Please Explain

gogogadget posted this on the "Any thoughts Chip" subject.
Hope it helps

Tug

A company can end a plan on its own ownly if it has enough money to pay all benefits accrued by retired employees and those who are vested in the plan. Retired employees are not affected, but if you are an active employee, you will stop accumulating benefits the moment the plan ends. And your monthly benefit at retirement reflects the number of years you worked and your salary AT THE TIME THE the plan was terminated, even if you continue to work at the company years longer. You won't receive either monthly payment benefits or lump sum, however, until you reach the retirement age specefied in the plan.

The PBCS's maximum payout for a person retiring at age 65 under the single-employer plan may fully cover all people earning roughly less than $115k , under a typical benefit formula. Some early retirees, however, may not find their benefits quite so sweet. If you retire at age 60 instead of 65, for example, your benefit will be capped at a much lower figure.

For multi-employer plans, usually the result of collective bargaining agreements, payments are much much lower.

Whats more, should the business clomate deteriorate, some corporations may go bankrupt or come under intense pressure to terminate their plans. Such an eventuality can affect those already retired and would prevent current employees from collecting any more at retirement than the amount they have already accumulated.

Consumer reports, October 2002 page 11 and 12
(exerpts)
 
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On 11/29/2002 10:58:58 PM tug_slug wrote:

gogogadget posted this on the "Any thoughts Chip" subject.
Hope it helps

Tug

A company can end a plan on its own ownly if it has enough money to pay all benefits accrued by retired employees and those who are vested in the plan. Retired employees are not affected, but if you are an active employee, you will stop accumulating benefits the moment the plan ends. And your monthly benefit at retirement reflects the number of years you worked and your salary AT THE TIME THE the plan was terminated, even if you continue to work at the company years longer. You won't receive either monthly payment benefits or lump sum, however, until you reach the retirement age specefied in the plan.

The PBCS's maximum payout for a person retiring at age 65 under the single-employer plan may fully cover all people earning roughly less than $115k , under a typical benefit formula. Some early retirees, however, may not find their benefits quite so sweet. If you retire at age 60 instead of 65, for example, your benefit will be capped at a much lower figure.

For multi-employer plans, usually the result of collective bargaining agreements, payments are much much lower.

Whats more, should the business clomate deteriorate, some corporations may go bankrupt or come under intense pressure to terminate their plans. Such an eventuality can affect those already retired and would prevent current employees from collecting any more at retirement than the amount they have already accumulated.

Consumer reports, October 2002 page 11 and 12
(exerpts)

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COHIBA REPLIES-

That is not 100% correct...

The pension plan can be terminated under "Distress Termination" if the pension plan's liabilities exceed it's assets. The plan may be terminated if the PBGC determines that it would be required to enable the company to pay it's debts and continue business.
 
It should be noted that if the PBGC terminates the plan, for lack of funding,
it can put a lean on any assets the company has to cover the shortfall. I think it becomes the first in line, even in bankruptcy, to collect.
 
I was told that at the ALPA retirement seminars, they gave information as to what would happen to the pensions for the pilots if the company filed for Chapter 7 or filed for a distress termination under Chapter 11. The PBGC would take over the fund, they do a breakdown in a pyramid type structure. The first two categories were not applicable to U- not sure why but the third category was called priority 3, I believe. You only went into this category if you were 53 or older. Then, it was prorated according to a combination of age and years of service. They go back 3 years. So, if you were 56 with 20 yrs of service the day the PBGC took over, on paper (which would determine what you ultimately got) you were 53 with your last 3 yrs for pay purposes (highest consecutive 36 months) also being 3 yrs ago. In other words, you would be paid as a 53 yr old pilot who retired early, taking a % hit for retiring 7 years early, using a pay scale from 3 yrs ago. Additionally, you would take an additional hit for having had survivor benefits. Think this is bad? If you were under 53, you were told that you got nothing. That's right, 0. Also, no lump sums under a distress termination. If someone attended the seminar, feel free to correct me. I don't know if it works the same with the other union pensions. The PBGC has a web site http://www.pbgc.gov/.