The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: G-dog on July 14, 2016, 05:06:19 PM
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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
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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
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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.
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"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 .
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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.