1,000 salaried Ford workers retire after pension warning from automaker

[StumblingElk]

You are wrong, they are sustainable if they are funded in the manner the actuaries lay out. The problem is that the politicians see a pile of money and raid it every chance they get. Social security is a prime example.
Another good example was NJ back when Chris Krispycreme was Governor. He whined all over the media about the teachers pension system and what a mess it was and how it was unsustainable. The truth of the matter was that the system had been negotiated over many years and the numbers were well known. The actuaries set the funding models and then the state of NJ ignored them. At the time Kristie was making these statements the state of NJ had not made ANY contribution to the system for over 10 yrs. A huge lie of omission.

I can't speak to your specific account above, but in general....no...the math doesn't work out. Politicians often artificially inflate unfunded liabilities rather than steal from them. They grandstand for more money/pensions and campaign on it. On paper, to the average person, it sounds great.

I had this discussion with someone some time ago and we pulled up some data/info online. In short, many places/unions/industries promise far more than what they could ever pay out. IE; teachers union in CA or the USPS. In the case of the USPS, they are funded through sales and fees just like a private business yet they receive Billions in bail outs with our tax money due tho their unfunded liabilities (over-promised pensions). Government sector is generally far worse in this regard. Mayor of Chicago has pleaded for help with this and said multiple times the math doesn't add up and their pensions aren't sustainable. California state has over $1 Trillion in unfunded liabilites. And so on

 

[JTK]

Usually you cover it with more overtime or hire "temp" workers who don't qualify for health or retirement benefits.

I get that, but a 1000? Seemingly all in a short period of time?

If that doesn't cripple the organization. You were way overstaffed to begin with.

 

[Kestas]

I retired 18 months ago and opted for the lump sum. Just looking at straight money, the breakeven point was 80 years old.

I recently learned that the lump sum in my old company has been reduced 25% for anyone that opts for it now.

 

[Vil_Riker]

I get that, but a 1000? Seemingly all in a short period of time?

If that doesn't cripple the organization. You were way overstaffed to begin with.

It's salaried employees so likely administrative positions. If as an exempt employee you've been in a situation where the company has a mass layoff and you remain in the workforce, you get a lot of extra tasks without a change in compensation. The company will provide you with the resources necessary to do the extra work which is allowing you to work late and on weekends.

 

[jeepman3071]

These pension plans never made any sense and have not been funded properly. It was all about politicians and union heads looking out for themselves. I'll have a very small pension from the University I currently work at if I stay here a while and retire by a certain age, but it is nothing compared to the pensions my father and grandfather have. I'm sure if I reach retirement age there won't be a such thing as retirement, just work until you die.

 

[64bawagon]

I can't speak to your specific account above, but in general....no...the math doesn't work out. Politicians often artificially inflate unfunded liabilities rather than steal from them. They grandstand for more money/pensions and campaign on it. On paper, to the average person, it sounds great.

I had this discussion with someone some time ago and we pulled up some data/info online. In short, many places/unions/industries promise far more than what they could ever pay out. IE; teachers union in CA or the USPS. In the case of the USPS, they are funded through sales and fees just like a private business yet they receive Billions in bail outs with our tax money due tho their unfunded liabilities (over-promised pensions). Government sector is generally far worse in this regard. Mayor of Chicago has pleaded for help with this and said multiple times the math doesn't add up and their pensions aren't sustainable. California state has over $1 Trillion in unfunded liabilites. And so on

Its a human problem, add money and humans and corruption ensues

 

[64bawagon]

These pension plans never made any sense and have not been funded properly. It was all about politicians and union heads looking out for themselves. I'll have a very small pension from the University I currently work at if I stay here a while and retire by a certain age, but it is nothing compared to the pensions my father and grandfather have. I'm sure if I reach retirement age there won't be a such thing as retirement, just work until you die.

Keep in mind that these plans and the funding were negotiated. Both parties understand the costs, its part of an overall compensation package and often there are ongoing monetary concessions made in order to help fund the pension obligation. The pension does not exits as a stand alone component.
Many municipalities are struggling with recruitment and retention of civil employees. The benefits have been cut and the wages didnt always keep up because they were thrown in to help fund the benefits that were cut.
Theres a lot of contracts that were bargained in good faith and have now been gutted after long court battles. Every contract I worked under turned out to not be worth the paper they were typed on and thats in a fairly liberal state. My boys would have been fourth generation in the fire service, both would have excelled at the career had I not talked them out of it. The pay isnt great and the benefits suck yet the politicians still wonder why recruiting is down.

 

[AITG]

What kind of blows my mind is, Ford can afford to shed 1000 employees and still function?

That alone says a lot.

We loose one tech or manager with my employer and it's a hardship.

Mack trucks went through a large early retirement in the 1990s. The unintended result was a tremendous amount of knowledge went with the the early retirees. I was a good sized fleet customer at the time and I had more than one discussion with regional service reps where I had to explain to the rep how his employer handled various situations. I can only assume that the devaluing of wisdom has gotten exponentially worse in 2022.

 

[Cujet]

With the current level of de industrialization, I expect more pension problems and bailouts, along with a doubling down of “stupid”.

I need not say more. The audience here is quite sharp.

 

[BHopkins]

Interesting article and something I would not have generally thought as happening- reduced lump sum pensions payout because of rising interest rates.

If I read the article correctly, a Ford employee that is entitled to a pension, and is taking a lump sum payout, will see a significant reduction in the lump sum payout in 2023 over 2022, because of the potential earnings in interest income.

1,000 salaried Ford workers retire after pension warning from automaker

www.msn.com

This is not unique to Ford. The company I recently retired from went through the same thing.

Any time the prime interest rate goes up, the value of pension funds goes down. The low interest rate in the past few years has resulted in significant increase in the value of pension funds. But it only matters if a retiree is taking the lump sum. If a retiree takes an annuity option, the change in prime interest rate will have no impact on the pension benefit.

The change is calculated each year based upon the prime rate as of Dec. 31, for the upcoming calendar year.

There a mass retirement exodus of employees from my old employer, in October and November.

 

[blkwtr]

Interesting article and something I would not have generally thought as happening- reduced lump sum pensions payout because of rising interest rates.

If I read the article correctly, a Ford employee that is entitled to a pension, and is taking a lump sum payout, will see a significant reduction in the lump sum payout in 2023 over 2022, because of the potential earnings in interest income.

1,000 salaried Ford workers retire after pension warning from automaker

www.msn.com

Lump sum pension payouts have always been calculated this way.

 

[IndyIan]

I guess fortunately here in Ontario, government pensions are not controlled by the government, so they can't dip into that pot for money. Also the various governments aren't on the hook for a pension shortfall either.
I believe the government has defined contributions for current employees and that's it. Current employees are can have their contribution rates increased or decreased depending on well the pension fund is doing.

 

[DwightFrye]

Unfunded pension liabilities by Ford and GM are going to be a big reason going forward why those companies don't have the cash that is really needed to put into EV development. Sure, they are putting some money into that category but they will need a whole lot more. Where are they going to get it ?

 

[GON]

Appreciate the responses in this thread. It was eye opening to learn that bulk pension payouts get reduced as interest rates rise. I had no idea how that worked.

 

[Dave Hess]

I retired 18 months ago and opted for the lump sum. Just looking at straight money, the breakeven point was 80 years old.

I recently learned that the lump sum in my old company has been reduced 25% for anyone that opts for it now.

Very smart decision to take the lump sum and head for the exit door.

My employer gives early retirement package to get the older and higher paid employees out the door sooner.

 

[supton]

What kind of blows my mind is, Ford can afford to shed 1000 employees and still function?

That alone says a lot.

We loose one tech or manager with my employer and it's a hardship.

Usually you cover it with more overtime or hire "temp" workers who don't qualify for health or retirement benefits.

Yep… we couldn’t get a replacement so now we ramped up outsourcing. Am waiting to see how this goes, but making sure I can “pivot” if things keep changing.