There are a number of comments throughout this site regarding potential loss of the lump sum option for the pension plan. Does anybody know if the company can take away the lump sum option any time they want? Do they have to provide legal notice beforehand or can they take it away tomorrow if they wish? What are the legal requirements under ERISA and the PPA? Hoping there is someone familiar with U.S. pension law out there. I am considering retiring in 1Q or 2Q 2021 but don’t want to wait if I would lose the lump sum option.
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This would likely be a violation of the "anti-cutback" rules for pensions. Federal law prohibits changes to pension plans which would reduce accrued plan benefits, including forms of payment like the lump sum option. But really would be better if you consulted a lawyer to be sure.
My understanding is that EM are in a minority of companies that offer the lump sum option. The annuity option is the only one I’m aware of that MUST be offered as part of a company1sponsored, non-contributory pension scheme.
The wrinkles really come in for the possible options for vested versus non-vested, grandfathered versus not, and how many years you’ve been employed. Therefore I think the company can remove the lump sum option at will, possibly with some exceptions, and probably requiring a limited amount of notice (like the removal of the 401(K) company match).
As at least one other poster has suggested that it would be wise to take the lump sum option, if available to you - and I would agree. Beside the rather low interest rates making it attractive, you also need to consider whether you think EM will continue to underfund (or borrow from, allegedly) the pension scheme and whether the company will maintain sufficiently robust (financially) to pay the full annuity for the next 25-30 years.
Personally, I’m planning to take the lump sum - probably at the end of 1Q21 - despite a 10% discount because of my age.
Definitely can remove the lump sum option on immediate notice.
Not a pension-related issue really - funding into the future, etc.
Lump's pretty good right now - and guaranteed.
Take it if you can (or must)!
@OP Funny thing with the law is that you can find 2 different lawyers tell you 2 different answers.
From what I hear and understand, they can take away the lump sum option. And they will probably do it without notice so there is not a mad rush to get lump sum.
We met with our financial planner last week, and he thinks this is nothing more than a rumor. The pension is VERY regulated, and not by ExxonMobil. It would take a whole lot of red tape, etc., to get this changed.
OP here. Thanks – I already saw that on the HR intranet. To me their words leave them wiggle room, which they can squirm out of. I’m really trying to get an answer from someone who understands the law about what the company can do and what they cannot do in regards to the lump sum option.
From the homepage on the intranet, choose HR. Scroll down and choose EXXONMOBIL Savings Plan Website. Choose last option: Oct. 1 Savings Plan changes. Q21 addresses your question.
Retire if you can and take the money out!