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Guest Message by DevFuse

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lump sum buy outs for salaried retirement is hourly next?


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31 replies to this topic

#1 OFFLINE   Cardinal

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Posted 28 April 2012 - 08:04 PM

Ford will start lump sum buyouts of salary retirements in the third quarter according to an article i read in the Detroit News. How long until hourly is offered buyouts or the IUAW starts handling retirements? Any replies or guesses?







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#2 OFFLINE   niteeyes

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Posted 28 April 2012 - 10:11 PM

wonder how much thier offering, either way I don't trust my investment skills and would probaly go broke before I kicked the bucket, just feel more comfortable with a pension, that is unless it's a couple million. LOL.

#3 OFFLINE   Ktp1989

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Posted 28 April 2012 - 10:12 PM

If the money's right I would love to have x amount of dollars per year of service and handle my own retirement...that way I know it will be there and can grow accordingly. Please let this be the case. If Ford sweetens the pot enough and then takes volunteers I would jump all over it.

#4 OFFLINE   CandyCane

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Posted 28 April 2012 - 10:36 PM

I would jump on it and buy Ford stock and then could
retirement in about 5 years cause if Ford ever unloaded the pension
There stock would sky rocket!

#5 OFFLINE   Fatso

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Posted 05 May 2012 - 05:38 AM

Lets talk $$$$$$$$ and then we`ll see!

#6 OFFLINE   Ktp1989

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Posted 05 May 2012 - 08:09 AM

It makes sense for Ford to look into this...anybody that gets off the books is a large benefit to Ford and it's stock holders. I personally would much rather run my own retirement and know what my money is doing and that it will be there and with the way our retiree's are getting screwed at every contract...it's a great idea to me. If the money is right I would be in immediately. On top of that...the average retiree lives about 18 months after retirement before passing...money up front means that money is still there when you pass for your wife or kids. The best thing of all is when your Social Security kicks in your pension is reduced in half....now you still get your social security and you retain all the pension. But the money has to be right....and that's the big issue.

#7 OFFLINE   CandyCane

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Posted 05 May 2012 - 09:09 AM

Show me the money

#8 OFFLINE   CandyCane

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Posted 06 May 2012 - 06:01 PM

I will take it and run

#9 OFFLINE   qwertyuiop

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Posted 07 May 2012 - 12:16 AM

My guess is that this will be offered in either 2015 or 2019. The UAW will have their say, and make it strictly voluntary, but don't look for too much more than what salaried is being offered. $500K is probably the maximum they would offer, and that would be for those with 40+ years in. I've been looking over this, and my guesses go like this:

10 but less than 15 years at the time of offering: $225,000 plus a $500 per month payment for the length of retirement, beginning at the later of the retirement date or age 62.
15 but less than 20 years at the time of offering: $300,000 lump-sum, with no additional payment
20 but less than 25 years at the time of offering: $375,000 lump-sum, with no additional payment
25 but less than 40 years at the time of offering: $450,000 lump-sum, with no additional payment
40 years or more at the time of offering: $500,000 lump-sum, with no additional payment.

Retirees would probably get options like this:

Retired for less than one year at the time of payment: $250,000 net after taxes, no additional payment.
Retired for more than one but less than 5 years at the time of payment: $175,000 net after taxes, no additional payment.
Retired for more than 5 but less than 10 years at the time of payment: $125,000 net after taxes, no additional payment.
Retired for more than 10 years at the time of payment: $75,000 net after taxes, no additional payment.

Edited by qwertyuiop, 07 May 2012 - 12:21 AM.


#10 OFFLINE   CandyCane

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Posted 07 May 2012 - 12:32 AM

Your numbers are bogus

#11 OFFLINE   Decker

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Posted 07 May 2012 - 01:50 AM

I like your train of thought, qwertyuiop.

At 500k, with 40 years that might be very interesting to many. I can only wonder what it might be if offered to the UAW membership.

At present the IUAW gets a cut from every bonus checks the membership receives. I think they would negociate (In our best interest) a large cut on the 500k.... I can hear it now, you know VEBA needs help.

I know CC..... "no sence and you had to stop reading"

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Decker


#12 OFFLINE   qwertyuiop

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Posted 07 May 2012 - 02:44 AM

Actually, my numbers are based on what salary is being offered. I don't find them bogus at all - I actually find them quite useful, considering life expectancies, seniority, etc. You want bogus, believe all the rumors about a $15,000 settlement (or any settlement, for that matter) from the arbitrator. You want EDUCATED guesses, talk to me.
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#13 OFFLINE   qwertyuiop

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Posted 07 May 2012 - 02:48 AM

I like your train of thought, qwertyuiop.

At 500k, with 40 years that might be very interesting to many. I can only wonder what it might be if offered to the UAW membership.

At present the IUAW gets a cut from every bonus checks the membership receives. I think they would negociate (In our best interest) a large cut on the 500k.... I can hear it now, you know VEBA needs help.


Decker
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I think the IUAW would, of course, get its normal 1.15% of the buyout amount. But I don't think the company would allow them to take more of that. Retiree dues are voluntary in the first place, and the VEBA is not something we (directly) contribute to. If they did put in the buyout clause that the union was to get any more of a cut, then I can very well see an uproar within the membership.
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#14 OFFLINE   Ktp1989

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Posted 07 May 2012 - 06:42 AM

If those numbers are anything close to what might be offered...it's a no brainer for me. Show me the money

The biggest question is will it be in a tax free investment that you draw off of at 59 1/2 or if you are taxed. If you are taxed 1/2 of that is gone. I like the idea that I am not out on my own as a retiree like they are now and have no say when the union takes from them. I also like that if i pass my wife already has the money...and if Ford were to go belly up the government wouldn't be running my pension. Its a win/win in my opinion if the money is right.

Edited by Ktp1989, 07 May 2012 - 06:45 AM.

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#15 OFFLINE   qwertyuiop

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Posted 07 May 2012 - 07:33 AM

Here's the thing... you can only contribute "bonuses" to a tax-free account up to a certain amount (about $46,000 per year). In order to keep this (relatively) tax-free, you'd probably have to throw the whole thing into an IRA. One way or another, unless those amounts are net (which I doubt, except for the retirees), Uncle Sam will want his share.

Unnecessary math below...

40,984 active employees (about 39,000 covered by the traditional pension program), about 135,000 current retirees.

Ford currently has $26.7 billion in pension fund assets. Assume a 2% increase per year, with 4% contributions made, and a 6% outflow every year. This equals no net change.

Let's jump ahead to 2015.

43.200 employees (the same 39,000 covered), 131,500 retirees.

Ford offers pension buyouts at the scales mentioned above. Assume the following:

Category 1: 3.000 of 5,000 accept offer. $675M paid out now, $360M in future liabilities for buyout takers, $1.44B in future liabilities for those that remain.
Category 2: 5,000 of 8,000 accept offer. $1.5B paid out now, appx. $2.16B in future liabilities for those that remain.
Category 3: 6,000 of 11,000 accept offer. $2.25B paid out, appx. $3.6B in future liabilities for those that remain.
Category 4: 8,000 of 10,000 accept offer. $3.6B paid out, appx. $1.44B in future liabilities for those that remain.
Category 5: 4,000 of 5,000 accept offer. $2B paid out, appx. $720M in liabilities remain.

Active employees bought out of pension: 26,000
Amount paid out from fund: $10.25B
Expected future liabilities from remaining active employees: $9.72B

There is still well over $16B in the pension fund to fund those who are currently retired and those who wish to not take the pension buyout.

Ford's liabilities are reduced by approximately 65%. Stock soars. Ford has record profits.... hopefully.

This is an example ONLY and ONLY illustrates my view of a possible outcome. All numbers above assume each retiree will live 20 years beyond their retirement date at a pension level of $36,000 per year. If interest and outflows remained the same, Ford would have enough money in the pension fund to make it last for appx. 50 more years, with funds running out in 2065, pretty much covering all employees eligible for this pension program.

It's too early in the morning for me to do this kind of math, but I needed something to do...
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#16 OFFLINE   CandyCane

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Posted 07 May 2012 - 10:26 AM

Mind boggling

#17 OFFLINE   Ktp1989

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Posted 07 May 2012 - 12:51 PM

It works for the company but all depends on the structure of the payout to the workers? If it is rolled to a IRA and taxes are left alone and the amount is in the ballpark of what has been stated here...with 23 years it's a no brainer for me.

#18 OFFLINE   CandyCane

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Posted 07 May 2012 - 01:07 PM

Roth Ira would be best , pay taxes now and then all earnings are tax free after 5 years and you turn 59 and a half.

#19 OFFLINE   Decker

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Posted 07 May 2012 - 01:20 PM

Here's the thing... you can only contribute "bonuses" to a tax-free account up to a certain amount (about $46,000 per year). In order to keep this (relatively) tax-free, you'd probably have to throw the whole thing into an IRA. One way or another, unless those amounts are net (which I doubt, except for the retirees), Uncle Sam will want his share.

Unnecessary math below...

40,984 active employees (about 39,000 covered by the traditional pension program), about 135,000 current retirees.

Ford currently has $26.7 billion in pension fund assets. Assume a 2% increase per year, with 4% contributions made, and a 6% outflow every year. This equals no net change.

Let's jump ahead to 2015.

43.200 employees (the same 39,000 covered), 131,500 retirees.

Ford offers pension buyouts at the scales mentioned above. Assume the following:

Category 1: 3.000 of 5,000 accept offer. $675M paid out now, $360M in future liabilities for buyout takers, $1.44B in future liabilities for those that remain.
Category 2: 5,000 of 8,000 accept offer. $1.5B paid out now, appx. $2.16B in future liabilities for those that remain.
Category 3: 6,000 of 11,000 accept offer. $2.25B paid out, appx. $3.6B in future liabilities for those that remain.
Category 4: 8,000 of 10,000 accept offer. $3.6B paid out, appx. $1.44B in future liabilities for those that remain.
Category 5: 4,000 of 5,000 accept offer. $2B paid out, appx. $720M in liabilities remain.

Active employees bought out of pension: 26,000
Amount paid out from fund: $10.25B
Expected future liabilities from remaining active employees: $9.72B

There is still well over $16B in the pension fund to fund those who are currently retired and those who wish to not take the pension buyout.

Ford's liabilities are reduced by approximately 65%. Stock soars. Ford has record profits.... hopefully.

This is an example ONLY and ONLY illustrates my view of a possible outcome. All numbers above assume each retiree will live 20 years beyond their retirement date at a pension level of $36,000 per year. If interest and outflows remained the same, Ford would have enough money in the pension fund to make it last for appx. 50 more years, with funds running out in 2065, pretty much covering all employees eligible for this pension program.

It's too early in the morning for me to do this kind of math, but I needed something to do...


I agree that the first bite by the goverment would be an amount that most of us can`t imagine. But the tax burdend would then only accur on the interest earned from the principal.

As a retiree most if not all expences would have to be planned on everyday needs and the standard of living one would want to sustain. In a world where someone else has been regulating (30 to 40 years) your income, (bi-monthly or weeky) I can see this being good for some and not so good for some. With the prior buy out`s there were some real horror stories. Unfortunately some only saw 6 figure checks.

I would, if the amounts talked about were close to reality, be happy to take on the accountability and planning that would come with this type of decision. Coming from a farming background, pay days were once or twice a year so the planning that was drummed into my head would come in handy. For me it would be my jumping off point.

Thanks qwertyuiop

Decker
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Decker


#20 OFFLINE   CandyCane

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Posted 07 May 2012 - 04:26 PM

Farm background , that explains a lot








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