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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19224  
Subject: Pension Estimator Question Date: 7/3/2008 12:07 PM
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I was wondering if there was a ball park pension estimator or calculation that one could use to estimate pension payouts down the road. I have a pension but since my original company was bought out 8 years ago the new company does not provide an annual summary of benefits. Trying to get an estimate or any info from them is like pulling teeth. I would like to go to a fee based financial planner to see if I am on track for retirement and this stupid pension thing is one area I have no clue on what the future benefit will be. I had a formual at one time but can not find it. I was wondeing if someone else had one.

I do have a request out to our HR dept and so far I have not received any word back on them.(I figure its a holiday week)
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13604 of 19224
Subject: Re: Pension Estimator Question Date: 7/3/2008 1:41 PM
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Most pensions in the old defined benefit style are based on a formula. The most common one I am familiar with looks like this:

Pension = n/30 x (FAS - normal SS payment)

n is the number of years of service you have at normal retirement age, usually 65.

FAS is a final average salary often for 3 to 5 years, but sometimes longer and allowing you to drop low income years.

SS is the normal age 65 Social Security payment for your income.

So if you have 30 years of service at age 65, you get full pension, which by this formula pays you full salary less Social Security. But some plans pay 75% of that amount or 50% or whatever.

If you retire at 65 with less than 30 years of service, your pension is reduced by the fraction you are under 30 years. So 25 yrs service pays 25/30 or 83% of normal pension.

If you retire before age 65, there is an additional reduction, typically 4% per year.

There are many varations on the formula. Some will give full pension after so many years of service, or after the sum of age and years of service reaches some total.

Some have straight formulas based on years of service. 15 x years of service would pay $450/mo for a 30 yr employee.

And of course you need to know about health insurance coverage if you retire before age 65 and Medicare eligibility.

I hope this introduces the subject. Plans vary widely. When companies merge, they often try to come up with a composite plan. And these days there is pressure to go to a defined contribution 401K plan instead.

Good luck.

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13605 of 19224
Subject: Re: Pension Estimator Question Date: 7/3/2008 2:24 PM
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Thanks Paul I appreciate your response. I have heard that my pension with my old company was very generous and the new company's plan is not. One of the agreements for our 2001 buyout was the original employees were to keep the old pension and anyone hired after 2002 would fall into the new company plan. The problem was back in 2006 the new company decided to change the original agreement and now everyone is clamming up on how the plan is structured for the old employees (in the orginal plan verses getting stuck with the new plan) I have heard the benefits are at least 25% less with the new company.

I will have 25 years in a few months and still have 15 more to go. I just want to make sure I am planning correctly.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13606 of 19224
Subject: Re: Pension Estimator Question Date: 7/3/2008 4:05 PM
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dcoop46 writes,

I have heard that my pension with my old company was very generous and the new company's plan is not. One of the agreements for our 2001 buyout was the original employees were to keep the old pension and anyone hired after 2002 would fall into the new company plan. The problem was back in 2006 the new company decided to change the original agreement and now everyone is clamming up on how the plan is structured for the old employees (in the orginal plan verses getting stuck with the new plan) I have heard the benefits are at least 25% less with the new company.

I will have 25 years in a few months and still have 15 more to go. I just want to make sure I am planning correctly.

</snip>


You have a legal right to see the detailed pension plan description. (Probably a 50 or 100 page document.) Ask the HR department to provide you a copy. If you don'r receive it within a reasonable amount of time, have your lawyer request a copy.

intercst

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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13607 of 19224
Subject: Re: Pension Estimator Question Date: 7/3/2008 4:51 PM
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You have a legal right to see the detailed pension plan description. (Probably a 50 or 100 page document.) Ask the HR department to provide you a copy. If you don'r receive it within a reasonable amount of time, have your lawyer request a copy.

intercst


They may charge you a fee for the copies. Might e 10¢ per sheet.

cliff

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Author: DorothyM Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13608 of 19224
Subject: Re: Pension Estimator Question Date: 7/3/2008 5:01 PM
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From the Department of Labor: http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html

ERISA does the following:

Requires plans to provide participants with information about the plan including important information about plan features and funding. The plan must furnish some information regularly and automatically. Some is available free of charge, some is not.

Sets minimum standards for participation, vesting, benefit accrual and funding. The law defines how long a person may be required to work before becoming eligible to participate in a plan, to accumulate benefits, and to have a non-forfeitable right to those benefits. The law also establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan.

Requires accountability of plan fiduciaries. ERISA generally defines a fiduciary as anyone who exercises discretionary authority or control over a plan's management or assets, including anyone who provides investment advice to the plan. Fiduciaries who do not follow the principles of conduct may be held responsible for restoring losses to the plan.

Gives participants the right to sue for benefits and breaches of fiduciary duty.

Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation.


When I was in HR we were required to furnish an SPD (Summary Plan Description) routinely. I'm guessing that something fishy is going on with your pension plan.

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13646 of 19224
Subject: Re: Pension Estimator Question Date: 7/8/2008 6:53 AM
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We are going on day three since I sent a message to my HR person requesting info on my pension. I wonder if I will get a response today?

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13647 of 19224
Subject: Re: Pension Estimator Question Date: 7/8/2008 9:19 AM
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If they're anything like my old employer it could take months. I once had an employee inquire about taking her pension but working part time for the company. After 4 months and several phone calls she gave up and retired completely. (I would like to have had her work 15-20 hours a week.) Explanation from HR was they had only 1 person handling retirements and didn't have time to deal with theoretical questions. My own experience when I took early retirement was similar. I wanted to know my lump sum pension vs. a monthly payout. They took forever to answer and I was just about at decision day before I got the info.

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Author: ChiliChild Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13648 of 19224
Subject: Re: Pension Estimator Question Date: 7/8/2008 10:01 AM
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I once had an employee inquire about taking her pension but working part time for the company. After 4 months and several phone calls she gave up and retired completely. (I would like to have had her work 15-20 hours a week.)

A friend retired last week and was solicited by her former boss to do some parttime work. HR told her that she could not receive a W2 and a 1090 from the same company in the same year. She has to wait until 2009. Of course, she actually retired (took the buyout offer), so maybe there's a difference.

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13649 of 19224
Subject: Re: Pension Estimator Question Date: 7/8/2008 10:28 AM
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"A friend retired last week and was solicited by her former boss to do some parttime work. HR told her that she could not receive a W2 and a 1090 from the same company in the same year. She has to wait until 2009. Of course, she actually retired (took the buyout offer), so maybe there's a difference. "

Might be company policy, we use retire folks as part time fill ins. They have to wait 30 days after the retirement date before they can come back.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13650 of 19224
Subject: Re: Pension Estimator Question Date: 7/8/2008 11:02 AM
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A friend retired last week and was solicited by her former boss to do some parttime work. HR told her that she could not receive a W2 and a 1090 from the same company in the same year. She has to wait until 2009. Of course, she actually retired (took the buyout offer), so maybe there's a difference.

The HR response is just classic HR treatment of anything out of the ordinary: MSU.

You cannot give an employee a 1099, but you certainly can give an individual both a 1099 and a W-2 for services performed during one calendar year. The issue in your friend's case would be whether the post-retirement service was as an employee or as an independent contractor, which is a facts and circumstances question of tax law. The person's prior employment and "retirement" status have no bearing on the determination.

Phil

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13666 of 19224
Subject: Re: Pension Estimator Question Date: 7/11/2008 12:16 PM
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Update - Talked to the pension person and they will send the info to me in 2-3 weeks. She was not really friendly, I guess you can expect that with a large corporation. We will see if the info arrives.

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13687 of 19224
Subject: Re: Pension Estimator Question Date: 7/15/2008 9:25 AM
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I found this and let my manager know I was going to send to our HR dept. He advised me not to ans said he would talk to them to see if they can expedite my request.


G. Periodic Pension Benefit Statements
(secs. 105(a) and 502(c)(1) of ERISA)
Present Law
ERISA provides that the administrator of a defined contribution or defined benefit
pension plan must furnish a benefit statement to any participant or beneficiary who makes a
written request for such a statement. The benefit statement must indicate, on the basis of the
latest available information: (1) the participant’s or beneficiary’s total accrued benefit; and
(2) the participant’s or beneficiary’s vested accrued benefit or the earliest date on which the
accrued benefit will become vested. A participant or beneficiary is not entitled to receive more
than one benefit statement during any 12-month period. If a plan administrator fails or refuses to
furnish a benefit statement to a participant or beneficiary within 30 days of a written request, the
participant or beneficiary may bring a civil action to recover from the plan administrator $100 a
day, within the court’s discretion, or other relief that the court deems proper.

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Author: dcoop46 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13688 of 19224
Subject: Re: Pension Estimator Question Date: 7/15/2008 9:28 AM
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"Update - Talked to the pension person and they will send the info to me in 2-3 weeks. She was not really friendly, I guess you can expect that with a large corporation. We will see if the info arrives."

Update-Update- forgot to mention received a call from HR that siad since I am not retiring and only want an estimate of my benifits my request will take 4 - 6 months. This is becasue of the back log of "real" retirement requests.

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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13689 of 19224
Subject: Re: Pension Estimator Question Date: 7/15/2008 10:27 AM
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...Update-Update- forgot to mention received a call from HR that siad since I am not retiring and only want an estimate of my benifits my request will take 4 - 6 months. This is becasue of the back log of "real" retirement requests...

Unbelievable. I thought, with pension funds computerized, all it would take is a chimpanzee to push the correct button.

TB

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13693 of 19224
Subject: Re: Pension Estimator Question Date: 7/15/2008 1:24 PM
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...Update-Update- forgot to mention received a call from HR that siad since I am not retiring and only want an estimate of my benifits my request will take 4 - 6 months. This is becasue of the back log of "real" retirement requests...
-------
Unbelievable. I thought, with pension funds computerized, all it would take is a chimpanzee to push the correct button.


really --especially at a large corp.

was thinking this was one advantage to small companies --where i quickly learned to schmooze the HR ..and then got better service
but the big place SHOULD have it all on computer


-j
..... no wonder OP is looking up ERISA law

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