This is the brave new world. My former employer suffered big losses in its cash balance pension plan during the 2008-2009 financial crisis, it was a cash balance pension that guaranteed 3% above inflation. They were invested 70% stocks/30% bonds, so you can imagine the percentage losses in their portfolio. The employer had to make large contributions into the pension plans to get the funding levels vs. future liabilities back in balance. They froze the pension but still gave one percent above inflation up to four percent. So in that case, you can't blame them.tooluser wrote: ↑Fri Oct 06, 2017 6:44 pmMy company has stated it will freeze the pension plans at the end of the next fiscal year. I am wondering what others did in similar situations. It's a hard freeze where they will maintain any vested benefit but move onto a completely new defined contribution plan for all. The new plan is somewhat generous by today's standards, but is an extreme blow to those several years out from retirement.
I am working through the DABDA cycle - denial, anger, bargaining, depression, acceptance. I knew this could happen, so denial was not an issue. I am in the anger stage but do not believe there is any chance at bargaining, so there is no need for depression, only acceptance of what is and will be. Plans for the future (retirement) now likely stretch out a couple of more years, best case.
The company will replace the three pension plans we have with a defined contribution plan of (as far as I can tell) about half the value of my pension plan. I am 52 so have 3 more years to claim the earliest retirement benefit. The benefit is reduced for early retirement, so I may have worked longer despite the freeze, though I would formerly have had "enough" to retire at age 55 (thanks to good savings habits).
I''m pretty sure that no company has ever reversed the decision on this. It's contemptible that they are balancing the books on the backs of their most experienced and loyal employees. Are there any statistics on how likely it is for a company that makes such drastic cuts to go out of business entirely? I wonder if they will even fulfill the new obligations for any length of time. It's extremely dismaying that this decision was made in times of good investment returns for the pension plan.
What they did was give us monies in lieu of the pension contributions to invest any way we wanted. I used those monies to buy a Target Date 2025 fund.
In your case, the markets are doing well. The company just wanted to eliminate another layer of uncertainty. Hard to take as a loyal employee but that is the world we live in today. You will find that loyalty isn't much valued, you should probably increase your savings rate and maybe plan to work a bit longer.