We are hearing that the pension lump sum is going to be discontinued Jan 1 2021. Anyone else hearing this?
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Does anyone know what is going on with the Class Action lawsuit whereas retirees were suing AT&T suggesting the actuary tables T is using to figure pension benefits are not in-line with gov't mandated rates and have not been updated in years? Is this on-going or any news in this regard?
Have not seen. I get the luxurious cash balance plan from Cingular so doesn't really matter.
For Jan 1, 2021 what was communicated so far was a change regarding the subsidy to medicare for those 65 or older if they don't retire by then.
Look, here is the deal on the lump sum and interest rates. Your future monthly pension is a fixed amount. The present amount to cover that future pension depends on the interest rate today. That is the lump sum value. The higher the interest rate, the present amount to cover the future pension is lower because less money is needed because it earns more. The lower the interest rate less the present value grows so more money would needed to cover the fixed monthly pension. That is why the lower the interest rate goes the larger the lump sum gets.
Can someone please explain why a lower to negative interest rate helps our lump sum opposed to annuity if we were to take it.
With the lower interest rates, lumps have skyrocketed! I know they were encouraging lump sums as they want to get rid of the pension fund completely....but, they may be scared of rates continuing to go lower or NEGATIVE! I’m getting out this year either way. This thing will collapse sooner or later.
I was let go in 2004 and left my pension with AT&T/Fidelity. I received a letter this summer with the option to take the lump sum (cash, 20% taxed), roll it over to an IRA or leave it. I left it in. Now I am told I can never take the full lump sum as I missed the window this summer, my only options are annuity and partial lump sum. Because there isn't a lot in there (haven't paid into it since '04), I opted to leave it and draw the annuity when I decide to retire. I had Fidelity run the numbers of what my monthly payout would be for me at 63 & 65, showed it to my financial guy and he said go with the annuity, because he couldn't find anything that would give me that same amount of money. And the annuity is for life, the money won't run out.
No idea if the rumor is true or not, however, there is speculation that the fed could go into negative rates in the future. With that in mind it could bump the lump sum payouts by a large amount. Current rates put the annuity at 6% of payout (monthly annuity x 12 ÷ lump) making the payout marginally attractive to the company. If the interest rates go lower (increasing lump) the annuity % of lump decreases and makes the annuity more attractive to the company.
This reason could make it plausible.
Yes, it is better for the company if you take the lump sum instead of the annuity, currently. Depending on who you are, and if you have a spouse, and what sorts of retirement funds she may have, lump sum may be a good thing. Seriously be checking with a financial planner, or two, or three. One very real deal, the state of AT&T, and it's pension funds, and if you are retired on the Annuity, and they eff up the fund, and goes for example bankrupt, you'll still get money from that pension, but it will be reduced, and quite possibly greatly reduced. Who wants that, especially in retirement? Lump Sum doesn't have that attached string. And you can bequeath your lump sum to your non-spouse family/relatives where you can't with the annuity, and that's a factor for many. Yes, the Annuity has some interesting pop-ups for your spouse, but you got to pick one, and whatever you pick, reduces the amount of payouts to you, then when you pass, it picks up for the spouse, at whatever popup rate you originally selected, and gone after the pop-up spouse goes. I’ve posted here on this earlier, and I have thought that this OP maybe a Troll, as the company keep pushing Lump Sum as its good for them, not as much in general for you depending. So why would they take away Lump Sum after 9/1/20, and in theory force you to take the annuity, potentially to be bankrupt, and at the very least having to occasionally load it with multi-billions of cash to keep it funded? Doesn't quite add all up to me.
This is pure B.S.
company's with Pensions would rather give the Lump vs a costly Annunity that has to be managed for the life of each retiree.
Its cheaper for aCompany to disperse Lump Sum vs a monthly pay check.
I heard a rumor that in order to get the 2020 rates, you have to collect the lump sum by Sept 1. But I have not called Fidelity yet to confirm. In 2019, they sent letters to some people that they had to take their lump sum in Sept 2019 or they would be forced to take annuity in future years. As a single man, I have to take the lump sum so it can be inherited by my kids.
I agree with others here. The company saves money if we take the lump sum but I am wondering what % is it funded? Does anyone know the % funded as of end of 2019? It should be documented.
Lump sum in compare to the annuity, based on two different financial planners running all sorts of scenarios, shows by a slight margin lump sum is better. There are a lot of attractive things about the annuity, including if you have a spouse, but, there is the risk that AT&T may go bankrupt on the pension fund, may not fund it, etc and then it's payouts could be seriously slashed. That's not a risk most want to take when deep into retirement.
No. Lump sum pension payout benefits them with folks living longer and longer these days. They would never have made more people eligible for it in the last few years if it was not benefitting them over all.
This could be straight up troll bait, as it sounds plausible. Potentially, another way to get the 20+ 50+ MR75 out during the 2020 vision reign storm. So, if this is true, I would like a like more confirmation, this means if 20/50/75, during year of 2020 (that fits a wife band in the L1/L2 range) then get out this year, or, lose the Medicare Subsidy, and the ability to take a lump sum. The Lump Sum, at this time according to my financial planner, is the best option to take, only slightly, for our situation, but it is a hair better. My G-d, I hate this company a little more everyday. Thanks Trolls
Probably because they are losing the current class action lawsuit and they have been caught screwing the employees that built the company. So now in att fashion they are just going to take their ball and glove and go home and not play fairly.
If there is a sharp drop in assets of the pension plan that might be a possibility.
Right idea; but, it's too soon.
It's not bad enough yet within the company, financial markets or the economy; but, you're on the right track.
There would be too much backlash if they were to try to pull something like that right now. But after a T and market crash sometime in the future, then they would have the political cover to pull such a stunt.
When the financial stars line up for anyone considering retirement, do it and do it quickly before they change the rules on you.
Don't take your eye off the ball.
Never heard they were discontinuing lump sum for mobility. We had it since the beginning and no reason to think they will change it as an option
For Management, the Company has been bouncing back and forth regarding taking a full or partial lump sum or not allowing it at all. We all know the benefits of lumping out for the employee and the benefits for the Company if it manages the money. Always remember the Company looks to its best interest not the employees.
Yes confirmed They will continue o remove anything to benefit employees and reduce cost.