Help! Someone smarter than me, please explain what this means! In the letter titled "Dear Merck Retirement Plan Participant", there are new assumptions for determining lump-sum benefits. ... if you retire in 2009 or later, effective January 1, 2009, we plan to use the minimum benefit assumptions required by PPA to determine lump sum benefits from the Merck Retirement Plan. The PPA interest rate will be phased in between 2008 and 2012. And then there is a table explaining the change from a "percentage of GATT Interest Rate" to a "percentage of PPA interest rate." How could they expect me to understand this? What is the difference between the two types of interest rates and does it negatively impact what I'll get in my pension?
Yes it will negatively effect your pension if you retire after 2008. Then the negative effect will be phased in over 4 years (I think). As my priest always says, there are no guarantees in life other than death.
I don't know if anyone knows the final calculations but know this. The amount will be less regardless of whether you take your lump sum or choose to annuitize.
I'll do ya one better...at least we still have jobs!! And health insurance!! And numerous other bene's. Who owns your soul?
Large companies have been trying to contain the never ending cost inflation of having employees since the dawn of capitalism. Merck is no different. Three years ago they gave us all a 2% raise and 40%increase in our bonuses (discretionary pay) and we all applauded while overlooking the devil in the details. They also brought out nationally renowned financial planners telling us that our pension is golden and worth staying. And it worked. Turnover is at a record low. Meanwhile you get the promise of a raise once a year; a raise that will arrive AT BEST in 12-18 months. Essentially you get two raises in three years. Your raise and opportunity for advancement are tied to your performance, which everyone knows, the odds of outperforming the mean two consecutive years is roughly 1 in 3. This is the first step in putting the BRAKES on the spiraling cost structure. Remember, we are the perenially most 'efficient' organization in the industry. Phase two is to quietly change the defined benefit structure that most people don't understand... myself included. Your decision to put up with this is a personal one. Mine depends on my hapiness and prospects for a brighter future. But I haven't been laid off like my friends and peers at other companies. Phase three is called the New Commercial Model. We'll see where we land with that.
Many large firms have completely phased out their pension programs as they represent a large liability for the company. Look for defined contribution plans like the 401(k) to be all companies offer as most already do. This effectively transfers 100% of the liability and investment risk to the employee. As for our pension, it's been nice but I expect its days are numbered.
Corporate bonds have a higher interest rate than the fed or GATT, therefore your lump sum payment will be less! It's all about saving Merck and the retirement plan money! Everything is always about Money or P****! Count on it!
Lots of CPA's out there but a dumb dirt farmer can figure out that one! The GATT rate that we went to several years ago was higher than the Fed Funds rate, therefore the lump sum was smaller! That's why an assload of folks retired during that transition. Now the Corporate Bond rate is higher than the GATT rate and so the lump sum will be smaller again! DA, hanging chads or what, are you from West Palm Beach! If you have over 25 years looks like they are giving you a great reason to leave now!
TAKE THE MONEY NOW AND RUN...IT WILL ONLY GET WORSE !!!!! I DID PRIOR TO 2008 AND NEVER REGRETTED IT EVEN WITH THE 2008-2009 MARKET. FIND A GOOD FINANCIAL PLANNER AND LET HIM DO HIS MAGIC...
Gotta love old threads. We had no idea back then of the magnitude of the pension changes. The longer I stay, the lower my lump sum goes. Wait until the interest rates start to go up!! Look out below!
