Change In Pension Plan Calculation

[Guest slick1]

I have worked for a company for 32 years. In 1995 the company changed the method used to calculate the pension amounts and created an "old" and "new' pension plan. This change was supposedly done to even out the plan and improve the plan benefits for new employees.

A date was established whereby some existing employees would remain on the "old" plan, and the rest would move to the "new" plan.

Rather than allow ALL existing employees to remain on the more lucrative "old" plan, some were forced to the "new" plan greatly reducing the plan benefit.

After dangling a carrot in front of an employee for many years this seems illegal to me.

I'm interested in all comments, thanks

[Blinky the 3-eyed Fish]

You cannot cutback a benefit that has already been accrued, but future a benefit is open to be eliminated.

Perhaps you can provide some specifics to your situation to see if your benefit was indeed cutback. Although it would be gross incompetence if it was.

[Guest slick1]

I'm not exactly sure what you mean by " You cannot cutback a benefit that has already been accrued, but future a benefit is open to be eliminated." What defines if a benefit has been accrued?

With the "catch-all statement" that the plan can change at any time, it seems like a company can pretty much do what ever it wants.

How can two long-term employees who have been under the same pension plan for many years are treated differently?

This seems like discrimination! The example below shows the old vs. new pension plan. I'm currently 50 years old so you can see the "hit" we took.

Age Old Plan New Plan Difference

43 $56,600 $92,600 $36,000

44 $62,700 $100,000 $37,300

45 $69,500 $108,700 $39,200

46 $77,200 $120,300 $43,100

47 $85,900 $131,000 $45,100

48 $262,700 $187,800 ($74,900)

49 $286,500 $192,400 ($94,100)

50 $311,400 $196,700 ($114,700)

51 $337,400 $200,700 ($136,700)

52 $364,700 $204,500 ($160,200)

53 $393,100 $213,500 ($179,600)

54 $422,800 $230,900 ($191,900)

55 $453,400 $249,000 ($204,400)

58 $506,100 $321,200 ($184,900)

65 $622,600 $535,900 ($86,700)

[david rigby]

Blinky's comment about "cutback" and "accrued" is correct but might need some clarification here. Pension law states that no retirement benefit accrued (already earned) can be cutback, but that future benefits (that is, the amount that would be earned during future years) can be reduced, or even eliminated. For example, a plan can be frozen, not changing the amount of the accrued benefit but making all future accruals zero.

In order to be of furthere assistance, it would help if you could describe in greater detail the nature of your benefit, both old and new. Also, what type of plan are we discussing: defined benefit? What are the early retirement provisions, if any?