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"I read about companies supplementing their pension funds through buying annuities.
Seems like a way of increasing costs without asking the contributors."

Some companies bought their retirees an annuity at the retirement point. That ended all future pension obligations - and got them 'off the books'.

My former employer was one that did it. However, they ended the pension plan about 1990 or so when the law changed, which required all pension funds be 'fully contributed each year', and started a 401K. If you had less than (years plus age =55), you got your 'pension money' dumped into your 401K as company stock you couldn't sell till age 55. If you exceeded the '55' you could retain your pension. On the date you retired, they'd buy an immediate annuity for you,not inflation adjusted. The company was off the hook.

I suspect many other companies had similar plans. That way, they didn't have to worry about COLAs and inflation , or bad years of earnings where they still had to pony up bucks for the pension plan no matter what.....for retirees.


The quoted sentence seems to be a different thing that the response.

When I retired, my former employer (Motorola) had already stopped offering a pension for new employees a few years earlier. Of course the pension plan continued for all us the were already in the pension plan. And when I retired I indeed got my pension payments for several years.

Then they decided to get rid of their pension headache and decided to get it off the books. In 2014 Motorola handed it over to Prudential and it converted to a group annuity. Out benefit amount did not change--good thing! Moto said, “Our retirees’ benefits are not changing, just who provides them,” IIRC, they handed to Prudential the Plan funds of $3.1B plus another couple billion in cash.
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