Anyone else hear a pension freeze is on the way? I have a friend in upper management and he warned me that the pension is on the chopping block before the end of the year. Another broken pipeline for ExxonMobil. It makes sense when you think about it. Borrowing money to pay the dividend & the pension is CRAZY! How long can this continue??
30 replies (most recent on top)
People forget that at the merger, VERY generous terms were given out to reduce the "redundancy". Forget, might have been 3-3-2. MANY took it and ran before Mobil was diluted by Exxon.
@1cus is correct. Nobody would lose any benefits earned. Most likely scenarios are a pension freeze (no further benefits accrue after the date of the freeze) or change in formula to reduce future payments. Freezing pension benefits for current employees and closing the plan to new employees is the most common approach taken by other companies such as GE. Hopefully, there will be no change, but don’t underestimate the current regime’s capacity for tunnel vision and poor decision-making.
@1els+173ybK2U Just rumors. One would think they would start offering packages sometime after all PIP’s are completed so that’s the 1 Nov date. I’m sure they want as many folks off payroll by 31 Dec so they don’t have to pay another’s year worth of vacation to those retiring or taking a package.
From these rumors it looks like it may be a voluntary layoff and mirrored on the Australia package possibly.
I’m seeing several dates referred to in this chain. What is the November 1 deadline and what is the December 31 deadline?
Why don't you get the facts before posting nonsense. Here are a few points of fact to correct items below:
- ) The law around a distress termination is clear. In order for a distress termination to be approved, the company has to file for bankruptcy, or the company has to prove it cannot continue in business unless the pension plan is terminated. XOM is not doing great, but clearly not anywhere close to bankruptcy. And the PBGC is not going to buy that the company cannot continue in business unless the pension plan is terminated (at least not while the company is paying $15G per year in dividends).
- ) Severance payments are considered compensation (just like the PIL) and not pension payments. The PBGC does not pay for severance compensation. So the company cannot get away with that game.
- ) It is true that the laws around pensions have changed dramatically since 1986. But they have been strengthened. The Pension Protection Act of 2006 made it tougher for employers to dump their obligations onto the government (PGBC).
- ) The pension plan can be changed prospectively. So for example, they can change the formula going forward. But if you have already earned a pension, it cannot be magically taken away. It’s called an “anti-cutback” rule and is designed to protect what has been earned.
This site would be more helpful if some people refrained from throwing out incendiary comments when they lack knowledge. If you get your kicks from scaring people, then wait for Halloween.
Your Pension is insured upon a plan failure. Though the payout will likely be 30-40% less than what it would be from the plan. It depends on your age and formula used to calculate your payment. Either way, if the plan fails you will loose money.
I went to the PBGC site and found out that a company has to be in Bankruptcy or so burdened by pension costs that they couldn’t continue in business in order to ask for a Distressed Termination:
A company in financial distress may seek to terminate a pension plan if:
the plan administrator has issued a notice of intent to terminate to affected parties, including PBGC, at least 60 days, and no more than 90 days, in advance of the proposed termination date;
the plan administrator has issued a subsequent termination notice to PBGC, which includes data concerning the number of participants and the plan's assets and liabilities; and
PBGC has determined that the plan sponsor and each of its corporate affiliates have satisfied at least one of the following financial distress tests - though not necessarily the same test:
a petition has been filed seeking liquidation in bankruptcy;
a petition has been filed seeking reorganization in bankruptcy, and the bankruptcy court (or an appropriate state court) has determined that the company will not be able to reorganize with the plan intact and approves the plan termination;
it has been demonstrated that the sponsor or affiliate cannot continue in business unless the plan is terminated; or
it has been demonstrated that the costs of providing pension coverage have become unreasonably burdensome solely as a result of a decline in the number of employees covered by the plan.
What is the November 1 deadline?
November
I just googled Distress TERMimation of Pension and the post below is correct. No more payments to employees if that’s filed and it’s perfectly legal!
Laws around pension system have changed dramatically since 1986. Hundreds of companies have discontinued as its costly annual contributions to fund, and filing for Distress Termination is easily approved once the budget gets exhausted. Very likely Dallas is looking at ways to exhaust that existing budget in lieu of paying 2 weeks per year as Chevron did. 2 weeks Is too much cash flow and elimination future payments into the fund is a great way to save cash in the future
Wait... all calm down. I heard one of the Presidents say today in a town hall that there are laws in the US that state you cannot cancel the pension for existing employees... you can only make a switch for new incoming employees if you choose to do so. So, if you are already here and get to retire here- don’t panic, you’ll have your pension... which, yes- is better than most others.
The most senior executives would lose more of their personal wealth as shareholders from a dividend cut than eliminating the pension. They make the decisions. Simple as that. Hiding their conflict of interest behind the shareholder mandate.
Unlikely the pension plan is terminated with a incentivized retirement plan that adds years and service. EM stopped adding years and service in 1986 in US (many lawsuits), because these payments reduced the viability of the pension plan for the remaining holders and some charges of age bias., with adding age and service. The pension plan could be changed for other reasons. For example, EM pension plan has a 1.6 factor while CVX is 1.3. Also, big tech companies like google and amazon do NOT offer a defined benefit plan. EM could change to a defined contribution plan. Only 15% of all companies now offer defined benefit plan and EM competitors offer far less in the total combined defined benefit and defined contribution. ODDs close to ZERO of incentivized plan with adding years and service
Of course, why continue contributing to a pension fund when XOM needs every dollar to continue paying the dividend! Shareholders rule, and employees are expendable!
It means your retirement may have to be mostly self-funded.
Once “Distress Termination” of the pension plan is enacted that means no further pensions are required to be paid. XOM can discontinue the program as “expired.” Hate to be the bearer of bad news, but....google Distress Termination and you’ll see that XOM can file and it will be approved as long as they can show there’s not enough funds remaining. Obviously, they do not want to continue paying into the fund, which is why Dec 31st is a target date for excluding any 2021 payments
What does this mean for say, folks that are not anywhere near retirement age (30s and 40s)?
Savings plan match of any kind will not be renewed again until/unless XOM sees a need to use in recruiting. Obviously, won’t likely happen for the next 2-3 years at least!
I heard rumors that controls analysts are forecasting how many more will be announcing retirements prior to Nov 1 and calculating how many 52+ vs 53+ will be be left after that so the higher ups can make the decision on 2-2-1 or 3-3-1. The rumors got out when they started asking managers for input on employees likely to retire.
It won’t just be frozen. After payout of packages that budget will be insolvent enough for XOM to claim “Distress Termination” of the Pension Plan. At no cost to XOM all earned will also be lost unless your retirement eligible and can take the severance.
Pension calculation. First number is years added to you age. Second number is years added to your service. And third number is weeks of pay for every year of service.
You can bet your bottom dollar HR is working on this. How many other companies still provide pensions? This has been on the wish list for awhile but the time wasn’t right. What better time to freeze it than now? As has been said, never let a serious crisis go to waste. It provides the opportunity to do things that were not possible before. Could then resume the Savings Plan match at the previous or lower level and tell us our total renumeration and retirement benefits remain competitive.
The portion of the package offering 2 or 3 years credit to pensions costs XOM nothing as it’s paid by PBG Corp. After this pkg XOM will exhaust enough of their pension budget to file for Distressful Termination, so bad news for those who don’t take it or are younger is that’s the only way it can (and it will be be lost) for us under 52/53, including what we show we’ve earned. The “1” is one week for every year but will be for a max, like “up to 6 or 12 months pay.” This is to get rid of those 60+since the one or two years credit does not help them, and the company wants them gone. In fact they may only offer that week per year to those already over xx years. All this is a masterful way for the corporation to get rid of the 30% target using PBG to pay most all of it and actually costs them less per head than a 3month PIP payment
Help me out here please. What does 2-2-1 or 3-3-1 mean?
Thank you. I’m one of those 52 plus employee.
Absolutely no one believes that any sort of package is forthcoming, at least not in the US. They will just PIP the older employees (not bloated management ranks) that they didn’t get this time.
I heard the same, and that it’s end/suspension will coincide with the 2-2-1 or 3-3-1 package in order to incent as many 52+ or 53+ to leave as possible.
Just remember....
#ExxonMobil’sCompesationRemainsCompetitive
That its one news that perfectly makes sense. Bring it on.
I wouldn't doubt it, but can only assume that a select few is involved with the discussion. There is no way to know definitively unless DW himself comes to the form and comment.