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Defined Benefit Pensioners

Old 02-06-2015, 05:44 AM
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Default Defined Benefit Pensioners

I am curious how many of you guys have a defined benefit pension plan.

If you are currently retired and are willing to share, I'm interested in who your employer was and simplest formulation of pension to years to salary.

If you are currently still working that is even more interesting.

Thanks.
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Old 02-06-2015, 06:05 AM
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Currently working
I contribute, my employer contributes, but almost all me
Earn 2% for every year of service (I.e. 50% after 20 years) max out at 60%
Still contribute to SS
No health insurance in retirement
Based on highest average salary, NOT including overtime

My wife is under a similar plan, but her plan calculates HAS with OT, but she doesn't earn any OT
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Old 02-06-2015, 06:08 AM
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Originally Posted by BadgerS View Post
Currently working
I contribute, my employer contributes, but almost all me
Earn 2% for every year of service (I.e. 50% after 20 years) max out at 60%
Still contribute to SS
No health insurance in retirement
Based on highest average salary, NOT including overtime

My wife is under a similar plan, but her plan calculates HAS with OT, but she doesn't earn any OT
What's your confidence level that the obligation will be fully met when the time comes?
Also...private sector or government if you're willing to share.
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Old 02-06-2015, 06:13 AM
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Great if someone working in the private sector still has a defined benefit pension!!!

Been VERY popular practice of big businesses over the last 10-15 years so to enter into the faux bankruptcy, followed by the shedding the pensions onto the PBGC , the pensioneer gets pennies on the dollar of what he anticipated being paid and the tax payer picks up the tab for that. This followed by the CEOs paying themselves hundreds of millions of golden parachute dollars. Hearty congratulations to those who still have a well paying defined benefit pension but I personally would not sleep well at night if a defined benefit pension was what I was planned on living on as my primarily source of income during the "golden years".

Best of luck to those counting on their former or current employers to honor the commitment but having seen it happen 1st hand, not a situation I would wish on anyone. Thankfully in my case I was in my late 30s and not 60 when it all went down but I witnessed older guys being devastated by it.....
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Old 02-06-2015, 06:19 AM
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Originally Posted by Mpellet View Post
Great if someone working in the private sector still has a defined benefit pension!!! Been VERY popular with big businesses over the last decade or so to enter into the faux bankruptcy, followed by the shedding the pensions onto the PBGC , the pensioneer gets pennies on the dollar of what he anticipated being paid and the tax payer picks up the tab for that. This followed by the CEOs paying themselves hundreds of millions of golden parachute dollars. Hearty congratulations to those who still have a well paying defined benefit pension but I personally would not sleep well at night if a defined benefit pension was what I was planned on living on as my primarily source of income during the "golden years".
That's certainly a perspective...
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Old 02-06-2015, 06:32 AM
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Originally Posted by chrispnet View Post
That's certainly a perspective...
Not a situation I would wish on anyone but it certainly was a learning experience. I had enough time remaining when it occurred for it to be recoverable but that was not the case for many.

I witnessed guys with 30+ years service either retired or near to it being absolutely devastated.....

Last edited by Mpellet; 02-06-2015 at 06:43 AM.
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Old 02-06-2015, 06:32 AM
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I recently had lunch with a former partner of mine in a Big 4 accting firm. He is nearing retirement so we talked about our retirement plans. His DB plan will pay him $200k per year for 10 years. This is an unqualified plan so if the firm goes under, unlikely, he could lose that income stream. My buddy, we have been friends for almost 40 years, also has a $25k/yr DB from the NFL....he played for 7 years. Add to that the SS his wife and he will earn and he is looking at $275k/yr for the first 10 years of his retirement without ever touching his investments.

My BIL joined a federal LE agency in the early 80s. He rose to the position of deputy director of said agency. When he did not get the director slot, and he should have, he looked at his retirement benefits and hit the door at 52 years old. Given the extremely lucrative nature of the old, grandfathered, federal employee DB plan, he is earning in the mid $100's......slightly less than what he made working 60 to 80 hour weeks. He now does consulting for various fed LE agencies and more than doubles his retirement pay. He and my sister seem to be quite happy. Candidly, he earned every dollar of his retirement. I will bet he averaged +60 hour work weeks for 30 years.....much of that time in some dangerous places......places like active war zones.
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Old 02-06-2015, 06:34 AM
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Retired 2 years ago with a defined pension. I was one of the last; every pension plan has a means to determine the amounts paid out. There was not a single co-worker that I found that had actually bothered to go in and check on how our pensions were calculated. Even our supposed "Reps" were clueless. It's really no mystery and is required to be accessible.

I'm not really sure what you're asking but here's why I left. Number one, I think depending on a single source of steady income is asking for failure at some point. So our expenses do not depend on my pension. It's certainly a part but if it failed tomorrow, we would continue living as is without having to go back to work. That and favorable circumstances made the decision very easy.

Plus I have skills where I can easily go back to work very quickly if necessary. So I guess in a nutshell, I would not depend on any defined pension plan as being a single source of income. And if depending very much on that source, I would consider the health of the company long term. I had a good friend get hammered years ago by a pharmaceutical company he retired from. They were hugely successful when he left but within I think 10 years, he got a letter one day cutting his payments substantially. He never told me the amount that was cut but he too had other income means so all was good.
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Old 02-06-2015, 06:39 AM
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Originally Posted by GulfC View Post
Retired 2 years ago with a defined pension. I was one of the last; every pension plan has a means to determine the amounts paid out. There was not a single co-worker that I found that had actually bothered to go in and check on how our pensions were calculated. Even our supposed "Reps" were clueless. It's really no mystery and is required to be accessible.

I'm not really sure what you're asking but here's why I left. Number one, I think depending on a single source of steady income is asking for failure at some point. So our expenses do not depend on my pension. It's certainly a part but if it failed tomorrow, we would continue living as is without having to go back to work. That and favorable circumstances made the decision very easy.

Plus I have skills where I can easily go back to work very quickly if necessary. So I guess in a nutshell, I would not depend on any defined pension plan as being a single source of income. And if depending very much on that source, I would consider the health of the company long term. I had a good friend get hammered years ago by a pharmaceutical company he retired from. They were hugely successful when he left but within I think 10 years, he got a letter one day cutting his payments substantially. He never told me the amount that was cut but he too had other income means so all was good.
Thanks for sharing. Sorry if my questions weren't clear.
You receive a monthly pension check now? Is it for life? Do you think you will get it for life? How does it relate to your monthly earnings when working? Private sector?
Thanks again for sharing.
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Old 02-06-2015, 06:54 AM
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Yeah it's for life but sources change upon reaching social security age where the company paid amount reduces and social security makes up the difference with a slight increase in monthly benefit. It's a percentage of the highest 3 years of monthly salary from the previous 10 years. Yes, private sector.

I'm fairly confident of getting it for life due to a number of things that occurred. The company went through bankruptcy which sounds bad but actually was a good thing for pensions. They had amended the plan before bankruptcy for our division so it was almost a non-issue in bankruptcy. Had they not, I wouldn't have been surprised that the plan would have been turned over to the PBGC during the bankruptcy proceedings. Another division that had not been amended did lose theirs.

Today the company is doing extremely well due to an incredibly competent CEO and was one of the factors in my decision to leave. But of coarse, all it takes is lower intelligence board and an arrogant CEO to change all that. But they've done well enough for continued success for many, many years to come no matter who's in charge.

Last edited by GulfC; 02-06-2015 at 09:12 AM.
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Old 02-06-2015, 06:55 AM
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Currently retired on a defined benefit pension.I contributed 5% of my gross pay per week for 32 years.The county that I worked for contributed between 6 and 11% based on their internal calculations of what was needed.Our retirement fund was and is controlled only by the member elected board consisting of 11 current and former employees that control the investments and payouts for all groups in the retirement program.There are slightly different rules for various departments,but for the most part,the pensions are very similar in who gets what.The program I signed up for was modified over the years but I made choices along the way that figured into my ultimate package.Some of the basics were,0-8 years if you quit,you could take your 5% invested with you.8-20 years you were vested in the program and could opt to take your 5% with you or leave it in the program to be collected after age 62.At 20 years we were given an option to either give up post retirement health care and change our multiplier to 1.2% from 1.0% or leave the multiplier at 1.0% until you had 25 years of service at which the multiplier would change to 1.2% and the health care would remain in effect.I chose the 25,1.2% with health care.I walked at 32 years. The final compensation ended up being 1.2% multiplier retroactive to date of hire with a score based on years of service and age times 1.2 which maxes out at 80.A score of 80 resulted in 75% of the best 3 of the last ten years wages,plus health care for life for me and my spouse.The accumulated sick days and vacation days counted in the final year's wages and boosted my monthly payout a bit. I make enough to not have to work and am looking forward to social security kicking in for both myself and my wife this year.My pension is not reduced when I qualify for SS as some are.The health care will modify when we qualify for medicare and at that time my healthcare will make up the difference between what I currently have and what medicare covers. These programs are not even offered by most employers anymore.My spouse will continue to get benefits if I should pass,reduced a bit,but still good.
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Old 02-06-2015, 09:07 AM
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muskamoot, I think you're actually describing a defined contribution plan.
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Old 02-06-2015, 09:15 AM
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I retired at age 55 and was enrolled in a defined benefit plan at the time of my retirement. $ calculation was based upon best 5 years average salary, years of service and age at retirement. Normal age of retirement was 65 with reductions for every year earlier; however I qualified for an early retirement so I received full benefit as if I was 65.
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Old 02-06-2015, 09:25 AM
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Originally Posted by GulfC View Post
muskamoot, I think you're actually describing a defined contribution plan.

No,it's a defined benefit plan.
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Old 02-06-2015, 11:16 AM
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I work in the private sector and my company allows you to either collect your pension as either a monthly benefit or in a lump sum. I pay nothing into it and it grows slowly over time, however the balance starts to grow quicker after you hit around 20 years. The growth slows after 30 years. I have 9 years until I hit 62 (my planned retirement age) and I will be taking the lump sum. I am not an expert, but I would rather have the money in my hands than risk having the monthly benefit being turned over to the feds if something went awry. And also there is a health benefit that once you hit 65 it works with medicaid as a supplemental. I have friends who are or will receive the grandfathered Fed benefit, which at times makes me a bit jealous, but I can't complain about the thought of my company handing me a sum of money at retirement, just for my service.
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Old 02-06-2015, 11:23 AM
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Originally Posted by chrispnet View Post
I am curious how many of you guys have a defined benefit pension plan.

If you are currently retired and are willing to share, I'm interested in who your employer was and simplest formulation of pension to years to salary.

If you are currently still working that is even more interesting.

Thanks.
I have a defined benefit pension plan. I am employed by state government.

I contribute 7% of my salary. My employer is supposed to contribute something, but hasn't been paying what they should. We're currently suing the governor for this.

I am currently still employed (43 years old) eligible for full pension benefits at age 60. I can retire once I have 25 years of service, but I lose 3% for each year under the age of 60.

I have 18 years in and expect to work here another 17 to possibly 20 years.

My pension benefit calculation for Tier 1 benefits is (# years of service / 55) x Final Average Salary. Final average salary is an average of the last 3 years of employment or the average of my 3 highest fiscal years salary.

My pension benefit, assuming I work until 60 and no longer get any additional raises, will be $69,999.99 per year.
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Old 02-06-2015, 11:41 AM
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Private sector defined benefit plan here. Up until a year ago it was 3 highest consecutive years of pay averaged X years of service X 1.1% and that was multiplied by 75%. As long as you had 25 years of service and for life. Surviving spouse option which will obviously reduce it.

Last year it was changed (and reduced) somewhat. All the years prior to the change are locked in the old plan. New plan uses average pay from start of new plan to retirement and it doesn't max out till the age of 65. The overall benefit was reduced by taking average pay from new plan X years of service X 1.5% and then multiplied by 50%.

Top management really likes having a pension but the old plan was killing us in the expense each year. They do also have 5% match in the 401k and medical in retirement.

Last edited by abeal2; 02-06-2015 at 11:43 AM. Reason: error
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Old 02-06-2015, 11:51 AM
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Originally Posted by muskamoot View Post
No,it's a defined benefit plan.
http://www.investopedia.com/terms/d/...ensionplan.asp

DEFINITION of 'Defined-Benefit Plan'


An employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company. There are also restrictions on when and how you can withdraw these funds without penalties.

http://www.investopedia.com/terms/d/...butionplan.asp

DEFINITION of 'Defined-Contribution Plan'

A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties.
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Old 02-06-2015, 11:52 AM
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Originally Posted by angler wrangler View Post
I work in the private sector and my company allows you to either collect your pension as either a monthly benefit or in a lump sum. I pay nothing into it and it grows slowly over time, however the balance starts to grow quicker after you hit around 20 years. The growth slows after 30 years. I have 9 years until I hit 62 (my planned retirement age) and I will be taking the lump sum. I am not an expert, but I would rather have the money in my hands than risk having the monthly benefit being turned over to the feds if something went awry. And also there is a health benefit that once you hit 65 it works with medicaid as a supplemental. I have friends who are or will receive the grandfathered Fed benefit, which at times makes me a bit jealous, but I can't complain about the thought of my company handing me a sum of money at retirement, just for my service.
Do you see this as a benefit or as deferred compensation?
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Old 02-06-2015, 11:55 AM
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Originally Posted by abeal2 View Post
Private sector defined benefit plan here. Up until a year ago it was 3 highest consecutive years of pay averaged X years of service X 1.1% and that was multiplied by 75%. As long as you had 25 years of service and for life. Surviving spouse option which will obviously reduce it.

Last year it was changed (and reduced) somewhat. All the years prior to the change are locked in the old plan. New plan uses average pay from start of new plan to retirement and it doesn't max out till the age of 65. The overall benefit was reduced by taking average pay from new plan X years of service X 1.5% and then multiplied by 50%.

Top management really likes having a pension but the old plan was killing us in the expense each year. They do also have 5% match in the 401k and medical in retirement.
Do you feel the defined benefit is secure?
Is their 5% match cash?
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