There have been several comments about Honeywell cutting pension benefits. I am a 15+ year HON employee. I thought my pension was average largest salary for the last couple years times years of service times 6 percent. Based on the HR Direct pension planner the lump sum payout increases by 5% a year after termination if I leave it with Honeywell. At some point the 5% increase after termination will be larger than the standard calculation if I continue to get 2%ish raises. Where is Honeywell cutting the pension? Is there risk leaving the lump sum at Honeywell rather than rolling it into an IRA?
11 replies (most recent on top)
The Pension freeze is equivalent to a $1000/mth cut in benefits in 10 years assuming normal raises over that period of time.
Pension was capped in December 2016. So if you made $50K, grow with the company over the next 20 years and now make $100K, pension is still based off the $50K.
Honeywell cut the pension for legacy Honeywell/Allied employees under the old "85" rule to retire with the change; "The final average compensation component of the formula was frozen and no amounts earned or paid after December 31, 2015 will be included."
The lump sum pension interest rate does NOT change monthly...sheesh. It is changed annually, it is filed with the government, and is announced every year to you via the paperwork sent to your home describing the pension plan, how it is funded and what % of fully funded the pension is.
Further, you can see at this link how interest rates affect present value calculation of pensions. https://ljpr.com/wp-content/uploads/2015/07/Interest-Rates-and-Lump-Sums-APPROVED.pdf
If you think this information is "advice" and is suspect due to my attitude, please look up "advice" and "fact" in a dictionary. They do not mean the same thing.
Regardless of my attitude, what I have offered here is not advice.
i would never take advice from this place. most of the posters are far too jaded to give you any real usable advice.
The interest rate changes every month. Take the lump sum and roll it into an IRA
There is ABSOLUTELY no guaranteed 5% return on the lump sum if left with Honeywell. The interest paid is recalculated annually and filed with the government.
First, there is no money waiting for you per se. There is "some value" that is shown on the calculator, and it is predicated on today's interest rate on a fixed amount of money TODAY, which will pay in the FUTURE on the date you put into the calculator. If interest rates jump, the company will apply the higher interest rate for future payout and TODAY's number will drop considerably.
We have been tracking the TODAY value of my wife's lump sum pension and last year when interest rates blipped up, they did at the time Honeywell was allowed to make the change. Her TODAY value took a major dump. Pretty much the opposite of what you might expect. At least she had a pension of some sort. Mine was a lot better, but still only about 1/3 of what I was promised when hired in 1983.
Roll the money over into a retirement account. I doubt you’ll get anything if Honeywell files for bankruptcy or dissolves.
While I agree that this is not a financial advice board, it would seem that a guaranteed 5 % is a pretty good rate of return with low risk.
Why not?
Umm, you shouldn't be asking investment advice on an anomymous chat board.