How did you get earliy retirement ??

[Owen` 2]

Well its been 4 weeks since I sent my letter in ,so I had to ask is there any progress

 

Was told gone up to next level for discussion banghead.gif

 

The wheels turn in big companies do seem to run so slow huh2.gif

 

 

 

I don't tend to talk too much about corporate finance in babbling here, but this may be a time it is justified.

 

One of the reasons pensions became so generous in decades past was because accounting (bookkeeping, or whatever the UK terminology is) norms permitted management to offload pension expense into a separate category for reports to shareholders. It was something they could dismiss as "not reflective of the quality of management's stewardship of the shareholder's money". Meaning, it was moved to an outsourced pension fund management company and it no longer involved the corporate management itself -- and they in many cases just stopped counting its cost in corporate results and told shareholders how lucky they were to have such genius management who should be rewarded by the Executive Compensation Committee of the BoD.

 

So management LOVED to offer early retirement with lots of incentives in order to get salary expense off the books -- and even for those companies that were "forward looking" that actually including the costs of pensions on the books, moving someone from 100K salary to 40K pension looked like a cost savings in year 1 and an earnings boost and management looked very good and quickly got their glowing resumes sent out to get hired elsewhere. It was one of the most absurd realities of business of the past 20 years that "forward looking" companies were paying people . . . literally paying people to become a lifetime burden on the company in return for no further work.

 

It's very similar to company management that loves to buy other companies. On their own personal resume they get to write, "during my 2 year tenure as CEO, corporate revenues increased 300% and profit increased 70%". He doesn't mention on that resume that he BOUGHT those extra sales and profit with the shareholder's money.

 

But for that, and for pensions, of course, 1 + 1 eventually does equal 2.

 

DrMick, it would not surprise me if your situation getting such high level review is one of the first to start to encounter the resistance to this stuff in the future. There are too few young folks paying into pension funds to cover the retirees. We'll hope you get past that resistance.

 

All this was known to be coming, but . . . frankly, Microsoft Office's arrival in the world of business increased productivity in the 90's for a solid 8 years, buoyed stock markets worldwide for those years and that stock market bubble buoyed up pension funds -- so management's folly was hidden.

 

The bad news is here:

 

http://moneycentral.msn.com/investor/chart...;CP=0&PT=10

 

and here:

 

http://moneycentral.msn.com/investor/chart...bol=%24GB%3AUKX

 

There has been no growth in the S&P for 8 years. The same is true of the FTSE.

 

You can't fund pensions that have inflation indexes if the pension fund itself doesn't grow.

 

It is for this reason that I keep cautioning folks dependent on pensions to continue to LBYM (Live Below Your Means) because those "Means" are pretty much certain to erode. A little bank interest or share dividends to supplement them would be a good idea.

 

And it is for this same reason that I tell younger guys to just forget about pensions. They will never return in your lifetime. You have to take care of yourself.

Edited February 6, 2008 by Owen`

[mike100 0]

My last 12 years of working was at a UK advertising agency as TV Editor.

After being bought out by a US company things gradually changed from 35 hours a week until work until you drop, or die, which a couple of workers complied.

 

A year later I decided that I did not want the alternative, and started working to rule. Within a couple of weeks they offered me a small redundancy package and after accepting it have spent the last 5 years or so in Los.

 

No regrets, and glad I gave them the finger.

 

Mike.

[poweroper 0]

No problem getting early retirement from company I was with as policy was to

allow at sixty for management if no operational resons against, never known anybody turned down

who wanted to go. Saved company a fortune as by that time sitting at top of pay scale which was wide and they could start someone else at a much reduced rate. They also pay equivalent to single person state retirement benifit until reaching sixty five.

Best thing that ever happened.

[Dr Mick 111]

No problem getting early retirement from company I was with as policy was to

allow at sixty for management if no operational resons against, never known anybody turned down

who wanted to go. Saved company a fortune as by that time sitting at top of pay scale which was wide and they could start someone else at a much reduced rate. They also pay equivalent to single person state retirement benifit until reaching sixty five.

Best thing that ever happened.

 

I could leave no problem if 60 ,but im 55 so i need pemission ,still waiting answer now 5 weeks

 

Can not live in uk for another 5 years

[Bobshere 7]

Very good topic gentlemen,

I took my first pension in 1999 (rule of 80 age/years of service). During the discussion preparing us for retirement people from health organizations, financial people there was a fellow from the Social Security Administration. Early SS can be received by a person, if eligilable, at age 62, at a reduced rate (25% I think). The SS rep stated that taking the early retirement a person would have to live 18.5 years to break even. The reduced amount continues till death.

Now I know SS is in trouble in the US and the younger people will more than likely not see much if any. I'm 60 as of Jan 2008 and have calulated a budget to see if I can make it with my pension now and SS.

The agency I work for now has a wonderful retirement plan. If all goes properly I will roll all of this into a nest egg/emergency/money for my son and his wife , when I pass.

It takes a lot of planning and soul searching to see if there is enough out there "to pull the pin". To all that have done it I say Great, to all of us on the fence plan and if it looks right jump on it and do not look back.

Just a thought

Bobshere.

[Owen` 2]

I took my first pension in 1999 (rule of 80 age/years of service). During the discussion preparing us for retirement people from health organizations, financial people there was a fellow from the Social Security Administration. Early SS can be received by a person, if eligilable, at age 62, at a reduced rate (25% I think). The SS rep stated that taking the early retirement a person would have to live 18.5 years to break even. The reduced amount continues till death.

Now I know SS is in trouble in the US and the younger people will more than likely not see much if any. I'm 60 as of Jan 2008 and have calulated a budget to see if I can make it with my pension now and SS.

The agency I work for now has a wonderful retirement plan. If all goes properly I will roll all of this into a nest egg/emergency/money for my son and his wife , when I pass.

It takes a lot of planning and soul searching to see if there is enough out there "to pull the pin". To all that have done it I say Great, to all of us on the fence plan and if it looks right jump on it and do not look back.

Just a thought

 

The UK guys can benefit a bit from this, too.

 

Social Security pays a "full pension" at age 65 (it is already in the law that this number is 66 or 67 if your date of birth is later than X or Y -- meaning they ALREADY increased the "full retirement age" in the US and did this several years ago). If you choose, you can start your pension at age 62 and accept a reduction, forever, of the pension payment. The amount of reduction is 20% if your date of birth would have let you retire at "full pension" at 65, 25% for age 66 and 30% if your date of birth allowed it at 67. The dates of birth for these thresholds are: born earlier than 1937, age 65. Gradual increase a few months at a time to 1938-1943 up to age 66. 1943-1954 holds at age 66. Then a few months at a time from 1955-1960 up to age 67. Anyone born after 1960 full retirement is 67.

 

One of the UK BMs might be kind enough to lay out whatever the similar thing is for state pension?

 

The UK guys probably have a similar arrangement. If you start drawing money at 62, you come out ahead overall if you die before the larger full pension payout at 65 has time to catch up and pass the amount collected from 62 to 65.

[Emil 0]

Now I know SS is in trouble in the US and the younger people will more than likely not see much if any. I'm 60 as of Jan 2008 and have calulated a budget to see if I can make it with my pension now and SS.

The agency I work for now has a wonderful retirement plan. If all goes properly I will roll all of this into a nest egg/emergency/money for my son and his wife , when I pass.

 

I don't think Congress and the President will let it fail. I would think that they would do things like raise or reduce the ceiling where one doesn't pay any into SS after they reached that amount during the year. They could also increase the percentages one pays. Increase the age one becomes elgibile like they have done already or decrease the annual COLA, say 1% less than the actual.

[Owen` 2]

I don't think Congress and the President will let it fail. I would think that they would do things like raise or reduce the ceiling where one doesn't pay any into SS after they reached that amount during the year. They could also increase the percentages one pays. Increase the age one becomes elgibile like they have done already or decrease the annual COLA, say 1% less than the actual.

 

 

Soc. Security will be one of the last to be hit. Company pensions first, government pensions next (both federal and state), military pensions next, and last Social Security. That's crystal ball future predicting so maybe it's wrong, but my motivation in assessing it is simply that old people in the US vote at a far higher percentage than young people.

 

Roughly 85% of all elderly people in the US draw some sort of Social Security, and most of them vote.

 

The funding for Social Security gets very complex politically as time progresses. There are no alternatives when the matter is one of mathematics: you either increase revenue or you decrease pay out.

 

On the revenue side, as Emil mentioned, the number is about 6% of income up to $95,000 per year. It is popular in liberal circles to point at that and declare that "the rich don't pay" because someone making $150K pays in only up to $95K. But what is less widely understood is that benefits are capped. The 150K guy gets the same pension as the 95K guy. It's mathematically fair.

 

Also on the revenue side there is the issue of minorities. Minorities are scheduled to become the majority of the US workforce somewhat soon. Their representatives in Congress will inevitably look at this reality, and at the reality that the retirees whose pensions they are funding are majority white, AND at the reality that minorities tend to die earlier and thus collect less in pensions, and have serious reservations about tax increases.

 

On the benefits side, the quietest, easiest, least voter painful way to cut benefits is what Emil suggested, an inflation adjustment reduced to less than the official number. This looks like a benefit increase each year, even though it is not, and it doesn't cost too many votes. The problem with this is the senior advocacy organizations are staffed by younger people burnishing their own executive credentials and salaries, so they need seniors to have plenty of discretionary income to pay dues into those organizations (and the executives' salaries). They are on top of any such attempt and scream bloody murder, galvanizing senior resistance and maybe even vans to give them a ride to the voting polls on election day.

 

In other words, these effects will make Soc. Sec. last to be hit. We should start to hear about cuts in state government pensions soon (for you UK guys, "state" means California or Maryland, not your "state pension").

[Dr Mick 111]

for my request for early retirement.

 

Now been waiting 6 weeks for answer ,all I know its gone up to

next level for discussion

 

What I will do if answer is no as I think I not can waite 5 years till I live in LOS

 

Can a apeal be made if the answer is no ,

Edited February 22, 2008 by Dr Mick

[js007 795]

Owen, I can't foresee any cuts in US federal pensions or military pensions anytime soon, at least for those already retired or otherwise vested. Of course, they can always change the rules for new soldiers or for new federal employees, but don't forget, they already did that for new federal employees back in 1983. People hired after 1983 or so have a different deal entirely from those covered under the older system. The newer employees pay into a retirement system, but they also pay into Social Security and into their own savings plan. When they retire, they collect from all three sources. Also, they have a reduced cola, I believe.

As for the military retirees? That's too much of a political issue to expect much change, and those guys have a good lobby.

 

As for Social Security? I think that's solvent for the next 30 or 40 years. Medicare is the bigger problem and needs to be changed soon.

 

State government pensions are on shakier ground, as many are not properly funded.

 

 

J

[Emil 0]

Owen, I can't foresee any cuts in US federal pensions or military pensions anytime soon, at least for those already retired or otherwise vested. Of course, they can always change the rules for new soldiers or for new federal employees, but don't forget, they already did that for new federal employees back in 1983. People hired after 1983 or so have a different deal entirely from those covered under the older system. The newer employees pay into a retirement system, but they also pay into Social Security and into their own savings plan. When they retire, they collect from all three sources. Also, they have a reduced cola, I believe.

As for the military retirees? That's too much of a political issue to expect much change, and those guys have a good lobby.

 

As for Social Security? I think that's solvent for the next 30 or 40 years. Medicare is the bigger problem and needs to be changed soon.

 

State government pensions are on shakier ground, as many are not properly funded.

J

 

The Feds are either in the CSRS (prior 84) or FERS and those that were hired prior 84 and in CSRS were given the opportunity twice to convert. The amount that they pay into the TSP can be up to 10% of their salary with the Feds immediately kicking in a matching amount up to 5%. Also the amount that the employee puts in is deferred from your current tax year, only pay taes when you withdraw the funds no earlier than 59 1/2. This amount is not in any danger as its yours which you can move around in various types of investment programs. Take that back the only danger is if your in a program that doesn't perform well, but there are programs that invest in only T-Bills where you get a set rate of return.

 

The military is a different story as its an unfunded program as the GI nor the military pays into a retirement fund. The GI only pay into SS along with the matching amount by the military. The money that pays for military retirees is funded by the US taxpayer each year as its part of the annual DOD budget. They tried to reduce the military pension back in the early 90's where the new recruits would only get 40% of their pay after 20 years instead of 50%. They went back to the old system after a few years. Right now there is a push to make the military pay and benefits even more attractive to attract more recruits so that each branch of the service can meet their recruiting goals.