Does anyone know for sure if the funding for the pension will or has already dropped below 80% this year and eliminate the lump sum option? Is there anyway to find out this info? Hr would not give me any kind of info in regards to this and seemed to get upset when I tried to press the issue.
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You are correct, simple math. Let's take a look. Say your obligations are $1,000,000 and your funding is $800,000. That is 80%. Now you pay out $500,000. You now have obligations of $500,000 and funding is $300,000. If my simple math serves, you are now funded at 60%. If that is not right please tell me what I am missing.
Another poster that doesn't understand simple math. A run on the plan does not drive the percentage below 80%. The percent funded is a measure of the current funding level as a percentage of the pension obligation. A run on the plan decreases the plan funding, but also decreases the future obligations. The percent funded remains the same. It is really simple.
The last annual statement for the Xerox Pension funding showed sharp decreases in funding each year over a five year period through 2025. The statement also made a point to articulate that after 5 years that funding will likely return to historical levels. During that 5 years period it will certainly shrink below 80%. You see they are trying to prevent people in the plan with large sums for running for the exits. A "run" on the plan, just like a run on a bank, will drive the fund below the 80% funding limit. Pygmalion applies. I and my wife both left because of this and cashed out after 30 years. I recommend that someone locate last years statement, or wait for this years statement and post the funding reduction vector schedule on this forum. It is a paper document. I doubt it is available from HR but may be available on the benefits web site under plan documents. That Icahn will skinny the fund and offer only an annuity, especially during this administration is a slam dunk. Then you can sit back, collect a check that will be chewed up by the new inflation tax of Joe Biden, and wait for the plan to finally become insolvent and collect much less under PBGC take a looky-loo. https://www.pbgc.gov/about/factsheets/page/plan-insolvency
The Xerox pension plan ended 1/1/2013 - that does not mean it went away or disappeared. If you participated in it as an employee prior to that date - what you have coming will show if you go to Xerox Benefits Web and look at the Pension tab.
Funding a plan above 80% is like driving your call with the gas tank always at Full - why - the PBGC requires 80% funding and putting in more is not the best allocation of funds (like it or not). If Xerox goes to default - and we are not (you are a dope if you think that is happening short term) - our numbers are still solid (over time it could happen (and you could get hit by a bus) - but, highly unlikely now as per independent credit agencies). We are in the Single Employer PBGC funding and trust me our pension is safe with this insurance (only if you were a super high wage earner and really old with 40+ years - might you be a risk for losing some money).
If you have long service your years up to 12/31/2012 then you are covered by the pension plan. Be smart go to the Resource tab and get the documents that explain how the pension works, it is yours, guaranteed by law and backed by the PBGC. It is highly unlikely that you have more in the pension then is covered by the PBGC pension.
People who make fear based, or uninformed decision - typically do stupid stuff. Lots of stupid people on this forum. Get the documents read-up, and understand your numbers. That simple. Highly unlikely you will get hit by a bus, the sky will fall, and you will lose any money that you are due from the old pension plan.
If you're relying on your pension from Mother X for retirement, I feel bad for you. You're a fool.
Folks, the pension guarantee formula for payout is NOT the same as the Xerox formula or other company's calculation formulas. Similar but NOT the same and may be lesser payout AND there is NO cash lump sum option. Also, HR is not the subject matter expert, and they don't want ANY misunderstanding; read your annual disclosure and plan rules, that is the legal document.
Agree on professional advice point, but HR is playing a dodgy game, which rightfully fosters distust. They should be forthright about this, but lying thieves are at the helm of the corp.
Some of the replies and speculation in this thread are at best 80% correct. That is why you should get professional help before you make such an important decision.
"PBGC is basically an 'insurance' managed by a government agency and paid for by fees charged to all pension plans that is used to provide participants of a pension fund with percentage of their retirement benefits (historically about 60%)"
where do you get the 60% number? From what I see, they pay 100% up to an amount higher than most of us would be getting from or pensions.
the plan is funded 80%+ (low 80's) and I'm guessing they will continue to fund at that level, the company has cash and is not in dire financial circumstances. You receive a statement every year that shows the funding. It's not that easy for a relatively financially stable company to start raiding the pension plan or dismantling the rules. Some of the other Ichan ventures were highly leveraged companies that really were really on life support and were speculative.
@ovv+1cPTBpis B-b-b-bingo. I also took it the day I walked out. Had a check 3 days later. I wasn’t going to leave it with them. Also FYI the most efficient process at xerox.
The 80% threshold for a lump-sum is a PBGC rule, not Xerox. For those who don't know the PBGC is basically an 'insurance' managed by a government agency and paid for by fees charged to all pension plans that is used to provide participants of a pension fund with percentage of their retirement benefits (historically about 60%) should the pension's sponsoring entity, in our case Xerox, be unable to pay its obligations, i.e. bankrupt. Lump-sum payout obviously drain the available cash on-hand to pay those 'insured' obligations faster than an annuity, so the PBGC basically says if a plan is not funded at 80% or more, participants cannot get a lump sum. So, don't expect that to change.
As for Xerox, based on the last funding numbers I saw and Icahn’s history of dumping pension plans on the PBGC as fast as possible, I would be shocked if the plan was above 80% today. But, due to an array unfathomable accounting rules, I think Xerox has 18 months from the end of the company’s fiscal year when the plan goes below 80% to notify plan participants. That’s because accounting rules are written by people with connections, like Icahn, so that they can get there hands on our money before the we get the shaft.
Take the money and run (fast). I wouldn’t trust the XRX Mgmt Team with my hard earned retirement dollars. I believe they currently have a lawsuit against them for charging excessive fees. Run Forrest Run
Go to www.xeroxbenefitsweb.com and model your retirement. If the lump sum of the entire amount is there that is what you get. IF it truly has dropped below 80 percent or whatever there calling the cut offs now you will show part annuity, part lump sum. If it gets to low (ie 50 percent) I believe the lump sum will not be an option. Good luck on getting HR to say anything. Keep in mind the numbers on the web site are good for that day only. If something changes a week from now your out of luck. If you commit to retirement, quitting etc the day you commit is what kind of program you will get.
"Is the lump sum taxed at 20 percent"
Not if you roll it over into your 401k or am IRA.
Is the lump sum taxed at 20 percent ?
HR is upset because they probably can’t meet the 80%. When you press them they get mad. That’s my take on it. I hope Everyone gets All the money they earned from this burned out shell of a company. You deserve that much.
I was never able to find this when I left. I took the lump sum just to cut my ties.
If they still allow you to model the options for retirement, I wonder if they would show lump sum if it wasn't available.