How likely is that to happen?
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Exxon Mobil has corrupted the retirement system by refusing to pay the promised burial payments to survivors with the assumption of the system by the company from India.
This article claims that the trend is Pensions coming back into popularity:
https://www.nytimes.com/2023/11/24/business/pension-retirement.html
Separately, by law companies are required to provide employees with at least 45 days advance notice prior the effective date of a plan freeze.
A company can also choose a soft freeze. The most basic way to implement a soft freeze is to not allow new employees to participate in the plan, but allow currently covered employees to continue. A soft freeze may also mean that active participants no longer accrue benefits, but the value of the benefits already earned will increase with the employees' wages.
Plan docs give them the right to terminate the plan at any time. The bigger question is what happens to all the people that took the pension? Not sure if voluntary termination is treated the same and turned over to PBGC. If that’s the case, pensioners will get screwed!
No problem. Social Security is enough.
Makes sense. Most young employees don’t believe the company will be around or at least the same scale in 30 years. Offer them a way to get paid now or at least take it with them when they leave.
Is medical benefits until age 65 also included in the "defined contribution" or "defined benefit" plan?
A defined contribution pension is a pot of money intended for retirement. The amount you have on reaching retirement with which to provide an income depends on how much you pay into the plan and the investment return you achieve. The pension can either be a workplace scheme arranged by your employer or a personal plan arranged yourself.
A defined benefit plan, more commonly known as a pension plan, offers guaranteed retirement benefits for employees. Defined benefit plans are largely funded by employers, with retirement payouts based on a set formula that considers an employee’s salary, age and tenure with the company.
Was told from a good source that the pension will be eliminated in the fourth quarter of this year. Over 40 will have two weeks to choose between defined contribution or defined benefit, those who don’t choose will get defined contribution. What will not be stated, is that those who choose defined benefit will be PIP’d within three years. Under 40 will get defined contribution. New hires will get neither. Eventually the defined benefit employees will retire, quit, or take the PIL after NSI. Next up will be employees who are in the defined benefit plan until they are NSI and leave.
The plan will allow ExxonMobil to be in a better position to compete in the future and continue to increase the dividend payout. The future is bright for ExxonMobil shareholders as it should be.
If Pensions stop then executive bonuses should stop.
They give each other millions in good times and bad.
Pip here to stay ..
If the 8% pip goes away, there will be no 52 protected status. The idea of NRE was fabricated to avoid age-related discrimination suits during layoffs and 8% PIP.
But if you can get to 52, you can get to 55 just fine.
Newbie, what’s the question?
Hearing PIP targets get adjusted down. If they go back to 1-2% per year, you do the math. It doesn’t sound particularly difficult to stay out of a bottom 1-2 % for 20-30 years. (The concern was if 8% persisted.)
The question asked here is the bigger threat. Does the pension stay? Who is grandfathered? If it is replaced, what is it replaced with?
Another newbie asking this question… For regular workers, the plan does not exist anymore. It’s still part of the sales pitch to new recruits, but precise mechanisms have been carefully set up to make sure that nobody outside management even reaches age 52 while working for the company - which would put them in protected status until age 55, when they can be thrown out, but with at least 75% of the pension.
The management are the only ones for whom the system will continue to work.
Move the work to India, Hungary and Brazil..cut the high cost US staff.
I think they will do it this year
Probably be a good thing if they offered compensation. Gone are the days of working somewhere for 30!years. If Exxon doesn’t pip you, you will probably quit anyway. Better to get compensated with something you can take with you.
Very possible if they instituted bonus structure/system as a substitute to Pension.
Expect it to happen in the next 3-5 years. The company will have to buy back a lot of its shares first to minimize dividend payout which they have already started very aggressively!
When they do roll it out, they will doubtless say that management heard employee feedback and decided to get rid of the pension. Just like changes to the performance assessment process and the “hot-desking” aka “neighborhoods” initiative!
I actually disagree with folks who say ‘financials are strong, so it’s not likely now’. This is the exact time you’d want to phase it out, when you can afford to take hits paying lump sums with strong cash flow. It would be a blip on the earnings radar.
It is important to cancel the pension plan and reduce salaries of non workers.
Not sure if it’s related but they are reaching out to people that left the company before they were retirement eligible and offering buyouts of their pension. Maybe this is more related to hiding cash and limiting future liabilities with all the profits rolling in currently?
They probably will eliminate the guaranteed pension at some point with a soft withdrawal and replaced with an enhanced 401k. The timing would not seem to be best to launch now as I doubt they would want that much uncertainty with employee loss.
Given the current environment and attitude from HR, I'd say it's dead certain. I've seen it before. My previous company did exactly that. Employees under 40 were moved to a defined contribution plan, an enhanced 401k plan really. Those over 40 were given a choice to maintain the defined benefit plan or switch to defined contribution. The old style defined benefit plan is passe in the US. It will also give HR the chance to minimize the current 401k matching program at the same time. The current one is very generous by US standards. Clearly, the Company philosophy has changed on hiring and maintaining employees for life.
Highly possible. Especially if they want employees to retire. While pensions still exist for other companies there aren’t many that still have a defined benefit plan with lifetime salary annuity. Once they get a new head of HR and get rid of TG, the change is bound to happen. At a minimum the finance folks will see what a drag it is. Until the benefits change EM won’t be competitive to attract new talent. People don’t want to work at the same place their whole career. Hiring for the long term is an outdated model.
Agree. A hard freeze on pension (no more company contributions) would cause a lot of people to walk. They get the amount as a lump sum when they leave, so why would they stay?
Stopping pension for new hires (and grandfathering the rest) remains likely….but would need to be replaced with a bonus-scheme to attract talent. New hires aren’t thinking about pension anyway. It isn’t until years 5-10 that they really start to see value in the pension…..so it is a benefit for employees you aim to keep and hold long-term.
Agree that any consultant advising ExxonMobil will suggest a soft freeze. Pensions are not popular with consultants now days.
I hope y’all realize other companies out there offer a pension. It’s much more rare these days, but EM isn’t the only company with a pension. A few examples: Aflac, Coca Cola, J&J, GE, other O&G companies….this isn’t something special to EM.
It would be the end of Exxon. That simple. Absolutely nobody would come to work for this company at least in the USA; and we are already having huge problems convincing people to come work here no matter what TG says in her video. Exxon would be finished. And, of course, it would trigger a massive number of resignations to the point where the company would stop functioning and just simply implode. But, maybe this is what Darren wants; Exxon to be taken over by another oil company. Who knows?
Wouldn’t that be something? We finally get a decent raise and then they stop giving the 11% via the pension. Sounds about par for the course. Employee benefits keep going backwards.
It will happen as soon as McKinsey or Bain (or other hired management consulting firm) recommends it to improve shareholder value.
They can freeze at any time. What you have vested you keep you just stop accruing. A hard freeze would stop anyone from accruing more pension benefits, those not vested get nothing. A soft freeze would apply to only new employees. Nothing or a soft freeze are the only likely thing, headcount is declining and financials are strong.
If there was any phase out they’d stop offering to new employees first. Any employees already in the plan cant be kicked out. Eventually they could offer buy outs to employees already in plan.
No clue if any of this would happen.