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It sounds like by closing the plant and stopping the employees reaching retirement age, they massively reduced the amount the employees were eligible to receive

It sounds like by closing the plant and stopping the employees reaching retirement age, they massively reduced the amount the employees were eligible to receive. Even if the pension fund was separate, by reducing eligibility this way they company had to pay less into it over the following years.

ac29 9y ago
To add to that, this pension (and many others) was structured such that payouts are non-linear based on number of years worked, so for example, you might get: 0-5 years worked: no pension 5-10 years worked: 5% pension 10-20 years worked: 20% pension 30+ years worked: full pension By preventing workers from being able to work the full 30+ years, they never had to pay the full pension. One of the workers in the story mentions receiving 1/5 of full pension after being laid off due to the closure.
- woobar 9y ago
  And this detail - someone working 27 year for the company and only getting 20% of the full benefit - doesn't make these pensions really attractive. And in the article they even call it a "more generous types of pensions". I know most of the DB plans were structured in a similar way, i.e. earlier years with the company have less impact on the overal pension. But this one looks more like a lottery, where you bet to stay employed at the same company for 30 years no matter waht.
- VLM 9y ago
  The popular marketing reason why the pension disappeared is the factory closed. The real reason the pension disappeared is the proposed vesting duration was ridiculous. I am older so current jobs have no pension of course, but when I worked jobs with pensions, the vesting duration was typically something like 3 to 5 years for 100% vesting, sometimes only 2 years for 50% vesting. In fact I have a pension from a previous employer projected to be worth $800/month which by then will be about the price of one cup of starbucks coffee... To make it crystal clear, the pension was eliminated when the vesting duration was moved from perhaps 4 years to 30+ years.
  - rwmj 9y ago
    Thanks for replying. I found an article about "vesting duration" for US pensions, and if I'm understanding correctly this means that after you leave the job for <N> years, the pension you are entitled to drops to half and (after more years) completely disappears. This seems incredible to me! Surely this would mean that younger workers who work for a company even for a long time but then leave would never collect a pension from that company?
    - VLM 9y ago
      The investopedia probably explains it better than I can https://www.investopedia.com/terms/v/vesting.asp https://www.investopedia.com/terms/v/vesting.asp https://www.investopedia.com/partner/investopedia/articles/retirement/112916/pension-vesting-everything-you-need-know.asp https://www.investopedia.com/partner/investopedia/articles/r... More like if you work somewhere for enough years, you'll the golden handcuffs of extra bonus, or the flip side if you quit each job after two years you get nothing.
- walshemj 9y ago
  didn't US pensions vest year by year ie 30/60ths, or even 40/60ths

ac29 9y ago

To add to that, this pension (and many others) was structured such that payouts are non-linear based on number of years worked, so for example, you might get: 0-5 years worked: no pension 5-10 years worked: 5% pension 10-20 years worked: 20% pension 30+ years worked: full pension By preventing workers from being able to work the full 30+ years, they never had to pay the full pension. One of the workers in the story mentions receiving 1/5 of full pension after being laid off due to the closure.

woobar 9y ago
And this detail - someone working 27 year for the company and only getting 20% of the full benefit - doesn't make these pensions really attractive. And in the article they even call it a "more generous types of pensions". I know most of the DB plans were structured in a similar way, i.e. earlier years with the company have less impact on the overal pension. But this one looks more like a lottery, where you bet to stay employed at the same company for 30 years no matter waht.
VLM 9y ago
The popular marketing reason why the pension disappeared is the factory closed. The real reason the pension disappeared is the proposed vesting duration was ridiculous. I am older so current jobs have no pension of course, but when I worked jobs with pensions, the vesting duration was typically something like 3 to 5 years for 100% vesting, sometimes only 2 years for 50% vesting. In fact I have a pension from a previous employer projected to be worth $800/month which by then will be about the price of one cup of starbucks coffee... To make it crystal clear, the pension was eliminated when the vesting duration was moved from perhaps 4 years to 30+ years.
- rwmj 9y ago
  Thanks for replying. I found an article about "vesting duration" for US pensions, and if I'm understanding correctly this means that after you leave the job for <N> years, the pension you are entitled to drops to half and (after more years) completely disappears. This seems incredible to me! Surely this would mean that younger workers who work for a company even for a long time but then leave would never collect a pension from that company?
  - VLM 9y ago
    The investopedia probably explains it better than I can https://www.investopedia.com/terms/v/vesting.asp https://www.investopedia.com/terms/v/vesting.asp https://www.investopedia.com/partner/investopedia/articles/retirement/112916/pension-vesting-everything-you-need-know.asp https://www.investopedia.com/partner/investopedia/articles/r... More like if you work somewhere for enough years, you'll the golden handcuffs of extra bonus, or the flip side if you quit each job after two years you get nothing.
walshemj 9y ago
didn't US pensions vest year by year ie 30/60ths, or even 40/60ths