?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
June announcement


--- In ibmpension@yahoogroups.com, "jbissel" <john@...> wrote:
>
> I was perusing the latest asset/liability info sent by the pension plan. It
is, of course, only from Jan 1, 2009. While I understood the decrease in plan
assets from $47B to $37B in 2009, I did not understand the corresponding
decrease in liabilities from $44B to $36B.
>
> Is IBM running secret death panels or was there some accounting change that
reduced their liabilities under the plan?
>
> John
>

And so far, in the plan that is grandfathered, you get to choose a plan with an
out of pocket maximum, correct?  They have offered such a plan for many years. 
Of course you might not like the price but that is a different story...  I am
not too fond of it myself.
--- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@...> wrote:
>
>
>
>
>
> --- In ibmpension@yahoogroups.com, "north99manverm" <north99manverm@> wrote:
> >
> >
> > In the IBM health insurance plans, don't you get to choose whether your plan
offers an out of pocket maximum?  And the lifetime limit?
> >
>
> You get to choose whatever IBM decides to offer.
>

Not to worry. AT&T will win this one simply because their legal team is more
powerful than the opposing forces. Now if a union is involved all bets are off.

--- In ibmpension@yahoogroups.com, finitewisdom <no_reply@...> wrote:
>
> Looks at least somewhat familiar, doesn't it?
>
>
http://online.wsj.com/article/SB10001424052702304172404575168240583359882.html#a\
rticleTabs%3Darticle
>
> Excerpts:
>
> ""We believe the conversion to our cash balance plan was appropriate and in
accordance with all legal obligations," said AT&T spokesman Mark Siegel. "We
believe our filing speaks for itself in explaining why we have no additional
liabilities to these retirees." "
> .
> .
> .
> "Pension cases typically are decided by judges, and there are no punitive
damages. But because this case includes an age-discrimination claim, under
federal law the judge could send it to a jury trial. If a jury found that the
company willfully discriminated against older workers, it could award punitive
damages that would double the size of the claim to $4.6 billion."
> .
> .
> .
> "AT&T was one of dozens of big companies including International Business
Machines  Corp. and Xerox Corp. that changed their traditional pensions to
"cash-balance" plans in the 1990s. The change saved companies money because
instead of calculating benefits by multiplying years of service and salary—which
produces rapid pension growth in later years—the companies converted the pension
to a cash-out value. This "balance" would then grow at a flat annual rate, say
4% of pay. "
> .
> .
> .
> "AT&T doesn't dispute there were long waiting periods for benefits to build.
But it said in court filings that the older workers' pensions were affected
because the former pension plan included a formula that boosted benefit growth
as employees approached age 55. AT&T calls this subsidy a "disparity," according
to papers filed in the case, which "benefits older workers.""
> .
> .
> .
> "Documents filed by the plaintiffs' experts estimate that the average loss to
people over age 45 was $65,000. SEC filings show that under the 2004 severance
plan for senior officers, the officers retained the right to "participate and
recover damages or other relief in the case." The company spokesman declined to
comment."
>

--- In ibmpension@yahoogroups.com, "north99manverm" <north99manverm@...> wrote:
>
>
> And so far, in the plan that is grandfathered, you get to choose a >plan with
an out of pocket maximum, correct?

Only if IBM decides to offer a plan with an out of pocket maximum.

>> They have offered such a plan for many years.

IBM offered a defined benefit pension plan for many years, too.

On the OLD ESTIMATOR program the NEW VALUES were added about
November 15'th. (A CALL TO FIDELITY/NETBEFITS CAN PROVIDE THE CURRENT
"ESTIMATED" CHANGE DATE; hurry, before IBM tells them they cannot divulge this
anymore ) The values provided were not very accurate, especially for the Annuity
payments; these payments should always go up, but will show lower numbers during
the end of year (after, around, NOV 15'th).In some cases, waiting can lower your
annuity payments by over $100 per month.

REMEMBER, to get the current year calculations, you must retire BEFORE DECEMBER
1. If not, your first day of retirement will be on January 1 (if you retire in
December) and the next years values will be used in calculating your retirement
payments.The use of more CORPORATE BOND values (which are usually higher tan
Treasuries) normally means LOWER PAYMENTS, based on higher interest rate values.

If you have question on the amounts being correct, CHALLENGE them with the help
of a retirement services attorney. They were over $300 per month OFF in my
initial calculations. This was based on WRONG and FLAWED "ASSUMPTIONS" in
calculating the amounts. ONCE you accept their numbers (ie. start getting paid
retirement) IBM will fight you to the death (normally yours) to prevent the
values from being modified.

--- In ibmpension@yahoogroups.com, thekanck <no_reply@...> wrote:
>
> In order to "convert" IBM's annuity into a lumpsum a interest rate has to be
selected. Historically this what the 30-year Treasury rate.
>
> I recall legislation that allowed, beginning in 2008, that the interest rate
would be calculated using 80 percent of the Treasury rate and 20 percent of the
corporate bond rate. Each year, the corporate bond rate would increase by 20
percentage points until it is 100 percent in 2012.
>
> I am "assuming" that IBM is using this new formula?
>
> In any event I think the new interest rates are only rolled into the
calulations once a year, but I do not know the effective date.
>
> Is it possible for an employee who plans to leave IBM on their own schedule to
calculate (guesstimate) in advance whether it is better to leave in the current
year or delay until after the new interest rates would go into effect?
>
> Thanks!
> TK
>

I suspect that the pension plan's liabilities changed not because a lot of
employees and retirees died, but rather because the Pension Protection Act
allowed companies to begin using a higher discount rate based on corporate bond
interest rates instead of treasury rates.

This higher interest rate makes the plan's current liabilities lower because, in
theory, that smaller amount of money can grow more with the higher rate of
return to pay all of the retirees in the future.

Many people were against this change when Congress was writing the law because
the higher interest rates can make a pension plan look healthier than it really
is.  Large companies, like IBM, were in favor of the change because it gave them
more breathing room in funding their pension plans.

--- In ibmpension@yahoogroups.com, "jbissel" <john@...> wrote:
>
> I was perusing the latest asset/liability info sent by the pension plan. It
is, of course, only from Jan 1, 2009. While I understood the decrease in plan
assets from $47B to $37B in 2009, I did not understand the corresponding
decrease in liabilities from $44B to $36B.
>
> Is IBM running secret death panels or was there some accounting change that
reduced their liabilities under the plan?
>
> John
>

I was told by the emp svcs center that the interest rate is calculated once a
year.  This year it is pretty low and that makes the lump sum higher than if the
interest rate rises the next year.
for myself and others my age and length of service it is apparently best to wait
until age 55 which is where the pension dollars tend to max out for an expected
lifespan greater than 75 years.
Waiting longer reduces the amount you can get when time is considered and taking
it earlier reduces the amount when time is considered.

Also, if you are thinking about leaving, take into account several other
factors:

medical wherever you are going may not be as good as what you have,
IBM puts an additional 4% into your 401K free, other companies most likely will
not and will not match what IBM basically puts in today.

When I did all the numbers I found I would have to get nearly 120% of my pay
somewhere else to be worth leaving IBM.  Other than that I'm simply using my
pension to supplement the other companies pay to myself.  Now at 55 that story
may change.

--- In ibmpension@yahoogroups.com, thekanck <no_reply@...> wrote:
>
> In order to "convert" IBM's annuity into a lumpsum a interest rate has to be
selected. Historically this what the 30-year Treasury rate.
>
> I recall legislation that allowed, beginning in 2008, that the interest rate
would be calculated using 80 percent of the Treasury rate and 20 percent of the
corporate bond rate. Each year, the corporate bond rate would increase by 20
percentage points until it is 100 percent in 2012.
>
> I am "assuming" that IBM is using this new formula?
>
> In any event I think the new interest rates are only rolled into the
calulations once a year, but I do not know the effective date.
>
> Is it possible for an employee who plans to leave IBM on their own schedule to
calculate (guesstimate) in advance whether it is better to leave in the current
year or delay until after the new interest rates would go into effect?
>
> Thanks!
> TK
>

--- In ibmpension@yahoogroups.com, "teamb562" <teamb562@...> wrote:
>
> ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
> June announcement
>

Holy hand grenade Batman!
I've never gotten so many personal phone calls and private e-mails on a subject
from active IBM peers in such a short amount of time, and the majority are
saying the result will be farewell to IBM by year end. These are highly skilled
technical people that will be hard to replace, like DBA's with 25 years
background, people that are looked up to as experts and key focal points in
their fields, and impossible to beat work ethics. They also tell me their BRIC
counterparts do not have the same work ethic as found in the USA and disappear
in the middle of critical situations that could make or break a contract. The
senior execs DESERVE what they get when it all comes crashing down on them in
ENRON fashion. What a big blue zoo.

I have a suggestion re the rumour.  federal laws are VERY specific.  The " plan
administrator" is absolutely obligated to answer truthfully ONLY if specifically
asked in writing re changes to pension plans.  So much so that IF there are or
were any high level discussions or decisions made, AND one asks IN writing -
carefully- IF they lie, they lose.

There are a few classical cases  on that point, in california as I recall . 
I'll try to find them.  meanwhile, I suggest folks plan ahead, and about two
weeks before you pull the pin, plan on writing and asking IF any changes which
would increase or decrease YOUR benefits have been discussed or agreed on by any
group or executive who has authority to change the terms of YOUR pension .   
e.g   ' would I gain or lose benefits or options regarding MY pension IF I
delayed my retirement by a month, and have any presentations been made to
responsible authorities regarding that kind of change ? "

I'll try and find links later

Document Don








--- In ibmpension@yahoogroups.com, dogbreath127k <no_reply@...> wrote:
>
> --- In ibmpension@yahoogroups.com, "teamb562" <teamb562@> wrote:
> >
> > ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
> > June announcement
> >
>
> Holy hand grenade Batman!
> I've never gotten so many personal phone calls and private e-mails on a
subject from active IBM peers in such a short amount of time, and the majority
are saying the result will be farewell to IBM by year end. These are highly
skilled technical people that will be hard to replace, like DBA's with 25 years
background, people that are looked up to as experts and key focal points in
their fields, and impossible to beat work ethics. They also tell me their BRIC
counterparts do not have the same work ethic as found in the USA and disappear
in the middle of critical situations that could make or break a contract. The
senior execs DESERVE what they get when it all comes crashing down on them in
ENRON fashion. What a big blue zoo.
>

Teamb562:

Your append is the first I had heard of that rumor....
Have you got an pointers to details, or can you provide any additional
information?

Thanks,
TK


--- In ibmpension@yahoogroups.com, "teamb562" <teamb562@...> wrote:
>
>
> ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
> June announcement
>
>

What's going on here???
Are there any details available????
sigh...............


--- In ibmpension@yahoogroups.com, dogbreath127k <no_reply@...> wrote:
>
> --- In ibmpension@yahoogroups.com, "teamb562" <teamb562@> wrote:
> >
> > ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
> > June announcement
> >
>
> Holy hand grenade Batman!
> I've never gotten so many personal phone calls and private e-mails on a
subject from active IBM peers in such a short amount of time, and the majority
are saying the result will be farewell to IBM by year end. These are highly
skilled technical people that will be hard to replace, like DBA's with 25 years
background, people that are looked up to as experts and key focal points in
their fields, and impossible to beat work ethics. They also tell me their BRIC
counterparts do not have the same work ethic as found in the USA and disappear
in the middle of critical situations that could make or break a contract. The
senior execs DESERVE what they get when it all comes crashing down on them in
ENRON fashion. What a big blue zoo.
>

FYI.

http://sec.gov/Archives/edgar/data/51143/000104746910001151/a2195966zex-13.htm

EXCERPT:
-------
During the year ended December 31, 2009, the company approved changes to the
United Kingdom Pension Plan which included the elimination of accrued benefits
under this plan effective April 2011. As a result of this action, the company
recorded a curtailment gain of $124 million included in 2009 net periodic
(income)/cost and reduced the PBO by $85 million. The company also amended its
cash balance and defined contribution plans in Japan to reduce overall benefits
for active participants for future years of service. This amendment resulted in
a decrease in the PBO of $359 million and had no impact on 2009 net periodic
(income)/cost.
....
During the year ended December 31, 2008, the company terminated one of its
defined benefit pension plans in Japan that resulted in a settlement gain of
$140 million recorded as part of 2008 net periodic (income)/cost and resulted in
a decrease in the PBO of $157 million.
-------

here are two cases  -  Please look up the details - AND ASK IN WRITING RE
PLANNED OR DISCUSSED CHANGES !!




http://lw.bna.com/lw/19980120/941896.htm

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
Robert D. Sprague, et al.,
Plaintiffs-Appellees/
Cross-Appellants,
v.
General Motors Corporation,
Defendant-Appellant/
Cross-Appellee.

although the case was about health care - note the following

  . . . We are not aware of any court of appeals decision imposing fiduciary
liability for a failure to disclose information that is not required to be
disclosed. At least three circuits have held that there is no fiduciary duty to
disclose planned changes in benefits or even the termination of the plan before
those actions become official. Pocchia v. NYNEX Corp., 81 F.3d 275, 278 (2d
Cir.), cert. denied, 117 S. Ct. 302 (1996); Payonk v. HMW Indus., Inc., 883 F.2d
221, 229 (3d Cir. 1989); Stanton v. Gulf Oil Corp., 792 F.2d 432, 435 (4th Cir.
1986). A fortiori, there can be no fiduciary duty to disclose the possibility of
a future change in benefits. See Restatement (Second) of Trusts §173, Comment d
(1959) ("Ordinarily the trustee is not under a duty to the beneficiary to
furnish information to him in the absence of a request for such information").

     Had an early retiree asked about the possibility of the plan changing, and
had he received a misleading answer, or had GM on its own initiative provided
misleading information about the future of the plan, or had GM been required by
ERISA or its implementing regulations to forecast the future, a different case
would have been presented. But we do not think that GM's accurate
representations of its current program can reasonably be deemed misleading. GM
having given out no inaccurate information, there was no breach of fiduciary
duty.


++++

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/04/25/BU2\
23469.DTL

Ruling gives Chevron retirees back pay

Reynolds Holding, Chronicle Staff Writer

Thursday, April 25, 2002

Chevron employees duped into retiring just before the company offered lucrative
buyout packages will get paid retroactively as the result of a San Francisco
federal court decision holding the oil giant liable for misleading the workers
at its Richmond refinery.

As buyouts and other retirement incentives become increasingly popular ways to
reduce staff and cut costs, the decision strengthens the right of employees to
demand complete and honest information about any plans to change their pension
and retirement benefits.

"In an era when many workers are losing their safety net and their retirement
security, this is a very important ruling," said Michael Ram, the San Francisco
attorney who represented the Chevron employees.

Fred Gorell, a spokesman for the oil company, now known as ChevronTexaco, called
the judge's opinion disappointing.

"We don't agree with his decision in favor of the plaintiffs," he said. "We are
reviewing our options, one of which would be to appeal."

In an opinion issued late Tuesday, U.S. District Judge William Alsup awarded six
machinists, mechanics and other rank-and-file workers who retired in 1999 the
additional money they would have received had they left Chevron after the
company announced its retirement incentives.  . .

goes on... try to find the actual court ruling  . .

  . . .

In this case, explained Alsup, Chevron had two duties as a fiduciary. One was
not to "actively misinform" employees about "the likely future of plan
benefits." The other was to tell employees who asked that the company was giving
''serious consideration" to changing benefits.

On Feb. 23, 1999, Chevron adopted a new plan for paying workers to retire early.
Three days later, executives discussed the plan's possible application to
refineries.

At about the same time, employees at the Richmond refinery began to ask managers
about rumored buyouts. But on a company Web site and at refinerywide meetings,
Steelman explain that the Richmond facility had to reduce staff, but would do so
by attrition rather than by layoffs.

Relying on Steelman's message, employees nearing retirement age began to leave
the company from March through May 1999. Steelman continued to say there would
be no retirement packages until May 28, when he announced a buyout that would
give many employees more than one year's salary.

"Unfortunately," wrote Alsup, "this notification came too late for virtually all
the plaintiffs."
..



--- In ibmpension@yahoogroups.com, dogbreath127k <no_reply@...> wrote:
>
> --- In ibmpension@yahoogroups.com, "teamb562" <teamb562@> wrote:
> >
> > ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
> > June announcement
> >
>
> Holy hand grenade Batman!    snip

Thanks folks!

Based on rumors of possible pension termination maybe it won't matter.
If I'm still around, I will start looking at this earnestly in August/Sept.

I do expect interest rates to spike in next few years ... maybe next few
months... so this might be a good year to "run away"........

TK


--- In ibmpension@yahoogroups.com, "Kevin W" <nowwicked@...> wrote:
>
> I was told by the emp svcs center that the interest rate is calculated once a
year.  This year it is pretty low and that makes the lump sum higher than if the
interest rate rises the next year.
> for myself and others my age and length of service it is apparently best to
wait until age 55 which is where the pension dollars tend to max out for an
expected lifespan greater than 75 years.
> Waiting longer reduces the amount you can get when time is considered and
taking it earlier reduces the amount when time is considered.
>
> Also, if you are thinking about leaving, take into account several other
factors:
>
> medical wherever you are going may not be as good as what you have,
> IBM puts an additional 4% into your 401K free, other companies most likely
will not and will not match what IBM basically puts in today.
>
> When I did all the numbers I found I would have to get nearly 120% of my pay
somewhere else to be worth leaving IBM.  Other than that I'm simply using my
pension to supplement the other companies pay to myself.  Now at 55 that story
may change.
>
> --- In ibmpension@yahoogroups.com, thekanck <no_reply@> wrote:
> >
> > In order to "convert" IBM's annuity into a lumpsum a interest rate has to be
selected. Historically this what the 30-year Treasury rate.
> >
> > I recall legislation that allowed, beginning in 2008, that the interest rate
would be calculated using 80 percent of the Treasury rate and 20 percent of the
corporate bond rate. Each year, the corporate bond rate would increase by 20
percentage points until it is 100 percent in 2012.
> >
> > I am "assuming" that IBM is using this new formula?
> >
> > In any event I think the new interest rates are only rolled into the
calulations once a year, but I do not know the effective date.
> >
> > Is it possible for an employee who plans to leave IBM on their own schedule
to calculate (guesstimate) in advance whether it is better to leave in the
current year or delay until after the new interest rates would go into effect?
> >
> > Thanks!
> > TK
> >
>

Do pension plan liabilities decrease if employees are fired prior to early
retirement eligibility?

--- In ibmpension@yahoogroups.com, madinpok <no_reply@...> wrote:
>
> I suspect that the pension plan's liabilities changed not because a lot of
employees and retirees died, but rather because the Pension Protection Act
allowed companies to begin using a higher discount rate based on corporate bond
interest rates instead of treasury rates.
>

Wow.

I spend a lot of time in India and China (I'm posting this from Bangalore as we
speak) working with IBMers and customers there. I can't speak for Brazil or
Russia, but the work ethic in China and India is mind-numbing. Just the other
day I was asked to call on a customer in Mumbai, they set the meeting for
6:30PM, we finished the meeting at 8PM when the customer had to go to another
business meeting, and all the Indian IBMers headed back to the office. (Granted,
the Indians don't show en masse in the office until 9:30 or so).

There are a lot of reasons, IMO, that IBM's rapid rate of offshoring jobs is
ill-advised, but "the Indians and Chinese don't have strong work ethics" isn't
one of them. The India Labs and sales offices are packed with workers until
7-8PM (at least) every day.

Kady


----- Original Message -----
From: dogbreath127k
Sent: 05/22/10 06:14 AM
To: ibmpension@yahoogroups.com
Subject: [IBM Pension] 2010 close of IBM Pension rumour has gone "viral"
internally

--- In ibmpension@yahoogroups.com, "teamb562" <teamb562@...> wrote:
  >
  > ?Maybe? because of the rumors circulating regarding ibm pension plan being
terminated for all current employees by year end 2010. Take it and leave this
year or else get a lump sum dropped into your 401k.
  > June announcement
  >

  Holy hand grenade Batman!
  I've never gotten so many personal phone calls and private e-mails on a subject
from active IBM peers in such a short amount of time, and the majority are
saying the result will be farewell to IBM by year end. These are highly skilled
technical people that will be hard to replace, like DBA's with 25 years
background, people that are looked up to as experts and key focal points in
their fields, and impossible to beat work ethics. They also tell me their BRIC
counterparts do not have the same work ethic as found in the USA and disappear
in the middle of critical situations that could make or break a contract. The
senior execs DESERVE what they get when it all comes crashing down on them in
ENRON fashion. What a big blue zoo.




[Non-text portions of this message have been removed]

So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?

Who gets that job?  Which insurance company?

Or does the PBGC come in and pay out and do the annuities?

Or what?

(is the PBGC still alive?...  just curious)

Kathi

Other that pure greed, why would IBM terminate the defined pension plan?  It is
closed as it is.  I can understand that sometime in the future the number of
retirees left in the plan will be low enough that switching to paid annuities
from other insurance companies would level IBM's risk of having all long livers
left in the pool.

How would the PBGC even come into play while IBM is raking in such huge profits?

Yeah, greed can evil all cures.

-- Don


--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>
> Or what?
>
> (is the PBGC still alive?...  just curious)
>
> Kathi
>

The rumor I am hearing from multiple co-workers is that IBM will "terminate" the
plan by converting everyone to a cash balance account.  If this is true, I don't
think this would be a legal termination of the plan, just a change in the way
benefits are paid as was done in 1999.  Thus, no need to buy any annuities.

What I have not heard is anything about what would happen to those who are
already retired and collecting an annuity.

Whether or not any of the rumors are true, I can't say.  Back in 1999, there
were lots of rumors of a cash balance plan prior to IBM's actual announcement. 
None of the ones I heard turned out to be correct.  Mostly, they were way too
optimistic about how IBMers would be treated in the conversion process.

--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>
> Or what?
>
> (is the PBGC still alive?...  just curious)
>
> Kathi
>

--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>

From the pbgc.gov website:

http://www.pbgc.gov/practitioners/plan-terminations/content/page13260.html

-------
Q: What is a standard termination?

A: A pension plan may be terminated only by following certain specific rules. A
plan that has enough money to pay all benefits owed participants and
beneficiaries may terminate in a standard termination. For each participant or
beneficiary, the plan administrator either purchases an annuity from an
insurance company or, if the plan permits, pays the benefit owed in another form
(such as a lump sum).
------

My comments:

Can it be any insurance company?

If annuities are purchased from an insurance company, I would assume PBGC
protection for your pension then goes away.


DISCLAIMER:  I don't know anything about plans for termination.  I found out
about this rumor from the Yahoo! boards.

--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>
> Or what?
>
> (is the PBGC still alive?...  just curious)
>

http://www.pbgc.gov/about/termination.html

----
When an employer ends a pension plan

Employers can end a pension plan through a process called “plan
termination.” There are two ways an employer can terminate its pension plan.

The employer can end the plan in a standard termination but only after showing
PBGC that the plan has enough money to pay all benefits owed to participants.
The plan must either purchase an annuity from an insurance company (which will
provide you with lifetime benefits when you retire) or, if your plan allows,
issue one lump-sum payment that covers your entire benefit. Before purchasing
your annuity, your plan administrator must give you an advance notice that
identifies the insurance company (or companies) that your employer may select to
provide the annuity. PBGC’s guarantee ends when your employer purchases your
annuity or gives you the lump-sum payment.
-----

The PBGC is still around, but
"As of September 30, 2008, the end of the 2008 fiscal year, PBGC reported a
$10.7 billion deficit in the financial statements for its single-employer
pension insurance program. "
http://www.pbgc.gov/media/key-resources-for-the-press/content/page15247.html

Another possibility:

If employees leave (either on their own or through a resource action) and roll
over their cash balance, wouldn't the plan's liabilities (and assets) decrease? 
Or if they just cashed out when they left?


--- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@...> wrote:
>
>
>
> Do pension plan liabilities decrease if employees are fired prior to early
retirement eligibility?
>
> --- In ibmpension@yahoogroups.com, madinpok <no_reply@> wrote:
> >
> > I suspect that the pension plan's liabilities changed not because a lot of
employees and retirees died, but rather because the Pension Protection Act
allowed companies to begin using a higher discount rate based on corporate bond
interest rates instead of treasury rates.
> >
>

When I researched this a few years ago, what I found was that a company that
terminates a pension plan can not just select any old insurance company to
purchase annuities from.  Companies must meet PBGC requirements and have and
adequate track record and assets to be able to pay the annuities.  This of
course is not an absolute guarantee that they will be able to do that, but it
should mean there is a high probability that they will.  These days I would
worry about even the big name insurance companies like Prudential and Aetna,
although I have no hard data to base that on.  Just a lot of distrust of what
has been going on in the world of insurance in recent years.

Insurance company annuities usually have some protection against default by the
insurance company.  The company may participate in guaranty pools with other
insurance companies and/or may also be covered by some state level protection.
This may or may not be sufficient to cover your entire annuity.

And yes, once the annuity is purchased, protection of your pension by the PBGC
ends.

--- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@...> wrote:
>
> Can it be any insurance company?
>
> If annuities are purchased from an insurance company, I would assume PBGC
protection for your pension then goes away.
>

I suspect the issue is interest rate risk. As long as the program remains open,
its costs can swing rather widely when interest rates increase, threatening
earnings per share.

Closing the plan moves the interest rate risk from IBM onto the annuity manager.
Further, the annuity manager can manage that risk better than IBM, since (IIRC)
pension plans are subject ot higher levels of regulation than annuities
(although the latter is also well-regulated).

Kady


----- Original Message -----
From: mr_quarkwrench
Sent: 05/24/10 10:22 PM
To: ibmpension@yahoogroups.com
Subject: [IBM Pension] Re: Termination of Pension Plan

Other that pure greed, why would IBM terminate the defined pension plan? It is
closed as it is. I can understand that sometime in the future the number of
retirees left in the plan will be low enough that switching to paid annuities
from other insurance companies would level IBM's risk of having all long livers
left in the pool.

  How would the PBGC even come into play while IBM is raking in such huge
profits?

  Yeah, greed can evil all cures.

  -- Don


  --- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
  >
  > So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
  >
  > Who gets that job? Which insurance company?
  >
  > Or does the PBGC come in and pay out and do the annuities?
  >
  > Or what?
  >
  > (is the PBGC still alive?... just curious)
  >
  > Kathi
  >




[Non-text portions of this message have been removed]

Yes, if employees take the lump sum when they leave, that would reduce the
plan's liabilities, too.   But the decrease of $7.5 billion in liabilities seems
much too large to me for this to be the only (or primary) explanation.



--- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@...> wrote:
>
>
>
> Another possibility:
>
> If employees leave (either on their own or through a resource action) and roll
over their cash balance, wouldn't the plan's liabilities (and assets) decrease? 
Or if they just cashed out when they left?
>
>
> --- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@> wrote:
> >
> >
> >
> > Do pension plan liabilities decrease if employees are fired prior to early
retirement eligibility?
> >
> > --- In ibmpension@yahoogroups.com, madinpok <no_reply@> wrote:
> > >
> > > I suspect that the pension plan's liabilities changed not because a lot of
employees and retirees died, but rather because the Pension Protection Act
allowed companies to begin using a higher discount rate based on corporate bond
interest rates instead of treasury rates.
> > >
> >
>

Pure greed probably isn't far from being the main reason IBM might want to do
this.  But they would probably say it is about reducing business costs.

The last year or two, IBM has made several statements about future pension costs
being unpredictable and that they might affect profitability.  This could be due
to the large losses in the stock market over the last couple of years and the
fact that IBM may have to contribute more money to the pension plan somewhere
down the road.

To me, it doesn't make a lot of sense for IBM to terminate the pension plan and
cash everyone out by buying them annuities.  But that's just my opinion.

What might make some sense is for IBM to reduce future pension liabilities by
converting everyone to a cash balance plan.  Since 2008, pension plans have been
phasing in the use of a corporate bond rate in calculating pension liabilities
rather than using the rate for 30 year treasury bonds.  Using this higher rate
also has the effect of reducing the lump sum value of a pension.  If IBM were to
convert everyone to a cash balance plan, they would be able to give everyone a
smaller lump sum than they could have in the past and would permanently reduce
the liabilities of the pension plan, saving the company money in the long run. 
And they would probably also reduce the chance that IBM would ever have to make
a contribution to the plan again somewhere in the future.

What doesn't make sense to me is that phase in of the corporate bond rate will
not be complete until 2012.  So IBM could save even more money by waiting 2 more
years than if they did this now.

Here's one scenario from an actuarial consulting firm:

http://www.milliman.com/expertise/employee-benefits/case-studies/planning-for-pl\
an-termination.php


--- In ibmpension@yahoogroups.com, mr_quarkwrench <no_reply@...> wrote:
>
> Other that pure greed, why would IBM terminate the defined pension plan?  It
is closed as it is.  I can understand that sometime in the future the number of
retirees left in the plan will be low enough that switching to paid annuities
from other insurance companies would level IBM's risk of having all long livers
left in the pool.
>
> How would the PBGC even come into play while IBM is raking in such huge
profits?
>
> Yeah, greed can evil all cures.
>
> -- Don

Palmisano turns 60 next year, right?  Will he leave next year? If so, what does
his comp plan look like?  Do they need the extra earnings this year to hit comp
plan targets?



--- In ibmpension@yahoogroups.com, madinpok <no_reply@...> wrote:
>

> What doesn't make sense to me is that phase in of the corporate bond rate will
not be complete until 2012.  So IBM could save even more money by waiting 2 more
years than if they did this now.
>

There will be no annunities purchased.  My understanding is this will not affect
current retirees. The "oinker" is terminating the future continuance of
annunities. Employees not currently eligible but have the defined benefit plan
will be cash balanced, perhaps with a lump into their 401k. Current retirement
eligible employees(30 yr, 15/55, etc) will have to make a choice this year.
Either retire (with an incentive) and take your last shot at a defined benefit
annunity or stick around (do you feel lucky) and get converted to a lump.
Not clear to me what this saves them but there is apparently something.


--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>
> Or what?
>
> (is the PBGC still alive?...  just curious)
>
> Kathi
>

Part of PBGC has been renamed with a new acrynom -  EBSA  Employee Benefit
Security Administration- this happened a few years ago

http://www.dol.gov/ebsa/newsroom/main.html

http://www.dol.gov/ebsa/newsroom/criminal/main.html

seems they helped nail madoff  . . .









--- In ibmpension@yahoogroups.com, justa_bean_counter <no_reply@...> wrote:
>
> So if IBM terminates the plan, there will be gadzilion annuities to purchase,
right?
>
> Who gets that job?  Which insurance company?
>
> Or does the PBGC come in and pay out and do the annuities?
>
> Or what?
>
> (is the PBGC still alive?...  just curious)
>
> Kathi
>

Just some thoughts...

I think IBM is terminating and cashing everyone out.  That is different than
placing everyone on a Cash Balance Plan.

I agree with fha, Sam HAS TO DO THIS NOW because he retires at 60, right?  Isn't
the executive retirement age 60? His 60th birthday is this year.

When a company terminates, the 'vapor profit' becomes real cash in the
executives pockets.  True, it is no long 'vapor profit' to the share holders. 
Instead, there will be transfer of wealth from the shareholders to the
executives. The executives get the excess cash (after temination taxes are paid
of course). This is why they can't wait for 2012.

This was their plan all along.  Take it and keep it.  It will all be legal,
thanks to the Pension Protection Act.  (protecing executives that is)

Kathi Cooper




--- In ibmpension@yahoogroups.com, madinpok <no_reply@...> wrote:
>
> Pure greed probably isn't far from being the main reason IBM might want to do
this.  But they would probably say it is about reducing business costs.
>
> The last year or two, IBM has made several statements about future pension
costs being unpredictable and that they might affect profitability.  This could
be due to the large losses in the stock market over the last couple of years and
the fact that IBM may have to contribute more money to the pension plan
somewhere down the road.
>
> To me, it doesn't make a lot of sense for IBM to terminate the pension plan
and cash everyone out by buying them annuities.  But that's just my opinion.
>
> What might make some sense is for IBM to reduce future pension liabilities by
converting everyone to a cash balance plan.  Since 2008, pension plans have been
phasing in the use of a corporate bond rate in calculating pension liabilities
rather than using the rate for 30 year treasury bonds.  Using this higher rate
also has the effect of reducing the lump sum value of a pension.  If IBM were to
convert everyone to a cash balance plan, they would be able to give everyone a
smaller lump sum than they could have in the past and would permanently reduce
the liabilities of the pension plan, saving the company money in the long run. 
And they would probably also reduce the chance that IBM would ever have to make
a contribution to the plan again somewhere in the future.
>
> What doesn't make sense to me is that phase in of the corporate bond rate will
not be complete until 2012.  So IBM could save even more money by waiting 2 more
years than if they did this now.
>
> Here's one scenario from an actuarial consulting firm:
>
>
http://www.milliman.com/expertise/employee-benefits/case-studies/planning-for-pl\
an-termination.php
>
>
> --- In ibmpension@yahoogroups.com, mr_quarkwrench <no_reply@> wrote:
> >
> > Other that pure greed, why would IBM terminate the defined pension plan?  It
is closed as it is.  I can understand that sometime in the future the number of
retirees left in the plan will be low enough that switching to paid annuities
from other insurance companies would level IBM's risk of having all long livers
left in the pool.
> >
> > How would the PBGC even come into play while IBM is raking in such huge
profits?
> >
> > Yeah, greed can evil all cures.
> >
> > -- Don
>