest of us (the silent majority, if you will) include 401k, healthcare, etc."
Yeah, exactly. People now-a-days have to save for themselves for retirement.
I'm just wondering who in HR told you, "As of 10/23/2018 anyone that retires between now and 12/1 is guaranteed lump sum pension." Everyone I've asked just avoids the question. I'd really like a direct answer from HR if possible. So how did you talk to???
Enough about the freaking pensions already. Only people who have been at Xerox forever have them. Most of us do not. Pensions are from a bygone era. Be grateful you have to decide what to do with yours because it means you have options.
"Benefits" for the rest of us (the silent majority, if you will) include 401k, healthcare, etc.
Time to go
As of 10/23/2018 anyone that retires between now and 12/1 is guaranteed lump sum pension. I got that from HR yesterday afternoon. I did not ask for any other later time frame as I am done Friday. I wish you all the best moving forward during this stressful time.
Before I was shown the door there was a posting on the website about pensions. It said that lump sum payouts would be available so long as the pension was funded to a specific percentage level. I forget the number they gave. Once the funding level falls below that percentage, people will no longer be offered the lump sum option. Normally this would not be a concern but given the large number of people choosing to leave and those being laid off it could become an issue. If too many people opt for lump sum payouts in a short period of time it could drive down the funding levels triggering the cessation of the lump sum payout option for the moment.
Get out while the gettin' is good! Lump sum pensions, (if they are still paying a lump sum in 2019), will be reduced by about 5% due to an increase in August 2018 IRS Present Value Segment Rates used to calculate lump sum amounts.
Has there been any information regarding the pension plan and if there are any restrictions coming?