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Old 01-03-2015, 09:24 AM
 
Location: Floyd Co, VA
3,415 posts, read 5,136,795 times
Reputation: 7231

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I am one of many people who may be facing a major cut to my pension plan but there are some qualifications that the trustees must follow. I tried calling my plan office but they are closed for the two week Christmas, New Year break. I'll call in a few days but thought some of the very smart folks here might have some thoughts to offer on this statement:

"Plans projected to run out of money within 20 years can cut benefits if there are twice as many retirees as active workers in the plan or if the plan does not have enough money to pay more than 80% of the future promised benefits. However, no plan can cut benefits unless the cuts are projected to restore the plan to solvency."

I do not know what the current ratio of retirees to active workers is.

Does solvency mean they must be able to pay 100% of future retirees benefits or would it be something less than 100%? It does not seem reasonable that they should be able to cut my benefits by over 83% now so that some worker who has 15 years to go until retirement at 65 will be able to receive 100% of his projected payments.

I have been retired for 10 years and receiving full benefits. If I were then to get 16.7% of this amount for the next 15 years that would average out to just 36.9% of the original amount I was to have collected. I could probably manage a very lean, no frills life with a cut of 65% but 83% would mean drastic changes for me.

I hope I will get some clear answers in a few days, the not knowing exactly what may come and when is really hard.
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Old 01-03-2015, 09:32 AM
 
Location: Near a river
16,042 posts, read 18,978,143 times
Reputation: 15649
Quote:
Originally Posted by zugor View Post
I am one of many people who may be facing a major cut to my pension plan but there are some qualifications that the trustees must follow. I tried calling my plan office but they are closed for the two week Christmas, New Year break. I'll call in a few days but thought some of the very smart folks here might have some thoughts to offer on this statement:

"Plans projected to run out of money within 20 years can cut benefits if there are twice as many retirees as active workers in the plan or if the plan does not have enough money to pay more than 80% of the future promised benefits. However, no plan can cut benefits unless the cuts are projected to restore the plan to solvency."

I do not know what the current ratio of retirees to active workers is.

Does solvency mean they must be able to pay 100% of future retirees benefits or would it be something less than 100%? It does not seem reasonable that they should be able to cut my benefits by over 83% now so that some worker who has 15 years to go until retirement at 65 will be able to receive 100% of his projected payments.

I have been retired for 10 years and receiving full benefits. If I were then to get 16.7% of this amount for the next 15 years that would average out to just 36.9% of the original amount I was to have collected. I could probably manage a very lean, no frills life with a cut of 65% but 83% would mean drastic changes for me.

I hope I will get some clear answers in a few days, the not knowing exactly what may come and when is really hard.
A 65% cut to your pension?? You must be interpreting this wrong, that cannot be possible. It sounds like at worst case, your pension would be 80% of what it is now, probably with COL increases.
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Old 01-03-2015, 10:40 AM
 
143 posts, read 132,698 times
Reputation: 802
If this is what he is a part of.... it may be true. What a sad state of affairs.

Congress' backroom pension-cutting deal is even worse than expected - LA Times
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Old 01-03-2015, 10:47 AM
 
Location: Floyd Co, VA
3,415 posts, read 5,136,795 times
Reputation: 7231
Quote:
Originally Posted by newenglandgirl View Post
A 65% cut to your pension?? You must be interpreting this wrong, that cannot be possible. It sounds like at worst case, your pension would be 80% of what it is now, probably with COL increases.
I wish I were misinterpreting but here is the calculator. I currently get $6,350 a month and have 27 years of covered service. This was actually a raise of a couple of hundred bucks a year over my base, hourly wage without any overtime. Yes, it is a fabulous pension and it was a primary reason that in all the years that I worked there only one person ever quit the job (and we had over 140 people when I started) and people who were laid off came back when there was a recall, even if they had been gone for several years. There were a number of years when the plan was so flush that they were required, by law, to give those already retired a 13th payment at the end of the year because the plan had too much money!

There is not and never has been any COLA.

Our contract was negotiated every 3 years and we generally opted to have about half go in to our pension plan for the future and the rest we took in current wages, ie, if the offer was 0.75 an hour raise for each of the three years we might agree to take 0.40 in our pay and the other 0.35 toward our pension.

Sea-land Service was a great company to work for from the time I started in 1977 until the end of 1999 when it was sold to Maersk. Many of the higher ups in management that I met had started on the shop floor just as I had and they had a good understanding of the operation. Maersk did not want the maintenance garage portion of the overall operation and so a new, stand alone company was formed and it was no longer an in-house expense but now had to make a profit.

Once a year there would be a meeting at the union hall with representatives from the plan administrators. In the the last couple of years before I retired at the end of 2004 we were told that the plan was fully funded through 2049. I recall that date because I would turn 100 that year and so had no reason to suspect that things would change so drastically after the financial meltdown of 2008. The most recent annual projection shows that the plan will be in critical condition through at least 2023.

Multiemployer Retiree Cutback Calculator | Pension Rights Center
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Old 01-03-2015, 11:16 AM
 
143 posts, read 132,698 times
Reputation: 802
I believe their definition of "solvency" is that the pension fund stays alive. It says nothing about benefit amounts. Benefits will be trimmed to a point where the fund will be able to meet its "current and future obligations." But that says nothing about the dollar amount of those obligations. They are really just asking the question: "how much do we have to cut benefits so that everyone still gets something?

Someone should go to jail for this, but they won't.. because they have already bought and paid for Congress, make the rules, and own and run the country.

This is only the beginning.
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Old 01-03-2015, 02:15 PM
 
Location: Near a river
16,042 posts, read 18,978,143 times
Reputation: 15649
Zugor,

Just curious, were you in the trucking or UPS industry?

Has the measure passed? If not, is the union going to do anything?

"...The provision generally applies to "orphans" -- retirees whose employers have either gone out of business or exited the pension plan...."

Does this apply to you?
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Old 01-03-2015, 02:18 PM
 
Location: Las Vegas
13,888 posts, read 25,327,549 times
Reputation: 26385
Does ERISA stand to help you out at all?

And those same self serving politicians had the nerve to give themselves 1K a month for their personal cars in this same bill.

Where was the AARP/old people lobby when these folks were being thrown under the bus?
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Old 01-03-2015, 03:32 PM
 
Location: Floyd Co, VA
3,415 posts, read 5,136,795 times
Reputation: 7231
Quote:
Originally Posted by newenglandgirl View Post
Zugor,

Just curious, were you in the trucking or UPS industry?

Has the measure passed? If not, is the union going to do anything?

"...The provision generally applies to "orphans" -- retirees whose employers have either gone out of business or exited the pension plan...."

Does this apply to you?
Sea-Land was an international cargo shipping company - those huge cargo ships loaded with 1,000 containers of stuff. I worked in the parts department of garage where the containers, the chassis, the tractors, forklifts and other such equipment was maintained and repaired. The Oakland, CA facility had about 140 machinists and another 20 or so teamsters working three shifts when I first started. I was in the Machinists union. When I left in 2004 they were down to a total of 37 employees, all macinists since they had eliminated the Teamsters and that work was simply added to what was done by the machinists.

This measure did pass when it was tacked on to the 2015 Omnibus Spending bill at the last minute so that is how they got it through. From what I've read there had been some talk of doing this since at least 2012. I believe that the AFL-CIO did have some part in the crafting of the changes.


Quote:
Originally Posted by yellowsnow View Post
Does ERISA stand to help you out at all?

And those same self serving politicians had the nerve to give themselves 1K a month for their personal cars in this same bill.

Where was the AARP/old people lobby when these folks were being thrown under the bus?
As far as I can tell Congress didn't completely revoke ERISA, they just gutted it. Since 2009 my fund has done a number of things to try and slow the hemoraghing. The ended the Golden 85 rule which allowed a retiree to collect the full amount without a penalty even before FRA if their age plus their years of credited service equaled 85. They raised the full retirement age from 62 to 65. They raised the "penalty" for early retirement from 3% per year to 4% per year. Then they eliminated early retirement completely. Apparently doing all that still was not enough. I don't know how much the fund "lost" as a result of the meltdown but clearly it was huge since just a few years earlier they had been projecting that it would be fully funded through 2049.

I can accept the fact that something more must be done and that those of us who are collecting very large amounts should shoulder some of the burden. I'd like to know that the Trustees have taken a cut in compensation, that they have done everything possible to reduce general, non salary expenses, etc but I doubt that has happened. I know that the plan office is still located in some very nice, spacious digs since I haven't received notice of a change of address. I'd like to be assured that I'm not going to be reduced to getting 12 grand a year now so that someone who is 40 (and still has a long time to plan for their retirement) will be able to get 40 or 50 grand a year.

There is no provision for any increase of payments that have been cut if the fund manages to get back in the black sooner than expected and it is once again fully funded.

Two small bright spots in the picture, one is that I turned 65 a few months ago and my medical insurance costs dropped from $1,535 a month to $280 a month. The other is that my federal and state income taxes will drop to zero. Multiply that by 1 to 1.5 million retirees.
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Old 01-03-2015, 03:53 PM
 
Location: Oceania
8,623 posts, read 6,252,837 times
Reputation: 8318
What union did you belong to?


Most union pension plans actually paid dividends, unlike SS, so they increased their value.
I was vested after a brief stint of 6 years in a union and it pays enough to cover my health insurance. COLAs are a yearly thing. That pension fund was declared hands off to fund managers after they tried to invest some funds in pet projects years back. Congress should have done the same with SS.
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Old 01-03-2015, 04:09 PM
 
Location: Great State of Texas
86,093 posts, read 72,515,954 times
Reputation: 27565
This was part of the spending bill just passed and affect ALL multi-employer pension plans.
It was a deal worked out between the unions and 2 Congressmen who authored the bill..one Democrat and one Republican so there should be no quibbling over politics regarding this law.

Instead of the pension going to the PBGC in case of default the unions get to keep administering the pensions and are allowed to make cuts themselves. Besides that the other new item in the bill is the change to ERISA that will allow them to cut retirees currently receiving pensions.

Yes, this is a HUGE deal because it sets a precedent for all other pension plans in the future.
Once on a pension you are no longer guaranteed a steady income up until you turn 80 years old at which time you are protected.

It's bad mojo folks. The multi-employer pensions are in the worst shape today and are the first to go down this path but don't for one minute think it will end there.

Anyone who has an employer pension fund needs to be aware of what got passed because one day this law can affect your pension..public , private, single employer, etc.
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