Last year, the return on the US pension assets were only $99 million and pension payments were $823 million per 3M 10-K. At this rate, our pension will be in the 60% funded range in 3-4 years. Pension cash flows look unsustainable. Why would 3M HR tell us the pension is well funded in 2022? Layoffs continue, will job eliminations fix the pension fund?
39 replies (most recent on top)
If one’s pension is now managed by MetLife, then keeping up with their financial strength will be important. MetLife currently looks good, but keeping a pulse on them will help to understand risk to pension payouts.
Key Areas to Monitor MetLife’s Financial Health and Why
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- Financial Strength Ratings
Why: Reflects MetLife’s ability to meet its financial obligations. Downgrades may signal financial trouble.
Current State:
• AM Best: A+ (Superior) (March 2025)
• Fitch: A- (February 2025)
• S&P: AA- with stable outlook (September 2024)
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- Financial Performance
Why: Positive and stable performance ensures MetLife can cover annuity payments.
Current State:
• Q4 2024: $1.2 billion net income (up from $574 million)
• Revenue: $14.5 billion, a 6% increase year-over-year
• Investment Income: $5.4 billion, a 1% increase
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- Dividend Payments
Why: Consistent dividends indicate financial stability and profitability.
Current State:
• Common Stock: $0.545 per share, payable March 11, 2025
• Preferred Stock: $0.355 per share, payable March 17, 2025
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- Industry Recognition
Why: Highlights operational strength and strong reputation in the market.
Current State:
• Listed among “World’s Most Admired Companies” by Fortune Magazine in 2025
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- Regulatory and Market News
Why: Changes in the insurance market or regulations can affect MetLife’s stability.
Current State:
• No significant negative regulatory actions reported
• Stable performance despite industry challenges
Risks for 3M Retirees with MetLife Annuity:
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- Financial Stability of MetLife
• Risk Change: INCREASED
Why: Pension payments now depend entirely on MetLife’s financial health.
• Mitigation Strategy:
• Monitor MetLife’s financial strength through credit ratings and financial reports.
• Diversify income sources to reduce dependence on annuity payments.
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- State Guaranty Association Limits
• Risk Change: INCREASED
Why:
• Previously, 3M pensions were protected by the Pension Benefit Guaranty Corporation (PBGC), a federal agency that offered a maximum of $81,000 annually for a single-life annuity and $72,900 annually for a joint-and-survivor annuity.
• Now, protection has shifted to state guaranty associations, which typically cap coverage at $250,000 to $500,000 in present value, not annual payments. This coverage is per person per insurer, with no increase for survivor benefits.
• Unlike the PBGC, which has federal backing, state guaranty associations are funded by insurance companies, not by state governments. Therefore, their ability to pay claims depends on the financial stability of the insurance industry, not the state’s budget.
• However, if a state guaranty association needed to make large payouts (e.g., if a major insurer failed), it could lead to delayed payments or reduced benefits if funding falls short.
Mitigation Strategy:
• Calculate the present value of your annuity to ensure it does not exceed state limits.
• If you have a large annuity, consider diversifying with multiple insurers to avoid exceeding the coverage cap with any single insurance company.
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- Inflation Risk
• Risk Change: NO CHANGE
Why: Neither 3M’s pension nor the MetLife annuity includes cost-of-living adjustments (COLA), leaving retirees exposed to inflation.
Mitigation Strategy:
• Consider investments in inflation-protected securities or dividend-paying stocks.
• Maintain additional savings to supplement fixed annuity payments over time.
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- Limited Transparency
• Risk Change: INCREASED
Why: 3M provided detailed pension funding status updates, while MetLife offers less transparency about how specific annuity pools are funded.
• Mitigation Strategy:
• Regularly review MetLife’s financial statements and credit ratings.
• Stay informed about insurance industry trends that could signal potential risks.
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- Legal and Administrative Barriers
• Risk Change: INCREASED
Why: Retirees must now navigate state guaranty associations if MetLife fails, which could involve a complex claims process.
• Mitigation Strategy:
• Understand your state’s claims process and prepare necessary documentation in advance.
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- Complexity with Survivor Benefits
• Risk Change: INCREASED
Why: State guaranty limits apply to the total annuity value, not separately for survivors. Once the limit is reached, payments stop, posing a risk to surviving spouses.
Mitigation Strategy:
• Review the annuity contract for survivor benefit terms.
• Consider additional financial products, such as life insurance or a spousal IRA, to secure the survivor’s financial future.
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- Risk of Moving to Another State
• Risk Change: SLIGHTLY INCREASED
Why: State guaranty limits vary, and moving could change your annuity coverage, potentially reducing financial protection.
Mitigation Strategy: Before relocating, verify the guaranty association limits in the new state to ensure they align with your annuity’s value.
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Clarification on State Guaranty Associations and State Financial Health:
• State guaranty associations are funded by insurance company assessments, not state tax dollars. Therefore, the financial health of the state (e.g., California and Illinois) does not directly impact the association’s ability to pay claims.
• However, if a major insurer fails and the guaranty association’s funds are not sufficient, it could lead to delays or limitations in benefit payments. (Think CA with all the fires and insurance companies pulling out. More demand on CA state insurance plans to cover and then more risks).
• Retirees should consider the overall stability of the insurance industry and maintain diversified income sources to reduce reliance on annuity payments alone.
I concur with the lump sum/pension comments already made about retiring in Nov 22. I too ran the numbers and although I wanted to work for several more years, the numbers were compelling. For illustration, taking the lump sum and immediately buying a (better) annuity would have resulted in a ~35% increase in the monthly payout compared to the pension.
The Portfolio I monthly pension is calculated based on your high-4 average pay and years of service. Age isn't part of the formula. An employee terminated at age 54.5 with 30 years of pension service and a high-4 average of $X will be entitled to receive the same monthly pension benefit starting at age 65 as someone who retires at age 55 with 30 years of pension service and the same high-4 average pay.
The lump-sum value is based on the previously calculated monthly pension amount, the IRS 417e segment rates from November of the previous year, and the person's age / life expectancy. The 6 month age difference between the 55 year old and 54.5 year old will have minimal impact on the lump sum value.
One difference is that the retired 55 year old has the option to begin receiving their monthly pension earlier than age 65 by taking a 5% per year reduction in the monthly payment. If the terminated 54.5 year old chooses to receive monthly benefits prior to age 65, they would take an actuarial reduction that would be closer to 7% per year. While some retirees qualify for the social security bridge benefit, it is unlikely that a 55 year old would meet the age + years of service = 92 requirement. (A 55 year old would have had to start working for 3M at age 18 or younger to get to 92).
I also left 3M in November 2022 at age 54-1/2, but it was by choice. I was originally planning to retire in the summer of 2023 on the first of the month after I turned 55. But then the Federal Reserve started aggressively raising interest rates and the IRS 417e segment rates that are used to calculate pension lump sum values skyrocketed. That meant my lump sum value would drop significantly if I waited until 2023 to retire. I used the most recent 417e rates available to do some net present value calculations and that indicated that my lump sum value would drop by over $150k if I worked the extra 6 months until I was retirement eligible. I'm a numbers guy and don't make many math errors, but that didn't pass the gut check. I double checked my work. Same result. Then I read an article by Twin Cities Retirement Group (96% of their customers are current or former 3M employees). It predicted "significantly lower lump-sum pension amounts next year". Two co-workers who were TCRG customers were told to expect their lump sum values would drop by 30 to 35% if they waited until 2023 to retire. Principal Financial also had an article stating "Since the lump sum equivalent of a monthly pension moves inversely to interest rates, this year’s historic run-up can reduce lump sum cash-outs by 30% or more". It had an example of a 55 year old who could expect his lump sum value to drop by 35%. Those predictions were inline with my calculations.
I was absolutely sure that I wanted to take the lump sum pension option regardless of when my last day of work was. I'd been watching for years as other Fortune 500 companies froze their pensions and then transferred their pension liabilities to insurance companies. I was amazed that 3M hadn't jumped on that bandwagon yet, but fully expected that 3M would eventually follow the trend. I knew that if something happened to 3M the PBGC would likely continue paying most if not all of any monthly pension benefit, but the PBGC balance sheet didn't look great either. I had even less faith in any insurance company that 3M might purchase an annuity from in order to shed the pension liability. Insurance companies are regulated by the states and state run backstops for insurance companies offer limited lifetime payouts if the insurance company goes under.
I knew going into it that I would forfeit my 2022 AIP (no pro-rated AIP unless you're over 55 and retire). I also knew I would forfeit over $20k of RMSA. And I would not be eligible for the annual retiree medical contributions once I was Medicare eligible. 3M can terminate that last benefit at any time so I wasn't confident that it would still be around 11 years or more in the future. Giving up close to $30k of AIP and RMSA was a tough pill to swallow. But losing over $150k on the pension lump sum would be far worse. Even if I invested that extra $150k in a boring, low-risk Treasury bond yielding 4% ($6k per year), it would make up for the lost AIP and RMSA in about 5 years. After that the extra $150k would continue to generate an annual yield. And if I died, my beneficiaries would inherit that money. Contrast that to the RMSA that has a lot of restrictions on what it can be used for, doesn't earn any interest, and can't be passed on to children or grandchildren.
If interest rates had stayed low, I absolutely would have worked the extra 6 months and retired with the full AIP and RMSA benefit. But given the situation at the time, I'm confident that I made the best decision I could. After 2 years, I have no regrets.
3M pension fund is as healthy as the physical and mental state of the current president or that of the past president, to be politically correct
I was let go in November 2022. At the time, I was a few months shy of turning 55, and others were even closer to that milestone.
I never ran the numbers to see the impact on my pension if I had reached 55. I know I lost the retirement medical fund (~ $30k), but I’m curious about how this affected my lump sum or annuity options.
Is there anyone still on Portfolio 1 who is under 55 now and could simulate their numbers to compare the impact of leaving before or after turning 55? What % hit would that be? Lump sum impact? Annuity impact?
I ended up choosing the lump sum primarily because I didn’t trust 3M to manage anything effectively going forward. On paper, the annuity looked good, but I had no confidence that 3M would continue to contribute to maintain its value. Opting for the annuity felt like I’d be relying on 3M to “do the right thing” and properly “manage” the fund—neither of which I had seen evidence of in the years leading up to my departure.
Ok why not until 2028? Dazzle us with your brilliance. What big things are you predicting?
If you are over 50, there is a target on your back. 3M has a history and practice of firing older employees. They were caught once in the Whitaker lawsuit, long battle in court with thousands of terminations. 3M knows how to target without getting caught now. A few years ago, they got careless and a scientist and product developer sued 3M for age discrimination. Anyone know how that one ended up? Fascinating story.
Pension numbers are not representative. HR knew that in 2022 when they tried to scare everyone to keep the annuity. Surprises will be revealed before 2028. Why do you think they are not freezing the pension until then?
3M is an ethics and human resource wasteland. Do not trust leadership, HR or ethics group. First rule of survival.
3M has no honesty or integrity. Welcome to an ethics wasteland.
Pension accounting has a signifcant amount of latitude due to inherent assumptions such as future salary increase projects, employee turnover, retirement ages, and discount rates. This is not like impairment testing, inventory accounting or deffered tax accounting.
3M is cooking the pension books and will delay the inevitable. More people being fired before they arrive at 55 or 59 1/2, watch for even more outrageous return assumptions beyond 8.00% and rising discount rates against pension obligations, delayed and prorated losses spread in the future for past events, etc. 3M executives destroyed more than just a good business, innovation and culture.
Executives and HR misdirected, bluffed and deceived employees regarding the strength of the pension. Pre-McNerney the fund was rock solid. Now it is mistated and getting weaker every year. The good news is that it is a defined benefit and 3M cannot legally remove existing funds. The current funds, while mistated, are backed by the strength of the US governement for what that is worth (PBGC). Look for weakening pension each year. Take the annuity and thank HR for conspiring with 3M Executives to cheat you out of the lump sum. If you took the lump sum, congratulations.
When 3M off loaded pension employees to Met, 3M recognized a $800 to $900 million charge. Therefore, at that time, the transferred pension was only 70 to 75% funded. In the article below, 3M claims the pension required no additional funding. Gaslighting at its finest. Obviously, pension was under underfunded by the $800 or $900 million charge. The remaining pension is only funded at the same 70 to 75% and losing ground every year.
3M to transfer about $2.5 bln of US pension obligations to Met Tower Life Insurance
By Reuters
June 13, 2024 6:01 AM CDT
3M (MMM), said on Thursday it would transfer about $2.5 billion of its U.S. pension payment obligations and related plan assets for nearly 23,000 U.S. retirees and beneficiaries to Metropolitan Tower Life Insurance.
Met Tower Life will begin paying and administering the retirement benefits included in the transfer on Oct. 1.
3M added it expects to recognize an estimated pension settlement charge of between $800 million and $900 million in the quarter ending June 30.
The contract, which represents about 60% of Early Retirement Incentive Plan (ERIP) retirees, required no additional funding, the company said.
No money No honey
BB hire a new Honeyman
Tireman out. What's next?
SIBG announcement tomorrow morning. At least we know 3M will not be announcing something new on the 3M pension. For folks in SIBG, “Ladies and gentlemen, we are now preparing for landing. Please ensure your seatbelts are fastened, your seats are in the upright position, and all carry-on items are stowed. We’d like to thank you for choosing 3M and hope you have a wonderful . . .” There will be gaslighting, lies, and disinformation. Listen for what is said by who and what is not said. No reason for concern, this is the new 3M.
3M job is just a job, no more no less. No careers here. It's a paycheck. Be sure not to stay too long. I took the lump sum even though HR never shared 3M's top 10:
10 Every year would be more toxic than the last.
9 Senior leaders would get far worse.
8 Advanced 3M would be a disaster and not the paradise promised.
7 The longer you stay at 3M, the less value you have and the harder it is to exit.
6 Options would be taken away and incentives reduced
5 A Chainsaw CEO would be hired to slash, liquidate, and hatchet.
4 Jobs would be downgraded, combined and assigned even more work.
3 Pension accounting would be juiced so that the Pension Protection Act of 2006 is not triggered.
2 3M would sell 60% of the pensions to an insurance company not backed by that company.
1 Employees would be targeted by 3M for layoffs that are between 50 and 54.
That top 10 was from the last 3 years. Can you imagine what is coming the next 3 years? Continue to take your 3M salary, at some point RUN.
A catastrophe waiting to happen for loyal US employees.
3M 2021
“The primary U.S. qualified pension plan, which is approximately 67 percent of the worldwide pension obligation, was 97 percent funded and the international pension plans were 101 percent funded.”
3M 2024
“The primary U.S. qualified pension plan, which is approximately 63 percent of the worldwide pension obligation, was 94 percent funded and the international pension plans were 122 percent funded.”
International 3M employees are covered. We know the US 94% funding is pure fantasy based on falsified and dishonest pension accounting and assumptions. US Pension is losing money and claiming future returns of 8%. Pension Benefit Guaranty Corporation (PBGC) get ready.
Who's to say the pension will keep going through 2028, was it? New leadership could decide it ends sooner.
BB has a plan for the breakup of 3M. You can bet he will try to spin all of the 3M pension liabilities into 1 spinoff. The result. The spinoff will also get lumped with liabilities like pfas too. Wherever Varys is hope he's doing well. But I think he predicted some form of bankruptcy if spins are done in certain ways. Monsanto did this with Solutia some 25 years ago.
Definitely wish I had taken lump sum when I could have. And don't count on that firm some of the assets got spun to for help. They have no loyalty to 3Mers.
3M identifies various "Risks Related to Financial and Capital Markets and Tax Matters" in the 10k. Can you guess what the #1 risk is?
Correct, the employee pension fund. Read the details . . .
"* The Company's defined benefit pension and postretirement plans are subject to financial market risks that could have a material adverse effect on our results.
The performance of financial markets and discount rates impact the Company's funding obligations under its defined benefit plans. Significant changes in market interest rates, decreases in the fair value of plan assets and investment losses on plan assets, and legislative or regulatory changes relating to defined benefit plan funding may increase the Company's funding obligations and could have a material adverse effect on its results of operations and cash flows."
Pension issue known when 3M HR told us it was good. That was 2022 and this information was not included in their video or FAQ. Masively mismanged under corrupt and incompetent 3M executives. Why did 3M HR not tell us about this? Why did HR push so hard to keep us in the pension annuity? 3M HR leaders are invited to comment and explain. Waiting.
As a vintage baseball card collector, 3M would have been better off buying a lot of vintage sports card (honus wagner tobacco, 1952 Mantle Rookie, etc) three years ago and sell them now and the fund would be way better off than the current investment buffoons have done (does Kearney do investment consulting too?)
The pension fund is weak. Pension assumptions have been revised, changed, then revised again. 3M projects a 8% return now! The rate of return on plan assets in 2024, 2023 and 2022 was 2.3%, 10.4% and -17.4%. Instead of an 8% annual return, the pension assets have produced losses of -1.6% each year. What could be causing these losses even after 3M juiced actuarial assumptions. Baseball cards, vintage comic books, antiques? My best guess is a significant amount into commercial real estate, maybe hedge funds. 3M calls this ‘private equities’ and ‘absolute return investments independent of traditional performance benchmarks’.
You can operate based on what 3M states in highly produced videos or what 3M does. Protect yourself, 3M will not. If you did not take the lump sum, it is too late. Annuity is only rational choice now. You should have not listened to 3M, especially HR.
It would help a lot of employees in making their pension choice to know how the most recent two previous career 3M CEO’s and similar top execs chose to receive their pensions? Lump sum payout or paid as the regular pension plan? If they took the pension option, did theirs go with Met Life or remain in the regular 3M plan? You might expect the option they are receiving to remain funded…? It’s a small part of their compensation, but it is an indicator.
Hey Tireman, why did you get rid of so many people at ages 53 and 54, sc--wing them out of a better pension if they had made 55. Also, those just months from the magic retiree medical points of 91 or 92. Is that why you got a 3 performance ranking?
Have a whole bottle of scotch tonight just to drown out the cries of the unwashed that you sc--wed over.
When the next recession hits, the pension funds will be in dire straits, no doubt about it.
BB or whoever the CEO will be at that time will no doubt manage it very well resulting in much smaller pension paychecks for those concerned.
I escaped this dumpster fire last year and I'm a few years from retirement yet. Best believe I've pulled out my pension $ as a lump sum to have it managed elsewhere until retirement. Anyone considering rolling over their funds elsewhere - get on it! You're losing money if you don't.
That's why so many are taking the lump sum. After the PFAS LAWSUITS, there might not be much of 3M left.
Informative reading: https://www.nisa.com/perspectives/pension-risk-transfers-prt-may-be-transferring-risk-to-beneficiaries/ . Economic conditions that would tank an annuity company probably won’t treat personal investments so well either. As our government unravels in real time, it’s hard to believe ERISA guarantees can be counted on in the future. Maybe I’ll take the lump sum and fill a remote cabin somewhere with g-ns and MREs; wait for the bright light in the sky letting me know it will all be over soon.
BB takes orders from Wall Street. Period. That was the case at his former company, and it's the case at 3M.
WS cares only about stock buyback and dividends. Since 3M slashed the divy (combined over the "new" 3M and SOLV), Billy Boy needs money to buy back more shares. The pension transfer was predictable. He does not care about anyone but himself and his cronies like Tireman.
Wished I had taken the lump sum when I could. For those left behind, don't think Billy Boy will keep funding until YE2028. He will likely announce ending it no later than 2026. The way BB is making money, if he didn't love his 100 acre estate in Florida so much, he could buy Wonewok for 30 cents on the dollar and hang out with the mosquitos (official state bird of Minnesota).
I took the lump sum when I left with many others in Nov 2022. Lately, 3M has become populated with outside executives. Executives who give lots of lip service (BB, Tireman and others) but whose actions are to grab as much money as they can from the cash register, jump the counter, and run out the door. Are these the kinds of people whom you want to entrust with your pension? Sure, there are Federal protections – but they might not be worth much when these goofballs get done. Already, 60% of the pension has been moved off to the Met Tower Life LLC joint venture – outside of the PBGC guarantee. By hook or by crook, the risk is being transferred from the company to you.
NO fearmongering here. Your information is outdated and incorrect. The 60% of the 3M Pension has been offloaded to Met Tower Life – a joint venture specifically insulated from Met Life – for a reason. The PBGC premiums 3M would have had to pay were slated to increase over 200% due to deteriorating 3M Pension performance. 3M keeps projecting an 8% return but the actual 2024 return was just 2.3%. Going forward, 3M would have had to dump in hundreds of millions of dollars had they stayed in the federal PBGC. Hence, the Met Tower Life announcement – no more PBGC guarantee for the 60% offload – you will now be covered by State annuity rules (usually a total of $250,000 to 300,000 depending on your state). The risk has been shifted to YOU!!
The 3M Pension used to be rock solid – that is no longer the case. They were unable to unload the remaining 40% to ANY annuity company – that is a warning sign. Taking the annuity is no longer a slam dunk.
Regarding the pension guarantee, it is true that pensions administered by 3M are guaranteed by the PBGC but the 60% that were transferred to the Met Life Annuity are not. Those are guaranteed by the Minnesota Life & Health Insurance Guaranty Association. In the unlikely event that Met Life company fails the, total protection per individual is $250,000.
1- Can we go back to the original concept of this board which is about layoffs please?
2 - All pensions are guaranteed up to $67,295.40 a year by the PBGC, and yes this includes 3M's pension. I checked this with three different financial planners with different firms and all agree. It is still best to take the annuity as you have to make an extra 6% above the normal return for the year to equal the annuity payout.
So please stop with the fear mongering, it doesn't serve anyone.
As you may recall, 3M made a couple of significant moves regarding the pension plan in 2024. Freezing the U.S. pension plans for non-union U.S. employees, effective Dec. 31, 2028 (https://news.3m.com/2024-01-08-3M-announces-U-S-pension-plan-actions) and transferring around 60% of current participants to a Met Tower Life annuity (https://investors.3m.com/news-events/press-releases/detail/1846/3m-transfers-a-portion-of-u-s-pension-payment-obligations). This removes a significant amount of pension liability from the company.
This is why I took the lump sum when I was laid off two years ago. With all the cost cutting and poor decision making by management I just didn’t trust that it would be there for the next 20-30 years.
I took the lump-sum in 2022. The louder that HR said 3M pension was 97% funded, the more I worried. 3M cannot be trusted. 10K says "As of December 31, 2024, the Company’s 2025 expected long-term rate of return on U.S. plan assets is 8.00%." The pension investment fund only made 2.3% in 2024. The 8.00% return assumption is not accurate. The pension is underwater and it is too late to take the lump-sum.
Don't ever assume the pension will be there. Or SS for that matter. Calculate all your retirement plans as if those 2 will not exist.