Can AT&T legitimately screw former employees out of their Pension?
Fidelity states it is protected and insured and cannot be touched by T, but I don't trust the folks in charge of AT&T. Their greedy ways will do anything to screw folks out of their hard earned pensions.
Serious responses only please. Links to factual information is appreciated.
Thank you!
I retired (surplused) voluntarily in February ‘19 and took a six month severance. I immediately rolled all my severance, pension, and 401k over to a independent financial firm. Take the money and run if you get the chance.
Thank you so much for the pension info, 1lor, I had been unable to find out what happens in the event a company terminates a pension without going bankrupt. You closed that gap for me and for others as well. (It's a shame we have to jump through hoops to find these things out when AT&T could have told us, but my guess is they want us to take the lump sum by all means.)
I took the enhanced lump sum pension and my spouse will be taking the annuity pension. :)
I left 2 years ago and just cashed out yesterday. Ask yourself if you would like to earn 0.7% or 10% per year on your pension if you invested it in in a S&P 500 index fund?
According to historical records, the average annual return for the S&P 500 since it began as the Composite Index in 1926 through 2018 is approximately 10%.
T is pushing the lump sum hard so that means you should do contact an independent financial planner....
In response,
You might review this article:
https://files.consumerfinance.gov/f/201601_cfpb_pension-lump-sum-payouts-and-your-retirement-security.pdf
There are PRO’s and CON’s on deciding on a Lump Sum vs. Monthly Annuity. Everyone’s situation is different with intangibles involved in the decision process. Choose wisely and visit with a Financial Advisor or start educating yourself on Retirement Planning.
Ask yourself what are your plans to generate a steady source of Retirement Income, outside of Social Security. Pensions were designed to help in that regard.
Lump Sum payments benefit the company on releasing them from future obligations, shifting the responsibility to you.
Also, every year the company must file a report to the US Department of Labor outlining the Pension plan financial specifics and health of the plans. There are multiple Pension Plans AT&T provides depending on the affiliate you are employed under. It is a very interesting report to read. All plans roll up under the Umbrella Corporate AT&T Pension Benefit Plan.
You can find the report at this location.
https://www.efast.dol.gov/portal/app/disseminatePublic?execution=e1s1
You only need to enter DATA on these two fields and then perform a search
Enter PLAN number as: 006
Enter EIN as: 431301883
A listing of filings will come up and you would review the last plan submitted for the Plan Year ending December, 31 2018.
Also, the company produces a condensed annual report summary for the past 3 years (ANNUAL FUNDING NOTICE for the AT&T PENSION BENEFIT PLAN). This report should be available on the Company Web site (or via Fidelity) under Pension Plan Documents applicable to the plan you fall under and should be showing a summary for Plan years 2016, 2017, and 2018.
Also, these sites may also be of interest on the Pension Benefit Guaranty Corporation (PBGC).
https://www.pbgc.gov/
https://www.pbgc.gov/news/testimony
Corporations pay a Premium PBGC to fund this Agency Responsible for Insuring Corporate pension plans. The AT&T Pension plans are categorized as SINGLE EMPLOYER Plans.
There is always the option that the Company may terminate the plan.
There are two ways they can terminate the pension plan.
First, they can end a plan in a “standard termination,” but only after showing the PBGC that the plan has enough money to pay all benefits owed to participants. Under a standard termination, a plan must either purchase an annuity from an insurance company (which will provide you with periodic retirement benefits, such as monthly for life or for a set period of time when you retire) or, if the plan allows, issue one lump-sum payment that covers your entire benefit. The plan administrator must give advance notice that identifies the insurance company (or companies) selected to provide the annuity. The PBGC’s guarantee ends upon the purchase of an annuity or payment of the lump-sum. If the plan purchases an annuity for you from an insurance company and that company becomes unable to pay, the applicable State Guaranty Association guarantees the annuity to the extent authorized by that state’s law.
Below are links for issues on the State Guaranty Associations
(each State has their own guidelines, Coverages, Benefit Limits, etc)
https://www.nolhga.com/
https://www.nolhga.com/factsandfigures/main.cfm/location/stateinfo
Second, if the plan is not fully-funded, AT&T may apply for a distress termination. To do so, however, they must be in financial distress and prove to a bankruptcy court, or to the PBGC, that they cannot remain in business unless the plan is terminated. If the application is granted, the PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.
Hope this may have helped.
Just wanted to share.... A family member retired in 1989 from GM. To date has never missed a check. Through good times and bad including bankruptcy/ bailout. Never missed a beat.
Took the lump sum at 55.
Invested it.
Take monthly withdrawals.
Spend 8 months a year at my cabin and 4 months at home.
If T can figure out a way to raid the pension fund, they will.
Don’t trust them.
Take the lump.
The PBGC website has a table showing the percentage of pension payment they will cover, based on the retiree's age at retirement ( I believe) in the event a covered company, such as AT&T, goes bankrupt. Someone 65 at retirement would be 100% compensated up to a monthly amount of $5K.
Also, AT&T is classified as a single employer, as opposed to a multi-employer. PBGC is close to fully funded on the single employer side (the other side is underfunded).
Explore the PBGC website. They have a table showing the percentage of pension payment they will cover, based on the retiree's age at retirement ( I believe) in the event a covered company, such as AT for the most part, AT&T is the former, which is good, because the PBGC is close to fully funded on the single employer side.
To end the 75% funding claim repeated from the news articles- No participant in any PBGC covered Pension Plan can get a Cash Balance payout if the plan funding level is below 80% per the Pension Protection Act of 2006. AT&T continues to payout millions to retiring employees that request the cash balance method of payment.
From The IRS Filing that AT&T is required to make yearly for the Pension Plan. I would imagine the wireless tracking stock is included here. I hope just because it says 75% in a news article someone might fact check it before you post it as fact. The Intern that wrote the article might not have passed math class..................
Funding Target Attainment Percentage
2017 96.5%
2016 98.5%
2015 98.7%
I took the lump just because I dont trust at&t anymore. Too much debt, paying way too much for other companies, and they still have old phone company people running all the companies. I wouldn't have said this 10 years ago though. So I took everything to a financial expert. Seems to really be working good. I trust them. I just feel better doing this. I'm sure the money will be safe but just dont trust the people running the now.
Enron employees took big hits their 401k. The typical 401k pays the company match in company stock. Many if not most Eron employees also invested their discretionary 401k portions into Enron stock because of it's growth and returns on equity. Enron stock dropped from $80+ to less than a dollar.
Company stock re-allocations are restricted until some age point in your fifties. Check to see if and when you can reinvest the $T portion if you need to diversify more. A big fundamental mistake of employees at big companies is to put all their assets into the company. $GE $GM $F $T all tanked from historic highs at different times without full share price recovery. Caveat emptor!
@1tju, "you fools are too young to remember, or you have a short memory." Which is precisely what I thought about you when I read your post!
Twain once said, "the older I get, the more clearly I remember things that never happened." Seems he was talking about people like you when he said that. Enron’s 17,000 employees, over four separate divisions (Gas, Financial, Paper and one other) within the Corp, got paid every red cent.
History books, and newspapers, have recorded that thanks to the Pension Benefit Guaranty Corp (PBGC) who brought pressure to bare on Enron, Enron sold $4.45 billion of its Gas line division and placed $321 million in escrow so that ALL the Pensioners could take their money, IN FULL.
This is why companies, like an Enron or AT&T, or the like that offer Pensions, Fund The PBGC, a government run agency since 1974. If you’re worried about your pension, don’t let uneducated fear mongers steal your ability to research the truth of it all...."A lie can travel half way around the world while the truth is putting on it’s shoes"....again, Mark Twain, don’t let people lie and so easily get away with it!
You fools are either too young to remember Enron or you have a short memory. Their pension funds were also protected and “guaranteed”. But that was all a big farce. Just like the ATT funding. You stand a very good chance of getting zero.
The pension is guaranteed by the Pension Benefit Guarantee Corporation (PBGC) up to a certain amount. They guarantee a fairly large monthly chunk of change.
https://www.pbgc.gov/wr/benefits/guaranteed-benefits
The problem with the pension occurs if it is sold to a insurance company. The PBGC is out of the picture. If something goes wrong with that insurance company, I don't know who pays what, and how much.
http://www.pensionrights.org/publications/fact-sheet/what-happens-when-pension-transferred-insurance-company
Unless AT&T goes bankrupt, you're fine. Of course, looking at who's steering this ship, bankruptcy is always a possibility.
Delphi went bankrupt; short of that, should be fine.
Take the Lump and leave b4 it is gone folks
https://news.bloomberglaw.com/employee-benefits/federal-pension-insurer-cleared-in-delphi-retirees-suit
Open up a brokerage account and move to an IRA!! You will be able to control your money!!!
Research Delphi
Take the lump
My understanding is it's possible, but unlikely.
We're talking about the pension and not the 401k.
To do so, they would either need to declare bankruptcy or go to court and convince a court they would need to abandon the pension to prevent bankruptcy. If either of these options happen there is federal pension guarantee program, but at best you would get 1/2 of the pension. The federal pension guarantee is also already short of funds.
If you’re vested it’s yours.
If you're vested, that's your money. Pretty straightforward.
Good question. I’m not sure. My understanding is your pension is protected unless the company files for bankruptcy. Then kiss it goodbye.