Thread regarding Chevron Corp. layoffs

offset

Just take a look at your indexed wages shown in your social security statement earnings history. Do those numbers look rather low compared to your indexed wages after working with Chevron? I bet 95% of soon-to-be retirees would say yes. Well, Chevron doesn’t have access to your wage history before you joined the company. So, they will have to estimate those unknown data fields going back 35 years or to when you were 22. I’m not sure what methodology or algorithm Chevron uses to guesstimate, but it’s that guessing to the high side that inflates the SS Offset number they use. The higher that offset number is, the lesser the pension amount is. This offset affects the annuity calculation, and whatever the annuity amount is, determines your lump sum amount. So, make no mistake. Submitting your social social security statement is very likely going to boost your pension amount to some degree or another. Short term employees with previous history of lower than average wage years before joining Chevron will be the ones that gain the most. But even long term employees of less than 35 years will likely see a small boost in their pension amount. I was a 27 year employee and saw a 12% increase in my annuity benefit just by submitting my SS statement.

For me it is a no brainer. I spent the late 1970s as a ski bum and the late 1980s and 1990s in various academic post-docs and the like. Those years my salary was effectively nothing relative to my next two decades in industry. Submitting my SS numbers should add a significant bump to my lump.

@5gbc, You may be the one exception. I will safely wager that over 95% of employees who joined Chevron earned less prior to becoming an employee. You might have the one in a thousand who traded down in pay.

You seem to cling to many old-fashioned notions of how things worked for older generations.

Most people had lower salaries before getting to Chevron or "Before" getting to any later job. That's how careers work, you make more as you gain more experience. Sorry to break up your bogus hypothesis there, little "cup-half-empty" guy.

Many people had higher paying jobs before ratcheting down the ladder to Chevron salary .

@4icw, Yes, the benefit sums you see in the Chevron retirement calculator already has the estimated offset figured in. That’s why it’s important to consider if you should submit your social security statement before or at the time you request your pension commencement papers. I am very sure that almost everyone with less than 35 years with the company will come out ahead by submitting their SS statement. The fewer years of Chevron service, the higher their final pension amount will be, no matter if they choose the annuity or lump sum.

So, is the Social Security offset already baked into the sums we see generated (lump sum and qualified annual annuity) by the pension calculator?

@3fjp, Indeed the pension formula is documented, but the way the SS Offset is computed is not clearly defined. You or anyone will have a difficulty trying to replicate the figure that Chevron will display in your pension calculation. Since it’s the SS Offset amount that takes away from the formula equation that precedes it, it is the reason why everyone who is paying attention has questions about the offset figure. But, as brought up several times, the retiree only needs to know whether or not their actual social security benefit at age 65 would be higher or lower than the offset figure Chevron is using. If your actual SS benefit at age 65 is lower than Chevron’s offset figure, waste no time and submit the social security statement to Chevron immediately.

It is your highest 36 months Chevron salary, summed and divided by 36.

The SPD does provide formulas based on year hired and legacy company. One of the inputs is “monthly highest average earnings” which is treated by a percent multiplier and is then multiplied by years of benefit accrual. What is the monthly highest average earnings? Is that the pension itself or Social Security earnings?

Formula is documented in plan. Varies by legacy employer.

@2jzl, I’m sure Chevron has a fixed formula methodology to determine everyone’s pension. Even though the Chevron Retirement Plan document lays it out, they certainly don’t disclose a formula, per-se, just a brief explanation. I hate when I cannot replicate a result that is shown on a retirement calculation scenario on my employer’s website. Try as I did, I called the Chevron Retirement Representatives several times and their position was to clam up and not give specifics. Not a warm and comforting impression. But in any case, by simple deduction, if your actual earnings shown on your SS statement produces a lower benefit at age 65 than the estimated SS Offset shown in your Chevron pension details, you should submit your actual SS statement to Chevron prior to, or along with, your application to commence your pension. Your pension payment, annuity as well as lump sum, will be higher. Hint: I downloaded the AnyPIA.exe application from the official www.ssa.gov website and with reading the instructions in a separate document, I was able to solve for my SS Age 65 benefit based on my actual earnings.

Here is an example. Suppose according to the pension plan, using your age, years of service and highest average earnings, you are entitled to a single annuity of $7,500/month for life. If CVX estimated your SS at age 65 as $2,500/month then they would reduce the annuity amount to $5,000/month from age 65-death. This amount will be fixed when you retire and will not change if you are paid a different amount of SS (or no SS) at age 65. If you can show actual earnings history and ask them to use that, perhaps it will forecast you will get $2,000/mo SS at age 65. In this case, they will now fix your age 65-death payment at $5,500/mo. The increase in the annuity payment will then increase your lump sum, since a larger lump sum is required to fund a larger annuity.

Do the pension calc now and look at the detailed estimate of SS offset. If it looks high relative to what you estimate, provide the figures to CVX and update it. It can be worth significant lump sum increase in some cases (e.g. you started working for CVX well after age 22 and earned less before starting your CVX job).

It’s a slog, but once you’ve figured out the offsets using the two calculations described in the SPD using the Chevron SS PIA estimate and comparing that against the offsets generated using the same formula with your actual PIA from SSA you arrive at your actual offset numbers (two of them). From there, what does Chevron do with the offset? How do they apply the offset numbers to the pension payout. That is not spelled out in the SPD.

@2ool, Excellent post and questions.
1) Don’t be overly concerned with trying to solve for the offset calculation. The important thing is knowing the difference between Chevron’s estimate and your actual Social Security Age 65 PIA benefit. If your SS Age 65 PIA is lower that Chevron’s estimated offset figure, you will benefit by submitting your social security statement to Chevron.
2) Chevron will replace the years prior to Chevron employment with your actual SS wage earnings. They will recalculate your pension benefit using your actual wages, thus resulting in Chevron using the same formula and using the correct offset figure.
3) The formula is described in the Chevron Retirement Plan SPD document. I concur in that the formula is not completely obvious or simple to figure out. I tried several times, but could not replicate the exact figure that Chevron shows as the estimated offset.
The bottom line is in knowing whether the Chevron offset is higher than the Social Security Age 65 PIA. If the Chevron offset is HIGHER, it will benefit you to submit your Social Security statement to Chevron. A higher offset takes away from the pension result, so by having Chevron lower the offset, it will raise the amount you’ll get. Hint: I was a 24 year career employee with Chevron went I left the company. It benefited me to the tune of 16% additional money in my pension after submitting my SS statement.

So, I’m not seeing a direct response to the OP’s question here and this seems important to people who didn’t spend their entire career at Chevron and/or had time with minimal income. Is it enough to know that the SSA report shows lower or higher earnings compared to Chevron’s PIA estimate to decide whether to submit a– statement of earnings? Are there any calculations needed to get the offset/do we really need to know anything more than there’s a difference? That is, will Chevron just replace the years prior to Chevron employment based on the SS report using the same formula they used to derive the PIA estimate? What does the formula look like (I know it’s in the pension plan description, but it isn’t completely obvious how to run the numbers).

@2yjg, Oh are you sooooo wrong. That’s real bad advice to be taking. The SS Offset affect both the annuity and lump sum. Remember that Chevron’s pension is first calculated as a Single Life Annuity. From that point, the Joint & Survivor is derived, and so on— including the Lump Sum. The higher the annuity, the higher everything else my friend. Think it through and quit propagating non facts.

I spoke with the pension folks today. If you are taking a lump sum this doesn’t effect anything, so no need to send in. It’s only if you’ll be taking the monthly amount.

Correction to my last post ; I meant to say if CVX is higher, not lower.

@xuf+17IKuoGd This is @wjg+17IKuoGd. SSO = social security offset. No where in my statement did I refer to Social Security payment. It’s very simple. All that 0P has to do is compare the SSO that’s in his or her pension estimate and if that number is lower than age 65 PIA then it’s best for him or her to submit the Social Security earnings statement so CVX can use the correct amount instead of an estimate.

Your response may be a little confusing @wjg+17IKuoGd. Submitting SS earnings if these are CVX estimate only affects the pension payout (lump sum or annuity) NOT your SS payments themselves.

YES, if CVX SSO > SS SSO, then submit SS earning history. My friends and I did, which resulted in lower SSO, but higher lump sum distribution.