I’m a bit confused about those who are saying that employees who are getting the pension are being targeted for lay off.
My understanding is that the pension was eliminated for new hires after 2015. That leaves a LOT of employees who are still under the old pension (I’m guessing at least 80% of the employee base).
How could they possibly get rid of that many people?
The pension is not, as stated, a lump sum; it is either a payout over time or a lump sum.
To the OP's question, yes, they can get rid anyone with a pension and are actively doing so. The current corporate climate–starting at the very top–strongly favors new kids out of college over veteran employees. The knowledge lost under this policy is staggering, and has nearly crashed the company on at least two occasions that I know of when rookie mistakes in highly technical, critical, sensitive roles were made by rookies with no more adult supervision (they eradicated all the senior DBA's at Hosting in one swoop) came within a hair of causing several Fortune 500 (even a couple of them Fortune 50) companies to miss entire payrolls.
Strange days at ADP under the current cough leadership.
@10wwMvwa-laa, your statement about the pension being a lump sum of money is not necessarily correct. The people included in the VERP were given a choice of payment either as a lump sum or a specified amount of money until the day they die, even if that means that it will exceed the original amount in the pension fund. I took the monthly payments and will continue to receive money from ADP for the rest of my life.
Why do we need numbers to support hypothetical annual costs? The bottom line is that ADP cut pensions for new employees that started in 2015 and beyond. This sends a message that employees are not important to ADP. That is all the "numbers" that you need. You can try spinning it one way or the other, but it still comes out that ADP cut their pensions, no matter what they did to the 401K.
But if you’re taking payments for life or lump sum, it’s costing ADP roughly the same in costs, unless you exceed your life expectancy.
New hires get a more generous 401(k) match which could be quite costly for the company as well.
Does anyone have numbers to support a hypothetical annual cost to ADP for both scenarios?
I am a retired ADP pensioner. I can confirm that if you select the monthly option, then you will receive monthly payments for the rest of your life.
Targeting employees that are covered by the pension plan, also identifies longer term and thus older employees. In addition to saving on pension cost ADP is saving on PTO since more tenured employees get 3 or 4 weeks of vacation, rather than 1 or 2. Don't underestimate the $$ that 1 or 2 weeks of non-productive pay save the company. (I'm may not agree with this practice, but this is part of what the bean counters are seeing,)
The strange thing about all the $$ cuts is that ADP never was losing money. They were just not making as much as what some of the investors wanted. Sad...
The previous poster is wrong about the ADP pension. it offers two options. A monthly payout or a lump sum payout. If you choose the monthly payment you are guaranteed that monthly amount for the rest of your life. Of course the lump sum is a one time payment then you can do whatever your want with your money.
Also, the pension is still a big expense because ADP contributes not the employee so it makes sense to eliminate employees who still have the pension plan to save money.
By the way none of this is news and the reductions have been going on for a few years now. They are doing it in what they call "waves" so it doesn't seem as bad.
ADPs pensions isn’t like a government pension where you’re guaranteed income for life. It’s a lump sump of money that if you exhaust it, it’s gone.
New hires who don’t get the pension benefit are getting a more attractive 401k match so I’m not seeing how the pension is the albatross everyone is saying it is.
I don't see how this is so hard to understand. Employees with pensions are costing ADP. ADP wants to save money so they are in the process of getting rid of pensioned employees. As the previous poster had said "Death by 1000 paper cuts". Gradually and carefully, pensioned employees are going to be gotten rid of.
ADP has been terminating thousands of employees over the last 4 years. They are targeting people who are "earning too much", people who work from home, and people with pensions. New employees are being hired to replace the ones let go and are earning a fraction of what the eliminated employees were earning. They also get no pension and work from one of the new supercenters and not from home. This is a gradual process, being done on ADP's timetable.
This is a conscious business decision to save on labor costs. Unfortunately, this decision is costing ADP big time since the new employees cannot get productive fast enough to service their clients well. The new employees are not paid enough for the complex work that they do, so are not motivated to do their jobs well or even stick around. They can get better jobs that pay more for less work at other places. Morale at ADP is very low.
This should have been foreseen by ADP's top management team since they are paid the big bucks to know their company inside and out. However, they failed and are still stubbornly holding to the same course in saving on labor costs rather than making their company more profitable. The survival of the company is in jeopardy.
Death by 1000 paper cuts - thats how! Little by little cutting at every level, and eventually no one under the pension system will be left.