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Roche Pension Lump Sum Offer

Discussion in 'Roche' started by Anonymous, Oct 11, 2013 at 11:46 PM.

  1. Anonymous

    Anonymous Guest

    Anyone know anything about this? Just got a letter but don't yet have the actual lump sum amount being offered.
  2. Anonymous

    Anonymous Guest

    No details yet, beware the tax man cometh and it will be ugly depending on the country you live in.
  3. Anonymous

    Anonymous Guest

    I just received my offer. Pretty low if you ask me...
    44 years old
    pension benefit at 65: 676.90
    lump sum offer: 29,500
  4. Anonymous

    Anonymous Guest

    I suppose one could ask what will $676 buy you 21 Years from now when you are Pension eligible? If collecting earlier than 65 it would be even less w/discounted payout. Not to mention what if you only live to age 66? Or how much could you grow that $29,500 in 21 years? One would really need a Crystal Ball for this one. Either way most companies no longer fund Pensions so consider this a nice benefit regardless.
  5. Anonymous

    Anonymous Guest

    Go through the calculations and a decision process:

    1. find out what the cost of an immediate payout annuity would be for a 65 year-old who wanted a monthly lifetime payment of 676.90. Or determine the present value of an income stream of $676.90/mo for an assumed lifetime with an assumed rate of return. NOTE: this is tricky because you have to make assumptions about what the world will be like in the future. This type of analysis is much easier for someone already fairly close to 65.

    2. Determine what rate of growth the $29,500 lump sum would have to achieve over the next 21 years to reach the purchase price of the annuity or the present value of the payout stream.

    3. Decide if you think you can achieve that rate of growth

    4. To verify your calculations and assumptions, gaze into your crystal ball to see what inflation, taxes, returns will be and most importantly how long you will live :)
  6. Anonymous

    Anonymous Guest

    Good luck living long enough to collect, especially if you work in Indy. It is hazardous to ones health
  7. Anonymous

    Anonymous Guest

    No guarantee that pension will be there at 65, let alone within next few years. How bad will you need that 676 each month ($8k per year)? You could take the 29,500 now, spend 10k on a stable stock that pays dividends, and let the remaining 19.5k ride on 2-3 aggressive bets that'll hopefully hit around year 2.
  8. Anonymous

    Anonymous Guest

    I left Roche several years ago & am just curious - are they devaluing pensions? The cash out was much higher than $29,500..........
  9. Anonymous

    Anonymous Guest

    minus probably 20% in taxes at least (not including the rest of your salary being taxed higher due to higher bracket). Your bring home on this likely no more than $24,000. Unless you are unemployed, and desperately need the money, why bother.

    Even though 700/mth does not sound like a lot, if you collect for 20 years, thats $163,200. Even if you die immediately, your spouse can get a huge chunk of that. Also, think of how quickly you can blow pat 30,000 today; even if you plan on saving it, 50/50 that wont happen due to emergencies whatever.

    700/mth for life will is not only much more money when considering the time value of money, but it will seem like a million/month when you are retired on a fix income. Ask anyone who is getting say 300/mth during retirement, what it means to them, and how they would feel if it were not there.

    Do not be foolish, if you do not desperately need the money, do not do this. There is a reason that the company is offering this; that is it will cost them a ton more money if you do not accept. If it were a great deal for YOU, they would not have offered. Anyone would either have to be desperate OR crazy to do this. I ripping my letter up when it comes.
  10. Anonymous

    Anonymous Guest

    In the US the entire amount can be rolled directly into an IRA so no taxes will be withheld. The amount in the IRA will grow tax-deferred until mandatory withdrawals at 70.5.
    It MAY cost them more, it MAY cost them less, it's a roll of the dice. Companies definitely want to shift the uncertainty and risk to the recipient, who MAY do better or MAY do worse after accepting or declining the offer.
  11. Anonymous

    Anonymous Guest

    This is smart math, and a great option....unless of course, Roche goes the way so many companies already have, and many will continue to do--getting rid of pensions altogether. If you have a crystal ball and can guarantee that it will be there when retirement approaches, great.
    My guess is you don't have that crystal ball...and Roche certainly isn't trustworthy these days.
  12. Anonymous

    Anonymous Guest

    Roche certainly isn't trustworthy at all
  13. Anonymous

    Anonymous Guest

    Well, at least in the US, Roche doesn't need to be trustworthy as long as the Pension Benefit Guarantee Corp is still solvent. Given the fate of similar quasi-governmental agencies in the past though, whether PBGC will still be around and whether one will get the full pension amount or a reduced one is anyone's guess.

    BTW, PBGC insurance payments are rising and another reason why companies want to get rid of pensions.
  14. Anonymous

    Anonymous Guest

    This is a great question, and after some quick math, this is what I concluded.
    My situation with slightly rounded numbers:
    They are offering me $100,000, or $640 / month if I was single, or $600 / month if I am married.

    First, if I was single the math goes this way:
    $100,000 / $640 per month = 156 payments /12 months = 13 years then I am on extra money. When I die, it is all gone and nobody else gets any money.
    $640 per month X 12 months = $7680 per year.

    Second, if I was married, which I am, goes this way:
    $100,000 / $600 per month = 166 payments / 12 months = 13.8 years then we are on extra money. If I die, my wife only gets $300 per month until she dies and then nobody else gets any money.
    $600 per month X 12 months = $7200 per year.
    $300 per month X 12 months = $3600 per year.

    If I take the whole $100,000 as a lump sum and do a direct roll over to my self directed IRA at Schwab, I decide when I will begin to receive the money and pay no taxes until that time. Meanwhile, I am going to invest it in the S&P 50 ETF SPY. Morningstar shows a 10 year history of 7.5% growth.
    $100,000 X 7.5% = $7500 per year.
    No matter who dies first or when, we still have that $7500 and when we die, we still have the $100,000 to pass on to the kids. Plus, in our case, we do not need the money until I am required to begin mandatory withdrawals at age 72, about 10 years from now. Based on the "Rule of 72" which all investors must know, that $100,000 at only 7% will DOUBLE to $200,000 before I begin to withdraw money.

    It is true that the market goes up as well as down, but over the long term, it goes up.
    Which plan do you think I an going to take?
  15. I am in Diabetes Care and I did not receive a Pension Lump Sum Offer from Roche...yet??

    (1) In what divisions are the people who received offers?

    (2) What are the criteria for getting an offer? Division? Age? Years of service?

    Please share what you know about this.

  16. Anonymous

    Anonymous Guest

    LOL at ONLY 7% each year...dream on
  17. Anonymous

    Anonymous Guest

    You say you are in Diabetes Care which makes it sound as though you are still employed. I think the offers are only going to former employees. Try calling Roche and asking.
  18. Anonymous

    Anonymous Guest

    My situation is very similar to your and I'm also opting for the lump sum. To me it's a no-brainer.
  19. Anonymous

    Anonymous Guest

    I was a Roche Employee in the early 90's, also got a lump sum offer but somehow managed to lose it while I was out of town.

    Can some one please provide the number or contact info they have so I can call them?

    I would really appreciate it, thanks!


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