Thread regarding Chevron Corp. layoffs

@3Fnrw, No doubt, petro-gal. A clear example is the post just before yours, a person with no other options trying to justify to himself that he is making the decision as a financial choice instead of being dug out of a hole.

Although either the lump sump or annuity can be an appropriate choice for different people in different situations, in general being desperately in need of a cash bail-out such as the lump sum, and touting it as the only viable option is a sign of financial instability and poor money management earlier in life during the years that mattered the most. That's what I see predominately on this site. These people have fear, no completed nest egg, and no other options. Just an observation.

If you calculated a 6% IRR for the annuity then you clearly have no clue how to do a discounted cash flow analysis. The annuity is for financially illiterate s—ers.

Nah, don’t take the lump sum and be done and forgotten. If you’re laid off and financially well off in your 401k to retire independently and have no burdensome debts, go for the pension annuity instead. Make sure Chevron never forgets you’re still around every month they have to pay you. Want to piss them off even more? Just live healthy and outlive you’re statistically computed year of death. Break the bank and show those SOB’s who cut you off from your job so soon.

Good point, it must be nice to be Chevron when you get to pay off people with the lump and keep all the potential earnings that would otherwise be paid out indefinitely with the annuity. It's like having employees give their pensions back. Some of those 'ol geezers seem to never die and the probability of either spouse reaching over 90 is very high these days once they make it to 60+. To be able to pay off these people early for pennies on the dollar is a financial windfall for the company. Take the lump folks! Please. You've read all the reasons here, what else do you need to know?

ctjt: why would Chevron sell its pension annuity pension obligations to another company? It is close to guaranteed free money (relative to paying out the lump).

Nice try @cvpl, but your reading and comprehension abilities are lacking or you’re just being a troll. Page 43 of the retirement plan reads; “Certain benefits also are funded and paid through group annuity contracts with Connecticut General Life Insurance Company, 280 Trumbull Street, Hartford, CT 06104 and MetLife, Inc., 200 Park Avenue, New York, NY 10166.” The key words are “CERTAIN BENEFITS”.

Now go to page 20 and educate yourself on what the “Certain benefits” are related to as it comes to being laid through Connecticut General or MetLife. Namely it’s under two group annuity contracts as a result of the restructuring of the Getty Pension Plan as of December 31, 1984. These two annuity contracts are known as the Getty Metropolitan Life Contract.

Like was said before in this topic, it is the Chevron Corporation who pays out on all retiree pension annuities and lump sums, with exception of the aforementioned Getty Pension Plan annuities.

@cvpl, Thank you, Popcorn.

Nice try, Popcorn, but check page 43 of the retirement plan. “...funded and paid through group annuity contracts with...Metlife”. Once you retire it is strictly an insurance policy, so no reason for Chevron to keep that.

@ccba, You started off well, until you mentioned MetLife all over again. As much as you continue to say this, the truth won’t change. State Street Bank is the trustee and Chevron funds the pension account for future retirees at this institution to prove solvency. The current lump sums and lifetime annuities are paid directly by Chevron to the retirees. I’m not sure if you are retired or not, but I am. My annuity payments come to me monthly and the remittance statements have the Chevron name and hallmark printed on them, just like any check Chevron pays out. You won’t see MetLife or State Street Bank on these checks or remittance statements.

Chevron does exceptionally well off of the hapless employees who get bought out with the lump sum settlement. It is a fantastic deal for Chevron and the pensioners. All of the old retirees who are on pensions can trust the program will generally always be solvent and keep paying them indefinitely because so many foolishly settle for the lower value one time buyout thinking they can gamble it into more which rarely happens. That's the whole beauty of the program. Sure, there are victims, but it is of their own making.

State Street holds the money proving Chevron can fund the future pension obligation. Once you retire they pay the money to you directly and it’s done. Once in a blue moon someone wants the annuity and Chevron purchase one from MetLife who do very, very well off the deal because the terms are tilted so badly against the hapless employee.

@9ibw, It’s evident you don’t do much reading or investigating. Read the Chevron Retirement Plan and point out to us where it says the employee’s annuity is paid out to MetLife, so that they can turn around and pay it to us. You won’t read that or find that anywhere to be true. The fact is, Chevron funds it’s employee pension plan through an outside trustee, which is State Street Bank. The MetLife Insurance Company has nothing to do or is involved in any part of our company’s pension plan.

I just wish all you people on here, ladies, naive little boys, whatever, real or not, would just help Chevron out and take the lump sum that you brag about having coming, although I don't believe half of you do. It helps the company out a whole lot to allow them off the hook for pennies on the dollar. Thanks for being a company person to the end. Chevron appreciates your service and dedication.

Well said. Anyone with 20+ years at Chevron is well positioned to stop working at any time unless they have no sense at all about spending. Most work longer for upgraded lifestyles which are discretionary. Popcorn lady was told by his MetLife advisor that he deserved an annuity since he could live on SS and not much else.

aosk: Speak for yourself popcorn. When I get my lump after I EOI out it will be a nice bump to my overall portfolio but a small percentage of the total. Most who spent their careers in the petroleum industry retire with more funds than they really need. In my case, several times what I need to live a perfectly comfortable life in retirement.

Indeed, the guys drowning in debt really need this bail-out to be able to hopefully break even. Retirement, well, that just ain't gonna happen anytime soon for most.

With the stupid blip in April rates we will need to wait until July for the three-month average to get past it. That lines up with accelerated EOI pretty well I guess. Ka-Ching! Time will tell if July has the lowest rates ever or not. It’s possble.

@agjd, We trust you, as you certainly know from experience!

The rates went up because you touch yourself.

It's a fabulous deal for Chevron and the Pension company to be able to buy off all of these liabilities at such a bargain for them with the discounted lump sum. And at a time like this, it makes a big difference in the balance sheet. Pick the lump sum. You've done the math and many of you seem to believe it's the bee's knees. I say go for it. Good luck to all with your futures in retirement. You've earned it!

Chevron doesn’t care which you take. They pay the lump sum to the employee or they pay it to MetLife, who then rips off the employee with the crummy annuity drip feed. Either way Chevron no longer has any obligation.

9pbx: Annuity is even a better deal for insurance company (worse deal for the annuitants) because the earnings on the invested lump compound over time and inflation lowers the value of the payout. The compounding of investment earnings will eventually become more valuable than the initial invested lump. You would think given the low IRR (payout rate) of the annuity they could offer at least provide some protection against inflation.

The lump sum buyout is the best deal for Chevron and it helps to shore up assets for the pension plan and benefits the pensioners and shareholders immensely. I highly recommend that you take the lump sum. If you don't believe me, simply look at all the reasons people have posted below. The math is easy.

That’s exactly why annuities are always a great deal for insurance companies and a huge mistake for the purchaser. If you die in 16 years or less you don’t even get your money back. Some people do die, so the insurers get that money. Some people die the first year. For people who live longer, the insurance company company has already had like 20 years to beat 2% average annual return, which is a joke. They can’t lose. Even if you live 40 years, the absolute worst market return over 40 years is still something huge like 6%. Worse yet, the insurance company gets the giant advantage of inflation so they are in effect paying you less every year. If you live more than 20 years, you start to get a few pennies return but inflation has destroyed the value by then. You can’t win!

8hid: Don’t be a Shiller. Work the rate out for yourself Einstein. The annuity gives you back about 6.25% of the lump every year, which means it takes about 16 years to get you lump back. An American male at age 60 is expected to live another 22 years. So at the average age of death you get 6 years more out than you put in (6x0.0625%)= 37.5% over the 22 years is 1.7%! Live to 100 years old, you get another 18 years of annuity payments (24x0.0625%= 150%) over 40 years is 3.75%. I hope you are in good health fat boy.

"estimated 2.2% return" Wow. just wow. Keep it up, troll. We don't need a lecture, being perfectly aware of all the calculators and market annuity rates. So you're going to die in like, 12 years, and you're 100% sure of it. Gotcha. Well, in that case, I say, go ahead and roll the dice. You've earned the right to make foolish choices!

@4zel: “actuarially equivalent”, I don’t know what that means, and neither do you. When the parallel compensations were set up they each cost Chevron the same amount, but there was never a promise of similar outcomes for the recipients. Insurance cost money! Right now very low interest rates relative to historical averages makes the lump payout particularly attractive. That said, no matter what the conditions there is a very high probability you will make more money over your life time investing the lump yourself. Google “should I buy an annuity”... you will find thousands of discussions and analysis better than anything you will read here. Let’s say, however, you decide you want an annuity: It would make you feel safer to calculate your expenses against a regular paycheck like you always have. Ok, your choice. Then the only question is if the annuity offered by Chevron is better than what you can find elsewhere (keeping in mind you can find different options elsewhere also, like deferred annuities, variable annuities and the like). Easy to shop that question as you can easily get quotes from fidelity or any number of other places. Nothing anyone posts here will (should) make any difference to you, just shop your options and make your choice! Me, I am taking the lump after my EOI is accepted, as I think I can do much better than the estimated 2.2% return on investment provided by the annuity. However, as other as pointed out, I also need to accept the associated risks of investing (no problem for me, but a worry for some). Good luck whichever you decide is best for you.

@4zel, Do you have some new evidence to reveal that illustrates that both options are not actuarially equivalent, as they have been for decades? Did something change? It would be useful info for many of us approaching retirement during the EOI option. I think many realize the power and value of a guaranteed monthly payment during trying times like these as long as you're not taking a loss, which never has been the case, unless something changed. Please share.

“If it wasn’t fairly equivalent in payout”...despite all evidence to the contrary! If you have not already made the choice, then I suggest you not fall for this nonsense! They were never set up to have “equivalent payouts”. The lump option was originally set up to cost Chevron the same amount as the projected maintenance of the pension benefit. They are based on completely independent metrics, however, and as the years have past the annuity has become a considerably worse deal for the recipient. If you are unable to judge the relative value, TO YOU, then either get help or choose one at random. I have looked. I find the annuity has a estimated IRR of around 2% based on the mortality tables, and I think that I can do better than 2% investing the money myself...much better!

@4ekn, you are NOT entirely correct when you claim it’s a no brainer and you come out ahead with the lump sum 90% of the time. You may be speaking for yourself based on your own social, financial and health situation, but don’t claim you are making any assertions for everyone else. The two pension choices are provided by Chevron for the very reason that people have choices based on their social, financial or health situation or circumstances. To the average Chevron retiree, both choices are actuarially equivalent. If it wasn’t fairly equivalent in payout, you could be 100% guaranteed of something and that it Chevron would modify its Retirement Plan as soon as there’s an imbalance. It would drop the annuity or the lump sum choice or tweak the payout formula.

The annuity is paid according to a formula in the retirement plan which apparently none of you have read. It has nothing whatsoever to do with any rate of anything. It is years of service and salary and age. It is a rip-off as it is not inflation adjusted so only useful if you live ten years or so.

The lump sum alternative is calculated according to an IRS formula. The formula requires use of insanely low investment returns which are currently compounded by the lowest interest rates in decades. The diffference between what the stock market normally returns and the return used in the formula has never been greater. You are more 90% guaranteed to come out ahead with the lump sum and in most cases by vast margins. It is a no brainer.

Look folks, you do not need a fancy computer for this. You say you get 6.2% of your lump as annuity payments every year. So in 16.5 years (%100/%6.2) you will get all your lump sum back, and if you die before then your rate of return is not be only zero, it’s negative! So you took the annuity at 60 and at 76.5 you finally got all your money returned, good job. Now let’s say you luck out and live another 16.5 years (you are now 93) and you now have received twice what you put in (wahoo!! ... A100% return on my lump investment!). Ok great, but that took 33 years, so you annual rate of return was 3.03% per year (and there was no compounding!). Ok, but you’re still alive and getting these annuity payments for another 16.5 years... you now have gotten back 3 times what you put in...wahoo and double wahoo! So now you lived to 110 years old, make 200% on your lump investment in just 49 years, for the whooping rate of return of, well not quite 5%. However, to get that 5% return on your annuity you did need to live to 110, short of that and you get less, so lead a very healthy live style! To get your 6.2% rate of return you need to live to something like 125 years old, which might be possible if medical science continues to advance rapidly...who knows? Good luck.

Financial advisors are not worth the paper their crummy credentials are printed on. Most are washouts from other industries. Your friend at Vanguard was not only incompepetent at calculating returns, I suspect his nephew works at MetLife.

Annuity IRR is not “based on your pay grade and other factors”... it is based on entering the correct numbers into the correct equation! Your 6% rate is calculated by taking your annual annuity payment and dividing by the lump sum: a number that is NOT IRR because it includes mostly your principle (the lump) being returned to you! There are only three inputs: lump value, the amount of annual annuity payments, and the number of payments (which depends on the number of years you estimate you will live). Use the calculator linked below (or any of hundreds of others on the web!) and you will see that your estimated rate of return on your annuity is under max 2% if you live less than another twenty years and under max 4% if you live less than another 40 years. Comparing your IRR to other factors, like potential rates of returns on other investments or to inflation, are separate considerations and not part of the IRR calculation. My god you guys are thick! I guess it is all for the better that you took the annuity!

@3rhc Indeed. One of the best in the industry, no doubt.

@3gmz, I didn’t bother to check the link for the calculator. But if you calculated the annuity IRR at 6%, I would think the method to be correct enough. Like I commented below, I calculated my 100% J&S annuity in 2016 to have a comparable internal rate of return at 6.05%. This result was also confirmed by my Vanguard Retirement CFP at the time. Chevron really does offer an unbeatable and generous pension annuity. I highly recommend most long term employees with a high balance 401k and no personal debts at retirement to take a serious look at the annuity pension. Don’t casually dismiss it.

Something tells me that all these annuity numbers that people are getting are different. For instance, I ran my numbers based on the same table below and got over 6% return. Maybe it's based on your pay grade and other factors. Don't ask me to post private info, either. Well, you can ask......

The link provided earlier is interesting:
https://www.thebalance.com/how-to-compare-immediate-annuity-rates-2389017
I ran my annuity numbers and got 2.2% return if I die at the age indicated on the longevity table. Luckily I am in great health and plan to live much longer than average ;-)

@3kso, Because you'd be wrong. Plenty of people post BS on this site all day long. You're no different. Because you believe something that is false doesn't make it true, troll.