On the rule of 75 I am at 70 or so. If my Pension is 200K lump right now what are the benefits of getting to that rule of 75? Is there some multiplier in there has my pension jumping from 200K to 300K instead of simply growing to 210-215K? I know each case is different but anyone out there know if the rule of 75 greatly enhances you pension lump by a significant amount?
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Thanks @6A6As!. I never understood why I didn’t see a bump at MR75, but did at 30 years. My peak is at 30 years, and not quite 64. I suspect since the change is a multiplier, I will see the same curve with lower dollar figures.
Expect the new formula to reduce both your lump or monthly pension if you stay past the end of 2021. The company has zero incentive to increase your payout with the new formula.
As for your calculations. When I calculated mine 8 years ago gauging when I wanted to leave, the age and years of service will have some effect on the best time to leave. My peak time was 27 years of service at 52 years old. The years past MR75 increased by $35k a year until 27 then fell to 22k for years 28-30. If you are older than 50 at 25 years of service, that peak will move closer to 30 years of service. This is using the old formula. What ever the new formula is will make a big difference.
Why would anyone stay? For any time period? Why even start work here?
The T idea of benefits is:
- For Management - 60 hr + work weeks
- No merit raise
- Valueless stock options
- Non-competitive wages
- And NO BENEFITS. H3II - you get better pricing and service with any other provider that T using our "concession price".
- Health plan working is awful
- And now, Obama Care or is it the new and improved Biden Care at retirement?
I'd make about the same working and basically the benefits are the same if I drive the collection truck for Republic Services.
i gave the example with the big jump, i was hired 2001 classic S level 2 management
Only way i know to check is go into Fidelity and use different dates. I use age 51 and 52 since that is when i hit MOD 75. It takes a big jump.
I understand now my plan is rare, and maybe i am doing something wrong. But that is what i see when i put in dates in Fidelity with no raise, no spouse, 0 in other % fields the have there. 51 = 380, 52 = 710. Various combos of partial lump sum and monthly, but i am using full cash value.
If you don't have this benefit, don't worry, mine will be reduced when the new calculator comes out. this initially was in response to the query is there any benefit to reaching modified age 75. THis is the only one i have that is possibly left, if not there is no benefit to me staying to MOD 75.
In a few years MR75 will be irrelevant. Management has stripped out benefits, and contributions won’t be far behind. I can see a scenario where pensions will be frozen and your benefit will grow at the Treasury bond rate. Employees will be forced onto the healthcare exchanges and the company will give each employee a fixed contribution that is controllable and predictable.
Looking at my latest SPD, there can be an "early retirement" penalty if the employee has less than 30 years, and the employee is less than age 55. Check your plan to see if that applies.
There are no longer any health benefits in retirement after 2021 for the majority all hanging in there to get to MR75 with hopes to leave with health benefits. Too young to retire without healthcare now. Not to mention there are also no longer supplemented healthcare benefits upon retirement. So there are a lot of 50 something folks who had the rug pulled out from under them....Get let go and try to find job with a very real threat of age discrimination not to mention trying to swing 900.00 plus a month for healthcare benefits with a pension that won't cover it all. A very real and scary situation. Of course most have 401K savings but did not expect to have to cover all of this after retirement or more likely a boot out the door....Yes, we all knew anything is possible these days but still did not expect all of these changes hitting at once in addition to daily concern about being laid off...Just good ol' business as usual....Remember you matter.
To the OP - As some have said, different pension plans from different legacy companies have different rules.
BUT - as someone who is approximately in your position in service and current lump Doebelieve the answer is likely YES, if you are management (I don't know anything about bargained pension plans).
There is a thread on tSpace in the Your Money Matters forum that asks this very specific question and there's finally a couple good answers in there as well. It's probably on the first page of the forum.
The actual rule is buried in the pension plan, but you are basically correct: there are "penalty" multipliers for every year, and that suddenly change when you reach MR75. In my case, that happens when I turn 50. At that point, there is a huge bump in the payout because the "penalty" multiplier for age 50 no longer applies.
The best way to do this is to log into Fidelity and model your payouts under the pension plan. Assuming you're like I am and will reach MR75 at 50 years of age, model the payout at a day or two before your 50th birthday, and then on your 50th birthday, and compare the two.
Keep in mind that for management, AT&T is changing future contributions to the plan, so any future-looking forecast that you do today will be wrong and won't be correct until the update the formula in a few weeks. But you'll still see the effect of the MR75,
Pensions are calculated differently for different employees, depending on legacy company, hire date, etc. I am non bargained, legacy Cingular/ SBMS. I don’t see any of these big jumps people talk about, still thankful to have it anyway though.
Put a future date in the fidelity calculator for AFTER you have your 75 ... and you will see what the difference is in your pension based on current interest rates.
Although I don’t pretend to know about all the different pensions within the company someone commented on another thread recently that his or her lump sum almost triples in value the day after reaching MR75 to 700K which I’m finding a little difficult to believe unless they’re possibly a 3rd level or higher but anything is possible I suppose
My pension doesn’t take a big jump til I hit 30 years of service... I’m expecting to see changes in that when the new calculator hits in Feb. Prior to hitting MR75 I don’t have a lump sum option. I have no healthcare benefits at retirement. Legacy SBC and I hit MR75 this December.
I didn’t notice a significant bump when I reached the “rule of 75” but I realize not everyone has the same plan (depending on what company you started with, etc.)
Someone can correct me if I’m wrong, but I think your best bet is to go onto the Fidelity website where you can plug in different ages/retirement dates. There you can get an estimate of what your lump sum (and monthly, if applicable) payment will be at each age.
The rule of 75 is to get retirement benefits. It does not impact the pension. Your cash balance pension increase every year is due to additions, which depend on your age, plus 4% interest.
The modified rule of 75 keeps you from early retiring if your age & service is less than 75.
Some people would want to retire - LEAVE/ESCAPE at say...........45 (say age 30, service 15)
This rule was designed to keep senior talent working longer.
Don't expect a huge bump-up in your lump at the achievement of 75 or higher. Won't happen.