Thread regarding Intel Corp. layoffs

Thank you @gwb for taking the time to explain. I was ISP'd.

Hi -tpn. It's -gwb. Your pension doesn't grow. It goes up and down with the stock market (which is what makes your RCP go up and down, and as I said, your pension goes up when your RCP goes down and vica versa). Once you've told Fidelity (OK, I want (lump sum or annuity), THAT'S when it locks down. You tell them the date you'll stop working, and the date you'll take the lump or annuity. They mail you a quote as to what those values are. I could be wrong here but I believe it still bounces up and down on a daily basis as the market fluctuates until the date you said you wanted to take it rolls around. Not 100% sure about that. But at one point it DOES stop fluctuating which is when you take it (annuity or lump sum). It will NOT grow once it's taken and there is NO COLA (Cost of Living Adjustment) like Social Security has. It is what it is at that point (your monthly annuity amount will be that for life and never, ever change if you decide on the annuity).

I guess the one thing I'm not clear about with you... is are you still employed by Intel or already retired (quit/ISPed)? If you're still employed by Intel I HIGHLY suggest you do at least 1 of 2 things....

1) Go onto InsideBlue and search for the word pension. Then read the threads posted to 'Money Matters'. It's a financial club and there are some SUPER financially savvy people in that club. They hold weekly meetings on various topics, Pension being one that's been covered recently by whomever is in charge of the pension. Sorry, I don't recall his name as I ERPed and can't look it up for you.

You can also post your question(s) to the club if you're not understanding something you read after searching the club for the word Pension.

2) Join/subscribe to The Money Matters club!! I highly recommend it. :) But note that some other group (Finance, I think) created a club with almost the same identical name. The founder of the MMC tried to get them to change their name since it was confusing to people and she's had the club something like 8 years or so. They wouldn't so there's a similar sounding blog/club name. I think theirs has something appended after "Money Matters".

Good luck. :)

@gwb. Thanks for your input. Yes, I absolutely don't understand how the pension works. As I mentioned, the estimate information I provided about 5% increase is what Fidelity adviser provided using the same estimation tool on their website we have access to. They modeled several scenarios and told me that is what the value of my pension will be if I wait until 65 to withdraw (based on what my RCP value is today). According to Fidelity I can move my RCP to an IRA (so there will be no up/down in RCP value after the transition) while keeping the pension plan as is (not withdraw or move it to and IRA) and let the value grow. Isn't this correct? If this is correct, then I don't understand your statement about the amount of pension being locked, since they said the amount will grow till 65 when it automatically becomes single life annuity. Thanks for any clarification.

This is a very incorrect statement "When I am 65, the value of my pension would have almost doubled (about 5% increase every year for the next 12 years). "

You obviously don't understand how Intel's pension works. the formula is tied to the RCP (Retirement Contribution Plan). They have a magic number they think the RCP should be. If it's short, the pension amount is the difference. If the RCP is at their magic number or higher, you get nothing (zero). It does NOT go up 5% a year, or any percentage for that matter. It's tied to the RCP as I said.

In other words.... when your RCP goes up in value, your pension goes down. When the market tanks and your RCP goes down, your pension amount goes up UNTIL THE DAY YOU LOCK IN THE AMOUNT. Then it is what it is forever. No COLA either. it simply is what it is.

Options for the pension plan:

• Withdraw now (pay 10% penalty and taxes if under 59 &1/2 or just tax if over 59 & 1/2). Money is yours.

• Move to an IRA now or later. No tax or penalty until you withdraw from the IRA. No penalty if 59 & 1/2+ when withdraw. The longer you keep it in the pension plan, the larger the amount will become.

• Choose single life, 10 year, or 15 year annuity any age until 65. The longer you wait, the larger the amount will be. Once you reach 65 and don't move it to IRA or withdraw it automatically becomes single life annuity.

You can use the pension estimation tool on Fidelity's site to model various scenarios.

For my personal situation, I am planning to keep it in the pension plan until right before I am 65. I am 53 now. When I am 65, the value of my pension would have almost doubled (about 5% increase every year for the next 12 years). Then I either withdraw or move it to IRA. This is assuming I do not need the money before 65. If I need the money sooner I will take it out and pay penalty and/or taxes, but the longer the money sits in the pension plan, the larger the value will be. I am not good at investing, so if I move it to IRA now, I don't believe I can get the ~5% return I would get if I leave it in the plan. I met with a Fidelity consultant once. When I meet them next time, I will discuss this option with them to see if they agree. I suggest you talk to Fidelity about your personal situation.

fidelity actually gave me a number over the phone. Just have to be talking to the right department. I was told I could take a cash out, but would have to treat it like income and pay tax. But they thought (said I had to talk to a different department to be sure) I could just roll it into an IRA without paying tax on it now.

If it was me I'd take the lump sum and invest it to turn it into something larger than $8K. $34 a month for life with no COLA isn't much. It's not even enough to notice. Call Fidelity.

Follow-up question:

I've been told my amount and it's like $34/mo or an $8k lump sum.

Do we just take it now or lose it? Or wait??

FINALLY!!!! SUCCESS. Sheesh

Interesting... it was the ampersand sign where my posts keep cutting off. I just replaced it with the word 'and'. Hopefully it works this time. Fingers crossed!

yes, it's possible to have zero pension. There's a complex formula that's used. This formula and Intel have a magic number for everyone. If they think your RCP is enough... then yes, you could have NO pension. If there's a shortfall between the magic number they think you need to be at, and where you're at, the pension is the difference. So when your RCP goes up, your pension goes down and vica versa.

The only way to know what your is is to run an estimate. You can do that on the NetBenefits site yourself, or call a Fidelity Netbenefits rep and ask for your quote. They will snailmail you a quote (that can still fluctuate as the market swings up and down. Hope for a downturn as you're waiting for your pension amount to get locked down. ;)

Oh, you have GOT to be kidding me. Why is this site NOT posting my response? it doesn't appear to like something after the word 'formula' (because I do not have a space and a close parenthesis after the word formula. hmmm... let me see if I can outsmart this site again. If I still can't get it to post then I give up. I've tried 6 times now and enough is enough.