What's frozen in 1998 'frozen' pension offer?

[Guest jdubya]

12/31/98: Corporation offers 'frozen' pension cash value of $346,992 less $109,797 offset for previous pension payout for 8 years, prior to rolling over previous pension to current pension. Allows employee to defer retirement to some future year without penalty.

05/01/03: Corporation now says only the original cash value of $346,992 was frozen, and that the $109,797 offset must be new FV based on new discount rates?

Is this correct/legal?

[MGB]

I don't understand your descriptions. There is no such thing as a "frozen pension cash value" amount in a defined benefit plan. Where did this come from? Is it supposed to be the present value of some other defined amount of monthly benefit?

The offset sounds like it is just the actuarial equivalent of prior payments. Yes, that increases with time.

[Mike Preston]

jdubya, is there anything new to this question that you didn't ask the first time around?

[Guest jdubya]

To clarify: The company offered me a choice between DB and Cash Value in 1998; I chose the DB plan because it promised a 'frozen' payout valued as of 12/31/98. As I understood it, both the annual payout and the cash value were frozen. What they did not tell me at the time was that the amount to be deducted from the 'frozen' payouts (for previous withdrawals) was not frozen but would be subject to a future value calculation at the time of retirement, resulting in a large drop in actual pension value.

To Mike: The questions I am asking now about the legality of what the company is doing is similar to my question many weeks ago. I am extremely frustrated that so little guidance is available to the layman in terms of pension plans. Do we just accept a case like this based on the company's word that everything is correct, even though the pension was reduced by 30-40%?

I would like to hire an independent actuary to validate the accuracy and validity of the company's pension calculations. Can anyone help me?

[Mike Preston]

As stated in the earlier thread, you have so much information that bears on this determination that is primarily legal in nature that you really need to hire an attorney. Any actuary can do theoretical calculations for you. In fact, if you provide all of the details here, someobdy is likely to do them here. But you don't want theoretical calculations. Or at least you shouldn't. What you need are calculations that are specific to your plan's benefits. As stated in the other thread, you will need to review the plan materials provided when you stopped your initial pension and, more specifically, what you signed around that time - theoretically, no doubt, acknowledging that you understood what the company was offering.

I'm not saying that you aren't right. I'm saying that there is no legal theory that will be exposed here that definitively states that you are right or wrong.

Good luck.

[david rigby]

As stated by Mike, there is a lot here. Anyone who helps will need much more information than is posted in this message thread. While I don't disagree with Mike's suggestion to consider an attorney, you might also consider this program: http://www.actuary.org/palprogram.htm

[Blinky the 3-eyed Fish]

I never knew actuaries had this program. It makes me feel all warm and fuzzy to know that actuaries are buddying up with the pensioneers to help save their retirement benefits.

[MGB]

There is a huge need for more volunteers because the large firms will not allow their employees to participate in the program (too easy to have a conflict of interest).

This program originated as a joint effort by the DOL and Pension Rights Center and later got the Academy involved. Although the AAA website says it is an AAA program, I think there are still other professionals involved.

[Mike Preston]

The only time I have been called was for a divorce issue. It was a participant that was an HCE of a small company that wanted free actuarial services,when need was clearly not an issue. I declined.

[Guest jdubya]

Thanks to all for the suggestions and help. I have sent a request for assistance to the link suggested.

It's good that your org. has volunteers who can offer advice to the individual pensioner who may have been shortchanged.

Thanks, again.

jdubya