Author Topic: Pension question - changing benefit  (Read 1168 times)

G-dog

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Pension question - changing benefit
« on: July 14, 2016, 05:06:19 PM »
A friend still working at my former employer has had the same estimated pension benefit payout for the last 6 years. This week, he checked and the estimated payout has reduced by over 50%!

How could this legitimately be explained?

The company has been in the process of eliminating or freezing pensions - stop giving it as a benefit for new employees (eliminate), and reducing contributions to existing accounts (freezing).

Separate question - can your pension payout be reduced AFTER you start receiving the benefit?
Any good resources to check the laws and rules regarding those dinosaurs known as pensions?

Thanks

MDM

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Re: Pension question - changing benefit
« Reply #1 on: July 14, 2016, 09:58:54 PM »
Two places to check:
1) Call the company benefits department and ask what happened in this specific case.
2) See http://www.pbgc.gov/ for general pension info

Dee18

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Re: Pension question - changing benefit
« Reply #2 on: July 15, 2016, 05:42:52 AM »
I wonder if the pension benefit was an estimate of a pension at the time of retirement.  The annual report I receive shows what my benefit at the time of retirement would be if I stopped work now and what it would be if I worked until "normal retirement age," by which my employer means 65. 

MidWestLove

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Re: Pension question - changing benefit
« Reply #3 on: July 15, 2016, 06:04:48 AM »
"Separate question - can your pension payout be reduced AFTER you start receiving the benefit? "

your friend should talk to the benefits department and yes, there are situations where pension could be cut/reduced (even after you have been collecting it for a while). if plan is terminated, if employee fails and plan is transferred to pension benefit guarantee corporation (insurance plan for pensions), the benefits will be recalculated and capped at the top . check out pbgc as others mentioned .

jim555

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Re: Pension question - changing benefit
« Reply #4 on: July 15, 2016, 06:19:35 AM »
We had a pension estimator and the lump sum amount dropped a lot.  I inquired and they said the interest rate used was changed causing the amount to change.  The lower the rate the higher the lump sum estimate.