Is anyone aware of that our pensions will be hit hard due to the rise in interest rates? I was informed by a reputable financial company that AT&T employees may lose a huge percentage (20-25%) of their pension if they don’t leave by November 30, 2022.
I have looked around on the HROnestop but no luck. I have yet to see any info from T on this topic.
I would appreciate any info because time is running out if it is true.
To Post ID: @3ypo+1iyxVmum,
Thanks. That was one possibility I thought as I know many from Legacy AT&T getting hit hard by the rates. Luckily mine are both in cash pensions for BS and Mobility
To post ID: @2rbj+1iyxVmum
I’m with Legacy T
@2vep Thank you for allowing me to clarify further
So are you suggesting everyone take the Lump and invest in the stock market?
If so,
Is the stock market inflation proof? YES. The Stock Market (S&P500) has returned on average 10% for the past 100 years. Inflation has a historic rate of 3.3%, 10-3.3=6.7. Your return net of inflation is 6.7%, the stock market has been inflation proof for the past 100 years.
What is the alternative to the pension? A diversified mix of stocks, bonds, reits, alternatives and 2-3 years in cash to weather the down markets.
When you say "lets say" is that like a guessing game? Not guessing, I used 4% as inflation is running hot but will come down to historic run rates. If I used 3.3% it would be closer to 23 years to lose 50% of your purchasing power.
The point is your first check from the pension will be the one with the greatest purchasing power, Guaranteed and proven by history.
It's nice to have cash based pensions from BS and Mobility and not worry about those rates. Will take the lump sum when I go . . . .. .
You may never see these historically low rates again and your lump sum may never recover. Or best case scenario it may take many years, not sure that’s a game I’m willing to play at my age
Remember to consider where you will get your Healthcare. Managers who didn't leave by end of last year pay close attention to this as 65 years old is the medicare magic #
To Post ID: @2bfw+1iyxVmum
What legacy company is your pension with?
I called fidelity today and based on the current rates I stand to lose over 25% of my pension if I decide to stay past 11/30/22. The numbers may change because the final November percentages won’t be known until December, maybe January. If the rates go even higher my pension will be severely impacted and may take several years to recover, that is, if T doesn’t start messing with the pension.
Do not get crazy over this topic. Do not retire because interest rates are going up unless you planning to retire within next 6 month. If that is not the case keep working and keep getting paid. Inflation is high and stock market is down. Your leave and you will loose big time. Your lump sum will melt faster than you imagine. Do not get fooled by these comments to retire by EOY."
I think you’re painting with a rather broad brush, segment rates are at historically low levels, the likes you may never see again. I’m sixty and was going to work a couple more years but it would literally be for 1/2 pay considering the 20-25% reduction in my lump sum. There are plenty of stable conservative funds available to minimize risk if you’re concerned about the market and you have the ability to just pay taxes on all of part of it and just stash it in a savings account. There are just a couple of factors to take into consideration, everybody’s situation is different.
"Do not get crazy over this topic. Do not retire because interest rates are going up unless you planning to retire within next 6 month. If that is not the case keep working and keep getting paid. Inflation is high and stock market is down. Your leave and you will loose big time. Your lump sum will melt faster than you imagine. Do not get fooled by these comments to retire by EOY."
The alternative theory to your argument is that the stock market is currently suppressed due to a number a factors which I won't mention.
Ok I give, other factors are; supply chain disruption, war in Ukraine, inability to hire workers at a poverty wage, household debt skyrocketing, US debt skyrocketing, the Fed attempting to pull QE while at the same time raising it's interest rates to fight inflation, not to mention Inflation itself and hello? Social Security/Medicare running out of funds.
Ok, I've decided you are correct after thinking about it!
"If you think the market is heading for more unstable times"
Here's a link for the magic 8 ball, maybe it can help you decide.
http://www.ask8ball.net/
"
Remember the monthly payment option does not have a COLA. Lets say inflation runs at 4% which will cut your purchasing power by 50% in 18 years. Do your homework and understand these simple principals."
So are you suggesting everyone take the Lump and invest in the stock market?
If so,
Is the stock market inflation proof?
What is the alternative to the pension?
When you say "lets say" is that like a guessing game?
Remember the monthly payment option does not have a COLA. Lets say inflation runs at 4% which will cut your purchasing power by 50% in 18 years. Do your homework and understand these simple principals.
You can go into Fidelity and model your pension, both lump and monthly payments. This is the easiest way to determine what you might lose if you want lump sum.
If you retire now, there are a number of funds you can put your money into, including AT&T Stable Value, which is essentially a savings account. It earns interest, not a lot,but some.
If you think the market is heading for more unstable times than you can handle on your own, that is an option until the market stabilizes
As I stated in a different thread here, if you are Legacy ATT Management, it is VERY late to retire before your lump WILL go down, and it could be significant $ depending.
Fidelity MUST snail main you a statement before you can go proceed with your retirement process because the L-T retirement plan was written before the internet was invented and that requirement was never changed by our wonderful HR, but they managed to sc--w us in other parts! That statement take 10-14 days for Fidelity to mail!
That will put you with only about 8 weeks before the end of November which is the last day of work where you can retire and get the 2022 rates.
Interest rates will impact every pension lump sum payout, no matter which plan you have. The amounts are different for every worker obviously.
" Can’t emphasize this enough: CALL FIDELITY for verification as there are many different pension plans"
I mean, yes....
But are people really so helpless that they cannot go onto NetBenefits and determine which pension plan they're covered by? And download the SPD?
Scary how inept some long-term employees really are.
The pensions vary across the legacy companies. Call Fidelity and they can explain how yours works. They are helpful. Outsiders don't know and are looking to make money off of you. If they make a blanket statement as if AT&T has one pension hang up on them!
They need to get rid of pump sum. Most of you aren't smart enough to understand it.
Do not get crazy over this topic. Do not retire because interest rates are going up unless you planning to retire within next 6 month. If that is not the case keep working and keep getting paid. Inflation is high and stock market is down. Your leave and you will loose big time. Your lump sum will melt faster than you imagine. Do not get fooled by these comments to retire by EOY.
It’s very confusing but if your at legacy B you are good. T - maybe time to retire.
Can’t speak for other business units but if you’re legacy T and have the lump sum option (not the cash balance) then yes, as of now it is down 20~25% and will most likely stay that way until the rates reset in November for all of 2023. If you’re craft you must retire by 11/30 for 2022 segment rates. Cash balances and monthly payments are unaffected. Can’t emphasize this enough: CALL FIDELITY for verification as there are many different pension plans
How do YOU not know about YOUR pension? You rely on outside companies to explain YOUR benefits to you?
What you heard is right, but it only applies to people who have legacy AT&T pension and plan to take the lump sum. Nov 30 is the deadline and there is a big difference in lump sum payout due to raising interest rate and this time the reduction is more than any year before and it is not just limited to AT&T but many companies which still offer pensions.
Now in order to retire before Nov 30, 2022, you need to start right now with HR and Fidelity since it takes weeks to complete the process. So tell your boss that you plan to retire next week.
Pension plans are unique to each individual. Try using Fidelity, since thats their job.
log into Fidelity, go to netbenefits, go to your pension and estimate benefits. Here you can leave the interest rates blank and the result will be your 2022 benefit estimate. Or you can plug in the current interest rates to estimate your future result.
Here's a link to get the current interest rates.
https://www.pensionsoft.com/resources/Segment
https://blog.acadviser.com/att-pension-payouts-expected-to-decrease-in-2022
@bbd+1iyxVmum - thanks. Is there a way in fidelity’s site to see if I am impacted? Or, do I need to call them?
Thanks
It's true as far as taking your pension as a Lump sum (depending on which pension, some pensions with cash value will not change).
If you take the pension as an annuity with monthly payments, there will be no change.