Tuesday, May 02, 2006

New LANS Retirement Calculator

Several people sent me this new retirement calculator.

Thank you.

--Doug

Comments:
Actually, this looks like it might be the new LANS cost model for LANL.
 
For any current employee who can not retire TODAY, TCP1 is the best/only choice. Before you turn in your LANS papers, run the numbers on this calculator. You will find that you are much worse off under any scenario if you are in TCP2.

I have heard that married couples who both work for the lab are trying one person under each plan. What are you thinking? EACH ONE should take TCP1. Go change your papers if you can.

Look, DOE screwed you out of your UC pension but LANS gave you a pretty good replica. Don't be stupid and throw it away. Everyone who is not retiring in the next year should pick TCP1. You will not get another chance when you realize your mistake.

(In my case, it is 1 million dollars difference between TCP1 and 2 if I live to 85 years of age.)

If you are not sure what to do - go see an accountant- THIS IS TOO IMPORTANT.
 
Yeah, tm...What happens when LANS goes belly-up at the end of their qualified small-business status in just five years. The next contractor does not have to honor the LANS TCP1 plan.

Anymore, I trust no one...LANS-TCP2 and a UCRS cashout for me.
 
Okay, let's forget for now that this is a really funny video clip, and respond to TM above.

I'm near 50, with over ten years employment, so I can't retire now, but I want the option to quit LANS before 60, so I can take a better job opportunity somewhere else. Let's say I find a good job when I turn 55.

Under TCP1, if I terminate before 60 and go inactive (important: NOT ACTIVELY RETIRE), then I lose retiree medical, period. Later, when I'm 60, I can apply for an annuity only, with no retiree medical and no sick pay added to years of service. I'm therefore handcuffed to LANS through my 50s, waiting for 60 to get both maximal age factor, years of service, and retiree medical with an employer contribution.

At present, the employer contribution for a single is just over $300/month, or $3600/year. Nice, but more important to me is to simply HAVE retiree medical insurance.

Under TCP2, I can go inactive at 55, effectively retiring, but not touch my UCRP retirement, and still GET access to retiree medical (i.e., DOE won't pay any of my retiree medical, but at least I will have a retiree medical plan): I have more than ten years of service, and I'm over 50, giving me ACCESS to retiree medical. And when I'm 60 (when my age factor is maxed out), I still have the option of annuity or cash-out with UCRP.

Note that in both scenarios, I still lost years of service due to sick pay.

Other differences in the "quality" of the pension plans:

TCP1: An ERISA-backed private pension plan, subject to retroactive changes, as well as a near certain future requirement for substantial employee contributions (but we won't know the amount for some months to come).

Will the plan under TCP1 "fail?" I doubt DOE could ever convince a judge to send it to "distressed termination" (i.e. PGBC), but they could easily standard terminate or freeze it within a few years anyway, as our Comparator Group has already done.

TCP2: A *vested* public pension plan, backed by a bigger pot and not subject to change. LANS throws in 10% of my salary into a 401(k) per year, which is common now in some of our comparator group, so I'm less worried about it changing soon.

If you are younger, then the dollar difference between the two plans becomes painful after say ten years. But if you are within a few years of wanting to quit and are already vested, then the differences are not so great. The spreadsheet posted on the blog earlier in April is excellent at giving you hard dollar amounts for a variety of scenarios, and includes the impact of perhaps substantial sick pay hours being added into your years of service.

For me, the extra dollars of TCP1 are not worth it. I will let go of the rice, and pull my hand out of the monkey trap. TCP2 is designed to make me portable, which cuts both ways. I will lock in my vested public employee right with UCRP, build my 401(k)in TCP2, and keep my resume honed. When opportunity knocks, I'll be ready to jump.
 
Very well thought out IMHO.
 
Well thought out for your situation TheMatrix. All of us have different circumstances. Who ever ran the numbers for TCP1, TCP2 retired/inactive had a pretty sharp pencil, the numbers I run show the values of the three options close. TCP1 is the simplest way to go, TCP2 is attractive for other reasons. For some it is a no brainer, others like myself are in a grey area, lots of service years but don't have the age.
I thank you all for the dialog, we need to turn over all the rocks.
Best regards,
 
On April 27th, DOE issued "Directive N 350.1" with very little
fanfare. You can find it at the link below. It involves benefits
which DOE will allow contractor's to provide to future staff:

---------------------------------------------------------------------
http://www.directives.doe.gov/pdfs/doe/doetext/neword/351/n3511.html
---------------------------------------------------------------------

Thoughout this DOE document, you will see the abbreviation "DB" used
for the term "defined benefit" (ie, a pension), and "DC" used for
"defined contribution" (ie, a 401K).

One of the sections involves the use of accelerated retirement
incentives (ie, to forestall the need for a RIF). According to
to the DOE, accelerated retirement will no longer be allowed:

Section 5.a.(6):
--------------------------------------------------------------------
"..Departmental Elements shall not approve costs for reimbursement
of any amendments to an Existing DB Pension Plan(s) (as defined
in this Notice) that augment or potentially augment in any way
the benefit for any plan participant, including any early
retirement incentive."
--------------------------------------------------------------------

Another interesting passage can be found in Section 5.a.(2):
--------------------------------------------------------------------
"After a date to be negotiated with each Contractor, but no
later than March 1, 2007, the Department will not reimburse
Incremental Pension Costs (as defined in this Notice) except as
required by law."
--------------------------------------------------------------------

If it's not in the law books, then DOE won't be offering to
help make up for "incremental Pension Costs". What, exactly,
are "incremental Pension Costs"? Is pension under-funding in
this category? It's anyone's guess.


Also, from Section 5.a.(9):
--------------------------------------------------------------------
"DOE will reimburse the allowable costs for a Contractor to
provide a one time opportunity for Incumbent DB Pension Plan
Participants to transfer to a market-based pension plan within
one year of the effective date of the new market-based pension
plan."
-------------------------------------------------------------------

Looks like the DOE is itching to see that staff on pensions
have the wonderful opportunity to join a "market driven" reduction
in their benefits. What a deal! Better not let this one time
deal pass you by.


Section 5.b.(7) states:
--------------------------------------------------------------------
"Department Elements are not authorized, either orally or in
writing, to compromise a Contractor's right to unilaterally
change, suspend, or terminate any medical plan, coverage or
contribution at any time."
-------------------------------------------------------------------

Hmmm, this seems to indicate that DOE won't be lifting a finger to
stop any future retiree medical benefit cuts. DOE to Contractors:
"Hack away at those medical benefits, boys. We won't stop you!"


Section 5.1.(4) states:
--------------------------------------------------------------------
"After a date to be negotiated with each Contractor, but no
later than March 1, 2007, new Contractor DB pension plans shall
not be approved for reimbursement under a Contract, and a new
Defined Contribution (DC) pension plan shall not be approved
unless it is market-based as described in Section 5.a(5)."
--------------------------------------------------------------------

Only "market driven" 401K's are allowed for all future contracts.
Employer contributions to 401K's have been heading downward, so
don't plan on LANS TPC2 6% "matching" or the "freebie" component
to last very long. And try not to act surprised or hurt when
LANS begins to cut back on their 401k contributions. It's tied
to outside markets, so LANS will have no choice in the matter.


There are more gems in this document, but I'll leave it to others
to dig them out. In summary, DOE is codifying what we have already
heard -- benefits for future staff at DOE facilities will only
offer the bare minimum and contractors will have no choice in
the matter.

One can only hope that DOE will get the future scientific staff they
deserve after making these benefit cutbacks.
 
Hey, it could be worse...you could be part of NM's educational retirement system, which includes NM's K-12 and university employees.

Someone showed me a newsletter that showed the NMERB plan currently has a funded ratio of about 70%. To get to 100% FR by about 2033, the plan is getting a .75% per year increase in contributions by the employer for 7 years, a small increase in employee contributions (total .3% over 4 years), and assumes an 8% return.

The bottom line is that the employer contribution will go from 8.65% to 13.9%, and I was told the employee contribution will go from 7.6% to 7.9%.
 
Wanted to note that the video clip was greatly appreciated...humor is in short supply here.
 
Yes, indeed, that video clip was much appreciated. I plan on using
some of the "new math" I learned from it in my next nuke design. It
should be a real hum-dinger! Sadly, I won't be able to see it tested,
but I'm sure it will work just fine (ie, good enough for DOE's new
workforce standards).
 
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