Deleted
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Post by Deleted on Jan 22, 2011 15:18:03 GMT -5
A couple of weeks ago I started a thread about how I felt my company was thinking about getting ride of their pension plan. Well I still feel the same...
But my question is to you guys, what would you do as a department manager? Out of 92 people in my department, only 20 are contributing to the 401K (and all 92 are eligible to contribute).
Yes I don't know their financial situation and what their life is like at home... but a lot of those people are in their mid 30's to late 50's and have been with the company for 15-25 years.
We are told to help HR and encourage everyone to contribute to the 401K. Explain to them the importance of savings, etc... But while I can easily approach such subject here, I find it odd to approach someone at work and talking to them about their retirement.
After all, isn't the company somewhat at fault for selling them the idea that they will get pension at the end? A lot of them stuck around just for that... the pension. Now we are told to go around and praise the benefits of the 401K and how everyone should be investing.
Yes, I feel we are being left out somewhat (no one told us about the pension being discontinued) but yet we are sent to do their dirty work.
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TrixAre4Kids
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Post by TrixAre4Kids on Jan 22, 2011 15:37:28 GMT -5
Are they talking of freezing it or eliminating it?
Possibly a freeze at current levels for existing employees and no pension for new hires?
It would seem to me, if the company has been paying into a pension fund those dollars should be untouchable, after the pension reform in 2006.
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Post by gsbrq on Jan 22, 2011 15:41:53 GMT -5
Just curious...does your 401k have a graduated vesting structure, or are participants fully vested from the start?
The reason I ask: my first thought on reading your post is that they're trying to increase participation in the 401k so that the highly-compensated employees don't run up against NDT limits.
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Post by The Walk of the Penguin Mich on Jan 22, 2011 15:51:29 GMT -5
As a department manager, it's not your responsiblity to counsel me with regards to my retirement. I'll listen to someone from HR, or from the retirement plan, but why should I listen to you? What sort of education do you have to advise me as to my retirement? Are you an investment advisor? If not, then what qualifies you?
I'm trying to give you an idea of my perspective. It sounds like your company is going to pull the rug out from underneath these long time employees and these people are just about ready to find that their pension is no longer viable. They're sending managers in to do their dirty work.
If you were an employee with 25 years in and made $70K/year, there is no way that you're going to be able to have sufficient retirement income if they pull the pensions - even if you maximize your contributions to your 401k for the rest of your working life.
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Post by Deleted on Jan 22, 2011 16:05:32 GMT -5
Mention it at staff meetings. Encourage the group to contribute at least enough to get the match.
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Post by Deleted on Jan 22, 2011 17:12:21 GMT -5
They're probably freezing the plan- having made contributions, there's money in the pot and that will be distributed to the people who are vested when they reach retirement age. It's still a bad deal for the people who are vested because the amount they get at retirement will no longer increase with years of service.
I can understand your position- speaking badly about the company isn't good for your career. First, see what you can find out about what happens to people who are already vested if they haven't made that clear. Any good news you can give (i.e. that they'll still get a pension but the amount is now frozen) will help. The other thing you can tell them is that many companies have made this decision- that while it's not a happy thing for the employees, it's a financial burden for the company to fund a traditional pension plan because of the uncertainties involved (how long people will live, what interest rates they can get on money in the pension fund). Maybe doing this saved a few jobs.
Did the company do anything to increase the match now that they no longer have to contribute to the pension fund? Mine did- 6% of salary every year in addition to the regular match of 100% on the first 6% you contribute- but that's unusually generous. If they did, emphasize that point. Also, if you can find out any good news about the quality of the plan (check brightscope.com, which evaluates generosity, expense levels and quality of investments), tell them about it.
Finally, do tell people of the advantages a 401(k) can offer with some simple math- for every $100 you put in, your take-home pay goes down by only about $75 (depending on your tax bracket) and what actually goes into the 401(k) is, say, $200 if they contribute 6% of their salary and the company matches 100% of the first 6%. There are people who will walk away from $200 in exchange for a $75 reduction in take-home pay but at least you've given them some objective calculations. Refer any questions- what should I invest in? what if I want to get my money out? what if I quit? to HR. That's not your job and you don't want someone to blame you if the market tanks.
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Post by BeenThere...DoneThat... on Jan 22, 2011 17:22:04 GMT -5
...good advice given here so far... I might add to it a few short articles of 401k success stories or customer satisfaction feedback... pass those out at staff mtgs maybe? ...most people appreciate hearing the cliffs' notes of others' positive experiences...
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Post by The Walk of the Penguin Mich on Jan 22, 2011 19:05:16 GMT -5
Finally, do tell people of the advantages a 401(k) can offer with some simple math- for every $100 you put in, your take-home pay goes down by only about $75
Pension contributions are also tax deferred, so if these people have been investing in a pension for 20+ years, then they've got a lot already invested in a system that apparently the employer's moving away from.
I still maintain that it may or may not be in the person's interest to invest in a 401k, depending upon their situation. The OP is in no position to recommend which would be the best route for many of these people to take.
I don't think it's fair for his company to use the OP to pressure people to make such a decision.
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midjd
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Post by midjd on Jan 23, 2011 16:57:42 GMT -5
I don't think it's fair for his company to use the OP to pressure people to make such a decision. Agreed, it does sound as though the company is sending the department managers to do the HR reps'/higher-ups' dirty work.
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Post by Deleted on Jan 23, 2011 17:25:39 GMT -5
A few more thoughts on this: first, another point you can give people in favor of 401(k)s is their portability- unlike a pension, you can carry your entire vested amount with you if you go to another company. Since people rarely stay somewhere their whole career anymore (most of us get forced outr one way or another), that's good news.
But, you should also say something to the effect that, "in case you were living in a cave, 2007 and 2008 were bad years for investors, and only you can decide how much risk you want to take on."
Write down the bullet points you're going to make. There are some honestly good points you can make, which will thrill HR, and some caveats. If HR thinks you aren't pushing hard enough, say something like, "I'd hate to see (company name) get into trouble for having non-investment professionals give investment advice if we had another bad market, so I want to be cautious about pushing everyone to invest in the plan." It lets them know you're protecting the company, but you're also protecting yourself and not ruining your own credibility by pretending it's the greatest thing since sliced bread for 100% of the employees.
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HoneyBBQ
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Post by HoneyBBQ on Jan 24, 2011 10:26:08 GMT -5
I would not discuss retirement with my employees directly. That's HR's job IMO.
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Wisconsin Beth
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Post by Wisconsin Beth on Jan 24, 2011 10:30:29 GMT -5
Can you invite HR to come and speak to your dept. at staff meetings to push it themselves?
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