Anybody have any guesses as to what will transpire at.hard spin with portfolio 1 pension? Will it freeze? Will they add time to service or age like 1 and 1? Thoughts?
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Don't worry too much about pension, my dear Watson.
The top dogs have a plan in place for pensions, which will be history very soon ,come 2024. Given the dire current situation, mostly self inflected by our competent management, there is simply no way to pay for pension liabilities moving forward, for both remainco and spinco.
Expect some announcement in early 2024.
Monish was a vp at GE. They broke the company into three. Healthcare pension was frozen. Will he use the same playbook for 3M spinco? Not sure if 3M remainco would also be impacted. Cost savings so likely?
It’s going down the drain. If you haven’t realize that yet, well, it may be too late.
When SpinCo was announced, MR brushed it off as relatively insignificant because there were less than 10,000 US employees (a guess from memory) who were pension eligible. After November 30, 2022, than number would have been greatly reduced.
Portfolio 1 - Larger pension, larger retiree healthcare benefit, tiny 401k match, ended with new US employees around 2000.
Portfolio 2 - Smaller pension, tiny retiree healthcare benefit, mediocre 401k match, ended for new US employees in 2009.
Portfolio 3 - No pension, decent by modern standards 401k match. Everyone hired post-2009 in the US is on Portfolio 3.
The pension amounts are quite significant by today's standards.
- Portfolio 1 pension at full retirement is roughly 2/3rds* of final salary.
- Portfolio 2 pension at full retirement is roughly 1/3rd* of final salary.
- Both fractions are extremely simplified to give you an idea of value. The exact pension amount specific to age, years of service, final salary, etc...
Portfolio 1, Portfolio 2…what is the difference?
Bennie - I think that is probably right.
Better question, how many employees are left with Port 1 pensions? The youngest possible person should be in their 40s.
Purely speculation, seeing this as a likely opportunity for Spinco and Remainco to freeze all remaining plan 1 pensions. I could see Remainco handing current cash value of all plan 1 pensions over to Spinco,and Spinco holding that amount for you, with some sort of enhanced 401k being your new retirement benefit.