This is a real no brainer. Even though I have been told repeatedly that I am doing a good job and that I have totally unique and valuable experience, my salary has been "redlined" for the past four years and my "incentive plan" has been cut below normal. When I asked why I got two responses: 1) "You make too much money." and 2) "You are not meeting expectations." When I asked what those expectations were (since I met all the objectives on my performance review) the answer was "I will let you know in two weeks." That answer was 13 months ago. The VP is still uable to articulate any expectations that I have not met.
The Board Chairman and CEO got a 17% raise this year. Employee raises this year will only average 2%. Based on my discussions with others, I suppose that CEO raise was included in the pool. Nationwide, job openings are exploding. People are about to leave this company in droves.
Sunday, December 21, 2003
Thursday, December 18, 2003
The Clock is Ticking
Not much going on related to my retirements. As stated below, I took the deal, even though they had sent a letter that said that it was not a good deal if one was planning to retire within 18 months. I took it anyway because: 1) I could use the money now [I was going to take a similar amount out of my IRA and pay the penalty] and 2) I don't trust them any further than I can toss a cat.
My clock is now down to 44 workdays. That equates to a February 27th last-work-day, followed by vacation, followed by an April 1st retirement. Even here they are getting shifty. They just changed the computer program that calculates retirement and it has a field that says my 85-point retirement is April 30th. If I actually run the calculator for a termination date of April 01, it shows that I get the full amount. The saga continues.
My clock is now down to 44 workdays. That equates to a February 27th last-work-day, followed by vacation, followed by an April 1st retirement. Even here they are getting shifty. They just changed the computer program that calculates retirement and it has a field that says my 85-point retirement is April 30th. If I actually run the calculator for a termination date of April 01, it shows that I get the full amount. The saga continues.
Tuesday, October 14, 2003
Monday, October 13, 2003
Buy Out Deal
The company sent me a written offer to buy out a "long service plan."
The company had a long-standing offer to employees hired before 1982 and over age 55 to pay them 10 extra weeks of salary when they retire or voluntarily terminate. On Saturday, they sent an offer to buy out this plan. Actually, for me it will be a good deal, because I was planning to tap into my IRA this quarter to pay off some up-coming credit card bills (mostly for vacation trips). The amount is right to avoid tapping the IRA again this year.
The deal offers an immediate cash payout, with tax consequences, or a payout into a deferred savings plan (401K), with different tax consequences. The bad part of the deal is that the payout amount is discounted 9% per year from assumed retirement date. This has no impact on me, since I will be retiring in less than 6 months from now, but is a real rip-off for later retirees. The company claims that the 9% is their weighted average cost of capital. They are ignoring the fact that recent risk free investments pull in about 1%.
There is also a club involved. The offer states several times, some of them in bold-red letters, that the company can change or drop the underlying plan at any time. With these guys that means they WILL drop the plan in the very near future.
I will select the immediate cash payout. I need the money now. I have already max'ed out on FICA, so I avoid a 6% payout there. I avoid the 10% penalty on a withdrawl from the IRA. My tax rate in the future will be no worse than my current rate. So I will take the deal.
The company had a long-standing offer to employees hired before 1982 and over age 55 to pay them 10 extra weeks of salary when they retire or voluntarily terminate. On Saturday, they sent an offer to buy out this plan. Actually, for me it will be a good deal, because I was planning to tap into my IRA this quarter to pay off some up-coming credit card bills (mostly for vacation trips). The amount is right to avoid tapping the IRA again this year.
The deal offers an immediate cash payout, with tax consequences, or a payout into a deferred savings plan (401K), with different tax consequences. The bad part of the deal is that the payout amount is discounted 9% per year from assumed retirement date. This has no impact on me, since I will be retiring in less than 6 months from now, but is a real rip-off for later retirees. The company claims that the 9% is their weighted average cost of capital. They are ignoring the fact that recent risk free investments pull in about 1%.
There is also a club involved. The offer states several times, some of them in bold-red letters, that the company can change or drop the underlying plan at any time. With these guys that means they WILL drop the plan in the very near future.
I will select the immediate cash payout. I need the money now. I have already max'ed out on FICA, so I avoid a 6% payout there. I avoid the 10% penalty on a withdrawl from the IRA. My tax rate in the future will be no worse than my current rate. So I will take the deal.
Wednesday, October 08, 2003
The Word is Out!
Well, the word is out that I am retiring. Based on detailed (day-by-day) calculations, I have 85 working days left. That means that the last work day will be the end of February and I will take vacation the month of March. Retirement is April 1st.
Evidently my retirement has been a subject in several higher level staff meetings. Mainly because they have already posted my job...two grade levels below mine and for about 1/2 the salary. Ha!
Evidently my retirement has been a subject in several higher level staff meetings. Mainly because they have already posted my job...two grade levels below mine and for about 1/2 the salary. Ha!
Friday, August 08, 2003
The Briefing
We got the briefing today. The Chairman briefed everyone who was a supervisor. I got to attend because I was DOA [Delgation of Authority] for my boss, who was out of town.
They did a very good job. It turns out that we are 800 million underfunded in the retirement plan. This is based on the actuarial table and expected investment returns. The company is kicking in 240 million to keep the plan solvent. They decided to keep the plan in place through September 2006. Good. That will let me retire in April 2003. In 2006. They will stop additional "earnings" for the defined benefit plan and start making additional payments to thee 401K plan.
This has two effects: 1) all of the investment risk shifts to the employees, and 2) so does the opportunity. The employees retirement funding will depend on how well the employee picks investments. Since I assume the retirement plan trustees have a fiduciary duty to protect assets, they have to invest in high grade (read low margin) investments. The employees can decide to take higher risks for greater returns.
Overall, they did a good job.
They did a very good job. It turns out that we are 800 million underfunded in the retirement plan. This is based on the actuarial table and expected investment returns. The company is kicking in 240 million to keep the plan solvent. They decided to keep the plan in place through September 2006. Good. That will let me retire in April 2003. In 2006. They will stop additional "earnings" for the defined benefit plan and start making additional payments to thee 401K plan.
This has two effects: 1) all of the investment risk shifts to the employees, and 2) so does the opportunity. The employees retirement funding will depend on how well the employee picks investments. Since I assume the retirement plan trustees have a fiduciary duty to protect assets, they have to invest in high grade (read low margin) investments. The employees can decide to take higher risks for greater returns.
Overall, they did a good job.
Monday, August 04, 2003
The Warning Letter
Over the past several years, there has been a real decline in the amount of medical coverage for both active and retired employees. We no longer have an effective medical plan.
Employees accrue 1/12th of their annual vacation earnings each month. The company expenses this vacation when earned and reverses the accrual when the vacation is taken. Unused vacation is thus a liability on the books. Until this spring, we could hold up to two years of vacation before accruals stop. The company suddenly changed this to 1.5 years and announced they would go to 1.0 years next spring. They originally gave 3 days notice, meaning most employees would be hit immediately. They relented and gave employees a month. Now they are asking, "Where are all the deadbeat employees?'' They are all taking their earned vacation before it is stolen.
On Thursday, the Chairman sent an email to all employees, telling them that the retirement plan was suddenly a half-billion dollar underfunded and that the company could no longer afford to meet its obligations. There will be a change to the retirement plan and to the entire benefit package. This underfunding occured because of the looting of the fund mentioned in the previous post and because they had been using 11% as the projected investment return for purposes of determining the level of funding.
Warren Buffet said that a 11% investment rate was legal, improper, a flagrant deception, and a misrepresentation. He was right.
On Thursday, we will find out the details of the changes. This will determine when I retire.
Employees accrue 1/12th of their annual vacation earnings each month. The company expenses this vacation when earned and reverses the accrual when the vacation is taken. Unused vacation is thus a liability on the books. Until this spring, we could hold up to two years of vacation before accruals stop. The company suddenly changed this to 1.5 years and announced they would go to 1.0 years next spring. They originally gave 3 days notice, meaning most employees would be hit immediately. They relented and gave employees a month. Now they are asking, "Where are all the deadbeat employees?'' They are all taking their earned vacation before it is stolen.
On Thursday, the Chairman sent an email to all employees, telling them that the retirement plan was suddenly a half-billion dollar underfunded and that the company could no longer afford to meet its obligations. There will be a change to the retirement plan and to the entire benefit package. This underfunding occured because of the looting of the fund mentioned in the previous post and because they had been using 11% as the projected investment return for purposes of determining the level of funding.
Warren Buffet said that a 11% investment rate was legal, improper, a flagrant deception, and a misrepresentation. He was right.
On Thursday, we will find out the details of the changes. This will determine when I retire.
Background
I have worked for a major aerospace company since 1977. When I started, the company offered an 85-point retirement. That means that I can get full retirement benefits [about 50% of current pay] when I reach 85 points. Points are defined as age plus years of service (rounded up). Benefits are considered "earned" starting at about 5 years of service. No one can collect benefits before age 55.
The effect is that earned retirement doubles overnight as you reach 85 points.
In the 1980's, the company decided that this was too lucrative, so they changed the deal to some other plan. Having some morals [and trying to avoid lawsuits], they grandfathered the old plan for current employees [me] and applied the new plan to new employees.
Around this time the retirement fund was doing really well. Large government contracts were funding big bucks for the plan, interest rates were high and any fool could get a good return on investments. The board of directors decided that they could take "excess' money out of the plan, since they put it in, and record it as profit [paying tax on it.] This was quasi-legal at the time. Shortly thereafter, Congress figured out that this practice greatly increased the risk of future bankruptcy of retirement plans, which the public coffers would have to pay for. Congress passed legislation to make this practice illegal. While this law did not stop companies from looting the retirement plans, it did make it much, much harder. Now, they must generally terminate a plan to get the money out.
As time went on, the company was split up. Parts were sold to other companies, most parts were spun off into new stand alone companies. The retirement plans were split up by some arcane formula. Retirees and potential retirees were assigned to companies. [My wife, who used to work for the company, will draw a small retirement from Boeing when she reaches age 55. She has never worked for Boeing, who bought part of the company, a day in her life.]
Over the years, the company has made several changes to the retirement plans. They used to offer full medical benefits to retirees. Now the premiums to be paid by the company have been capped. They have slowed the rate of retirement "earnings". They have always been careful to state that the plan can be changed at any time. When they did the final spin off of the current company, they stated that they would only protect the current plan through FY2003, which ends with September.
The effect is that earned retirement doubles overnight as you reach 85 points.
In the 1980's, the company decided that this was too lucrative, so they changed the deal to some other plan. Having some morals [and trying to avoid lawsuits], they grandfathered the old plan for current employees [me] and applied the new plan to new employees.
Around this time the retirement fund was doing really well. Large government contracts were funding big bucks for the plan, interest rates were high and any fool could get a good return on investments. The board of directors decided that they could take "excess' money out of the plan, since they put it in, and record it as profit [paying tax on it.] This was quasi-legal at the time. Shortly thereafter, Congress figured out that this practice greatly increased the risk of future bankruptcy of retirement plans, which the public coffers would have to pay for. Congress passed legislation to make this practice illegal. While this law did not stop companies from looting the retirement plans, it did make it much, much harder. Now, they must generally terminate a plan to get the money out.
As time went on, the company was split up. Parts were sold to other companies, most parts were spun off into new stand alone companies. The retirement plans were split up by some arcane formula. Retirees and potential retirees were assigned to companies. [My wife, who used to work for the company, will draw a small retirement from Boeing when she reaches age 55. She has never worked for Boeing, who bought part of the company, a day in her life.]
Over the years, the company has made several changes to the retirement plans. They used to offer full medical benefits to retirees. Now the premiums to be paid by the company have been capped. They have slowed the rate of retirement "earnings". They have always been careful to state that the plan can be changed at any time. When they did the final spin off of the current company, they stated that they would only protect the current plan through FY2003, which ends with September.
New Blog
I have had many transitions in my life and I have always regretted not having kept a journal. What happened? What did I say and do? How did I feel?
I am about to transition from the world of work to the world of retirement. That is, from a wage slave to something else. This blog will document that journey.
I am about to transition from the world of work to the world of retirement. That is, from a wage slave to something else. This blog will document that journey.
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