Thread regarding Chevron Corp. layoffs

Will HR actually go through these scenarios with us ?, Thought there was some mention in the retirement plan that Chevron will not run any scenarios for you ?

Excellent point, 1iiu. I did not take this into account. The rich get richer.

If that is case, for folks who make 200K in 2015, their number is 210K for 2015, the max social security earnings taxable for 2015 is $ 118,500 which is what will show up in the Social security statement , so just for 2015 alone Chevron numbers are ahead by almost a 100K. If so, the higher your number for 2015, the more chance that it will pay off to submit your social security statement. Am I understanding this correctly

I'm glad this discussion around the SSO has generated interest. It's very important to understand how important it is to your potential retirement payout. It can make a material difference. But rather than seek a lot of details here, please get HR experts to explain it to you and even show you several scenarios.

The figure you would start off with in 2015 is $210k ($200k bumped up by 5%). Chevron would then use a reduced figure for the 2014 value (whatever the % difference was in the National Average Wage between 2014 and 2015). Keep doing this exercise for each year going back to your age 22. Compare the results of the Chevron estimation method to that shown in your SS Earnings statement. If SS shows overall lower wages, then you will benefit by giving Chevron your actual SS statement. Lesser SS earnings would yield you a lower offset amount, thus increasing your pension calculation , whether it be the annuity or lump sum does not matter. Both forms of pension go up.

iF you made 200K in 2015, is your starting number 210K (105% of 200K) or is it $ 118,500 the maximum Social Security earnings that are taxable for 2015 per IRS. ?

So, the chevron record has nothing to do with what you actually made at Chevron, it is completely based on a starting number (105% of you Highest earnings) and then every year that number is subtracted by approximately 5 % ??. So, for example if you starting 105 % number for 2015 is 100k, then your 2014 number is 95 K even if you made 100k in Chevron earnings in 2014, is that correct ?

@1bky, the 5% comes into play in one way. When Chevron calculates your wages back to age 22 for SS Offset purposes, it starts with your Chevron SS Wages you earned last year (2015) and it bumps it up by 5%. So, if you earned $100k in SS wages, your starting figure will be $105k. That's the base year. Now, for 2014, 2013, 2012, and every year back to age 22, the previous year's figure will be adjusted by the percentage change in the National Average Wage (NAW) for that year. For example, you start with your bumped up SS Wage for 2015. The figure for 2014 will be reduced by the percentage change in the NAW between 2015 and 2014. Keep doing the math for each each going back to the year in which you were 22. Once you have values for all those years, compare each year to your actual SS wages shown in your SS Earnings Statement. If your actual SS earnings are lower than the Chevron estimating method,!you should provide Chevron your SS Statement. They will need to use the actual earnings, which will result in a lower SS Offset number. They will substract a lower offset from the front end of the retirement equation and you will receive a higher benefit in your pension.

Great Discussion.

2 questions

1. Based on reading the Retirement Plan and the comments from the previous posts, it appears that Chevron would use about a 5 % factor for earnings between the age of 22 and the time you joined Chevron. So, does that mean that say you

joined in 1990 at the age of 27 and made 40K, then your wages per Chevron record would be

40K - 5 % for 1989 = 38K and then 38K - 5% for 1988 and so on ??

1. If there is a difference between your Social security statement total earning and the numbers that Chevron has calculated, would ALL of the difference be added or subtracted to/from your Lump sum payout ?

Appreciate replies from folks who have gone through this process.

@1pmv, The answer you provided the previous poster is correct. The Highest Average Earnings ("HAE" or highest 36 months of pay) is an important part of the pension calculation. The discussion we are having about the Social Security Offset is another factor that goes into the overall calculation. Your HAE is easily figured, but the SSO is another factor that's little known, much less advertised or discussed by HR. I busted my assfiguring it out myself. I had called the HRSC several times to ask questions and piece-meal the answers together to make sense if it. I'm now retired but having made the correct decision to provide my SS statement before commencing my pension (annuity) paid off an extra 16% for me. I venture to think that the majority of employees with 25 or less years with Chevron would benefit to one degree or another by providing Chevron their SS earnings record before they retire. Everyone should strongly petition their HR department to provide them detailed information and examples of how the SSO works and ways for an employee

to draw logical conclusions to whether substituting Chevron's estimating method with their actual SS earnings record is in their best interest. Spread the word and have others request more info with examples dealing with the SS Offset.

Can someone help with the math on this?

I have worked for Chevron for the past 10 years

My Age 65 PIA in the Benefits Connection retirement estimator is $2601.00

the current estimate for 100% joint annuity is $1186

My Social security estimate that i downloaded today has an estimate of $2381.00 at age 66

How can i estimate the difference in annuity if Supply Chevron with my real earnings?

any help would be appreciated

@GEjhx1M-1wjt, No, that is still true. The latest discussion on this thread is the Social Security Offset factor which also affects your pension and lump sum. I believe there are several numbers that are used in the calculation, That's only one of them.

So, it has nothing to do with the Highest average 3 year earnings, I thought based on an earlier post that is the number Chevron plugs in for the years that you have not worked for chevron ?

@GEjhx1M-1jtu, Although in my case, I prefer the annuity, It seems from as much research as I can reasonably do, is that "the latest rumor" is just that, a rumor being propagated on this board by the same troll. Keep your rumors to yourself if you don't mind. This has been a rather reasonable, truthful, mindful of others thread aside from that.

Thanks for bring up the Social Security Offset issue. What I am understanding is that Chevron goes by the National Average of 5% prior to the years you were employed. In my case I was 31 when I hired on with Chevron. I have my Social Security Earning Record so I plugged it into an Excel spreadsheet, going back to I was 22. I calculated the 5% from my first year employed with Chevron to when I was 22 and compared the two. Looks like I save $17,700 by turning in my Social Security Earnings Record to Chevron if I am doing this right. Any comments are appreciated.

Thanks, Iam going to read everything about this in the retirement plan, let us see what the experiences of other folks has been

@1ddn, I started as a Chevron employee when I was 32 years old. I took my pension at 58. There were 10 years that Chevron had no idea what my previous pay with other employers was. Nonetheless, for me, submitting my Social Security statement yeilded me an increase of $16% in my pension payout. Since you began your Chevron career closer to age 22, your gain (if any) will not be as great as mine. Legal Disclosure: I'm not a Financial Advisor, nor providing financial advice. Do your own research. Thank you.

Latest rumor is that they will be doing away with lump sum option in near future.

I did not start working till 26, does that means chevron assumes 4 more years (22 to 26) in their offset calculations. If so , my lump sum should increase if I submit my social security statement ?

Also, would like to hear the experiences of other folks who have submitted their social security statement and what the results were

For the person who mentioned that his lump sum increased by 16%, how many extra years did Chevron have in their calculation ?

Thanks

So if I did not work until 26, then there are 4 years (22 to 26) of extra income that are included in Chevron's figures, so I should get an increased lump sum by submitting my social security statement. Is that correct ? Any other offsets to this that we should be looking it ?

Very interested from hearing from folks who have submitted their social security statements and what the results were

Thanks

@GEjhx1M-1gwc - No one reading this has any idea which post was yours anyway. You didn't say.

@GEjhx1M-1gwc, That's nice, since we have no idea which post was yours because you did not indicate the Post ID. Please don't and rest assured that your post will remain anonymous. And lose the paranoia. Not only are you anonymous, so are the readers.

BTW, even though this site allows anonymous postings, let me make the legal disclaimer that I'm not a Financial Advisor not offering anyone financial advise. Please do your own research. Thank you.

Reposted (did not post a moment ago)...

I'm pleased to see the topic of the Social Security Offset being discussed. Learning how this offset works and how providing Chevron your S/S statement will most likely increase your pension benefit is a big plus for every employee to understand very well. In my case, even after retiring from Chevron after 25 years, having provided Chevron HRSC with my S/S earnings statement bumped up my pension payout by 16%. That's nothing to sneeze at. It's too bad Chevron will not advise its employees on this subject or offer a better explanation of how this works so they can easily run their own estimates and make sound decisions for themselves. I cannot stress enough how important it is to understand the Social Security Offset. Demand that your HR groups place a bigger emphasize this topic in all their retirement presentations. Good luck to all.

I'm pleased to see the topic of the Social Security Offset being discussed. Learning how this offset works and how providing Chevron your S/S statement may possibly increase your pension benefit is a big plus for every employee to understand well. In my case, even after retiring from Chevron after 25 years, providing Chevron HRSC with my S/S earnings statement bumped up my pension payout by 16%. That's nothing to sneeze at. It's a shame that Chevron will not advise its employees on this subject or offer a better explanation of how this works so they can easily run their own estimates to make sound decisions for themselves. I cannot stress enough how important it is to understand the Social Security Offset. Demand of your HR groups to place a bigger emphasize this topic in all their retirement presentations. Good luck to all.

@yjy is correct and has explained how it works quite well. Chevron goes all the way back to your age 22 when estimating your Age 65 SSO (Offset). Of course, if you worked elsewhere from age 22 to the time you entered Chevron, the company doesn't have a clue how much you were paid. They have a methodology to estimate those years. It's explained in the formula found in the Chevron Retirrment Plan (SPD). In layman terms, Chevron starts with your Social Security earnings for last year (refer to your W2 for that figure). Enter that base figure for 2015 in a spreadsheet and increase it by 5% (multiply the figure by 1.05). For each year going backwards to the year you were 22, adjust the figure by the percentage change in the National Wage Index (published by the IRS and SSA). Once you have a calculated figure for every year, compare each year side-by-side with your ACTUAL Social Security earnings from your S/S Earnings Statement. You can even add up all the annual figures for each column in the spreadsheet (Chevron's method and Actual SSA Earnings). If the Chevron total exceeds the Actual SSA total, then you will be better off providing Chevron your Social Security Earnings Statement. Chevron will be obligated to use the actual earnings instead of their prescribed estimate. Lower S/S earnings will force Chevron to use a lower Offset figure, thus increasing your pension benefit (both annuity and lump sum). The degree of difference between Chevron's estimating method and your actual S/S earnings record will determine how much more you will get out if your pension. Logic will dictate that most employees with fewer years at Chevron who also earned lower average wages than what Chevron was paying them in their last 3 years, will gain the most by submitting their actual Social Security Earnings Statement to Chevron before commencing their pension.

One more thing I forgot to correct, it's not subtracted from your lump sum, it's subtracted from the single-life annuity benefit. This reduced annuity is what's used to compute all the other forms of payment (pre-2008 plan only).

@yuy - Not exactly. The SSO is an estimate of the dollar amount of your Social Security benefit that can be attributed to Chevron's payments into the Social Security on your behalf. In addition to the money you see deducted from your paycheck, Chevron pays an identical amount directly to the SSA. If you started working at 22 and worked your whole career at Chevron, then the SSO would amount to around 50% (for some reason I think they use 45%) of your expected benefit (since you and Chevron have each paid half into the system). For any year from age 22 until retirement that you didn't work for Chevron, they will assume that another employer paid into Social Security on your behalf by an amount based on your current highest wage and the national wage trends. So, for example, if you worked half your career for Chevron, then the SSO will be about half of the 50% or 25% of your expected benefit. You can also submit your actual Social Security earning report, which will produce a more accurate estimate, but could result in either a lower or higher SSO.

The social security offset is an estimate of how much ss will pay you once you are eligible. CVX subtracts this amount from your pension lump sum. If you have only worked for CVX, then CVX has your social security earnings and can accurately calculate the amount of ss you will be paid. If, however, you have worked for another company, you can provide CVX with that income so they can accurately calculate your ss benefit.

If CVX under-estimate your ss benefit, they will under-penalize your lump sum and you will get more money. And vice versa.

I also want to know more about this social security offset issue

There is a topic that has not received enough attention, that of the Social Security Offset. Everyone should not ignore how the S/S Offset can affect them when the time comes to commence their pension benefits. Download the latest version of the Chevron Retirement Plan and print the one or two pages that discusses the Offset and how it's figured into your pension formula. This is s topic that requires a bit of explanation. I may start a new thread to discuss it further. In any case, the S/S Offset is itself "an estimated figure" used by Chevron to subtract from the Pension Formula. The lower the offset is, the higher your benefit (both annuity and lump sum) will be. The S/S Offset can only be changed one way... to provide Chevron with your actual Social Security earnings statement. Chevron does not require you to submit your S/S Earnings Statement, but if you decide to, Chevron is obligated to use it. Once submitted, you cannot retract it, even if the result produces a lower benefit. Consider this carefully before providing Chevron HRSC with your earnings statement. More on this on a thread I will post later.

Another poster on this thread mentioned about the government going after retrement savings. It's possible that could happen to some degree. It's called "Means Testing". This scenario is more likely to occur under a leftist or Socialist leaning government. Moreover, if or when this happens, it won't make any difference if a retiree has chosen an annuity or the lump sum payout. Keep that in mind.

I can certify something a previious poster in this thread mentioned; "You cannot buy an annuity on the open market for a comparable cost." That is very true. The rate of return on investment that Chevron will pay on the annuity is very generous compared to purchasing an annuity later on from an insurance company. I elected the Chevron 100% Joint & Survivor annuity which has a 6% fixed rate of return. My 401k balance is very high, so I opted for a fixed pension annuity and keep my 401k balance conservatively invested. Most definitely, one option is not always best for everyone. If the annuity amount is way too little to matter, taking the lump sum could present the retired greater opportunities, like paying off a mortgage or high interest debt. Always get free advise from a Certified Financial Advisor and seriously consider the tax implications of any decision you may want to make.

im 63 and not married,so I guess its best for me to take the lumpsum, since I have no one to leave the money to.But ive been thinking of getting me a 17 year old Filipina wife,and leave it to her if I croak..

@GEjhx1M-mmq Those measly interest rates and low inflation currently are an argument towards the annuity, just as the lack of COLA on the CVX annuity is a con. The index funds have been suffering the last couple of years and 5 or 6% looks good. However, that's just today. Most people say look at long term, and these things tend to be cyclical, but of course, I have a hard time visualizing that myself, with the S& P and Dow in the negative for 2015.

@GEjhx1M-mmq Those measly interest rates and low inflation currently are an argument towards the annuity, just as the lack of COLA on the CVX annuity is a con. The index funds have been suffering the last couple of years and 5 or 6% looks good. However, that's just today. Most people say look at long term, and these things tend to be cyclical, but of course, I have a hard time visualizing that myself, with the S& P and Dow in the negative for 2015.

You mention interest on the lump sum, anything safe ls yielding next to nothing . I need at least 5 % if Ian to live on my accumulated assets. Stock mkt risk worries me

I have been beating my head against a post on this issue since I selected the EOI in this upcoming ROM. I talked to a drilling buddy of mine who left last year and he took the lump sum. He had a very good reason, he could not live on the annuity alone. I am in the same boat so I have decided on the lump sum. With the interest from it and my 401-K I will be o.k. I need to save the severance for my son's college. I can draw Social Security October this year which will help out for sure. Final decision, it's my money and I want it. Don't want a liberal government licking their chops over it as that will be their next source of income to pay off the massive debt that accumulated under Obama. They will come after your retirement believe me!!

I was looking to see if most of the Chevron folks lean towards a particular option. I guess a third option if you don't need it would be to just leave it as is , if interest rates continue to stay low , that should work out well ?

There was already a thread on this "For Chevron employees now retiring. Lump Sum or Annuity?" you can search it. It is an interesting discussion and deserved to be continued. There is a research paper on in that gives anywhere from 30% to 70 "Annuitization Rates" (take the annuity) based on the plan restrictions. So the restrictions of the plan itself affect it tremendously. - i.e. some employees (at some companies) with less years are forced to take the LS, (LSD) so those Lump sum rates look skewed. Restrictions are varied, that's just an example.

https://www.ebri.org/pdf/briefspdf/EBRI_IB_01-13.No381.LSDs.pdf is the paper. Google it.

It really depends on you own personal situation. If you are younger and have fewer years, you have a tendency to take the money and run, or have the mindset that you can invest it better. If you are older, you realize that the CVX pension is a very good deal as far as pensions go. You cannot buy an annuity in the open market for a comparable cost. Sales people make commissions on them and they are fiercely competitive for those commissions.