Pension takeaway

MrFedEx

Engorged Member
Can someone elaborate on the bolded part for me? Is there a way to "cash out" your pension benefit if you quit?

Sorry if that is a stupid question but I may be leaving (fingers crossed) the Purple People Eater after just over 6 years and I want to make sure I get every penny I can out of them.

The Piss-Poor-Pension Plan (PPP) is really an annuity that is given to you as a cash payout when you depart FedEx. It isn't a pension at all, but they want you to think it is, hence the name. I don't consider it as a "buyout" because the amounts are so low as to be laughable. The Traditional Plan is an actual pension, however crappy, and it cannot be cashed-out. You can call Retirement Administration and they should be able to provide you a copy of approximately what you will get from each if you provide them with your projected date of departure. Your current PPP balance should have been included in your last yearly statement.
 

55+

Well-Known Member
Unfortunately Fedex spun the PPP like it was going to be easy to cash out when you leave . Remember the glossy pamphlet they sent out explaining how wonderful it would be to have "Seed money " to start that new business you always wanted to start when you leave Fedex? check the fine print. If you are under 59 and a half you will pay a 10% penalty on top of approximately 20% in taxes ..you can roll it into an ira with no penalty and vanguard can help set you up with that.
 

UpstateNYUPSer(Ret)

Well-Known Member
Unfortunately Fedex spun the PPP like it was going to be easy to cash out when you leave . Remember the glossy pamphlet they sent out explaining how wonderful it would be to have "Seed money " to start that new business you always wanted to start when you leave Fedex? check the fine print. If you are under 59 and a half you will pay a 10% penalty on top of approximately 20% in taxes ..you can roll it into an ira with no penalty and vanguard can help set you up with that.

Check the fine print on your 401k and you will find the same language.
 

vantexan

Well-Known Member
The Piss-Poor-Pension Plan (PPP) is really an annuity that is given to you as a cash payout when you depart FedEx. It isn't a pension at all, but they want you to think it is, hence the name. I don't consider it as a "buyout" because the amounts are so low as to be laughable. The Traditional Plan is an actual pension, however crappy, and it cannot be cashed-out. You can call Retirement Administration and they should be able to provide you a copy of approximately what you will get from each if you provide them with your projected date of departure. Your current PPP balance should have been included in your last yearly statement.

It ain't much, but even after taxes and penalties it'll be enough in about 18 months for me to quit. I know of a number of places with a decent quality of life that cost about 30% of what it does in the States. Other than improving my Spanish I don't see that I'll need to do much to live there, just bide my time until I have enough to last until my pension kicks in.
 
Three and a half years ago (when I was still working for Express), I did a detailed spreadsheet work-up of the PPP compared to the DBPP. It worked out that the PPP was only worth slightly over one-third as much (in 'time-value-money' comparison), to the DBPP. This makes the assumption that the monies are invested at 'market rate', which the PPP ISN'T.

What is keeping the impending 'Exodus" from Express wage ranks manageable at this time, is the fact that everyone that hired in before 2003 has some level of benefit under the DBPP (the benefit was capped in 2008). This means that every wage employee with over 10 years in (at this point) has something under the DBPP. Those who have more than 20 years under the DBPP (hired in 1988 or earlier), are actually coming out ahead under the DBPP/PPP (they know it, they just aren't talking about it too much). They are 'vested' with almost a maxed out DBPP (since wage progression came to a halt - they haven't lost anything in potential benefit compared to how it was calculated at the end of 2008). In addition, they are receiving PPP monies - in essence, they are 'double dipping' (Express knows full well of this issue).

The real screwing is to those hired in after 2003. They are solely under PPP (if they hired in before 2008, they received 'compensation credits' which were placed into a PPP balance - I was one of those people).

A full time Courier hired in after 2008 (barely above entry level wage), is making no more than about $37,000 a year (and this is with working reliable OT). They are receiving about $1,850 a year in 'contributions' to their PPP, invested at a paltry 4% rate (and what is the stock market doing right now....). Take a look at your statement which will have your 'contribution' in it coming out very soon.... you will see what I mean if you are a full-time, bottomed out Courier.

And when the 'official' inflation rate eventually ramps up (it is being suppressed right now), that 4% will only counteract the effects of inflation - there will be no real rate of return. The rate is tied to Treasury Bond yields, but that is a paltry amount above inflation.

A 'real' pension would have the employee receiving approximately 15% of their gross wages (at no cost to the employee), placed into a fund which receives a 'market rate of return' which is about 8% on average for a conservative investment strategy - NOT the 4% you get (Express holds the cash, so their paying out only 4% is cheap money for them, they pay about 8% on bonds, yet only pay 4% on the pension money they 'hold' - you can figure that one out...). FIfteen percent of $37,000 is $5,550 a year.... this very real Courier is only getting $1,850 a year. The PPP (in the absence of any other employer sponsored plan), ISN'T a pension - it is a JOKE.

If you received $5,550 a year (in 2013 dollars), invested at market rate of 8%, continuously for the next 25 years while working as a Courier, you'd have $435,000 in your PPP (worth about $270,000 in 2013 terms). If you guys would ever go to the effort to organize, this is what you'd have...

By receiving $1,850 a year, invested at Express' 4% current rate for the next 25 years, you'd have just under $80,000 in your PPP (worth about $50,000 in 2013 terms).

Now... you're looking at the numbers and seeing that one is about 5 times as much (when I 'suggested' that your pension is worth only about one-third what it should be). What is happening is the effect of that paltry 4% rate of return on your money. You are getting hit with a 'double whammy' - you are only receiving only one-third of the monies you should be, AND you are only getting a rate of return of HALF of what it should be. Then to top it off, the effects of inflation makes the rate of return you are receiving only a hedge against inflation - no real growth in value of the 'investment' is occurring.

What you will get for a 'career' at Express (rest assured, there will be NO wage employees putting in 25 years in full-time status for those solely under the PPP - won't happen), is basically a payment for your utility bill once you hit age 60. That's it, nothing else, your Express 'pension' will basically pay your utilities for the remainder of your life (while you live in a trailer or government subsidized housing). And I'm amazed why you guys still persist on sitting on your butts and not do the real work of organizing, simply amazing to me.

The line that exists for everyone after your job exists and is very real. Most if not all of these people don't get any pension whatsoever in their current job (if they are employed), and aren't making what an Express Courier makes. Now.... they aren't held to the pace of an Express Courier either. These people are looking to LIVE in the present, they can't afford to look at retirement at this stage.

Do you see the strategy of Express yet??? Has your HR rep done the math in front of you and really explained what you will have should you actually put in 25 years solely under PPP??? Trust me, they KNOW what will happen to a wage employee putting in 25 years - making the BIG assumption that full time wage employees will still exist for all that time.

Look at Fred's bastard step-children.... (Ground drivers), They get NOTHING in benefits, and Ground is very profitable because of it. Do the dots come together yet???

If you have ever watched the "Connections" series with James Burke (British historian), I'm going to make a 'connection' much like he did in his series....

The push to implement DRA is CONNECTED to the joke of a pension (along with no real wage progression). Express MUST have DRA in place, in order to ensure its volume is moved by employees who will receive virtually NOTHING for a pension and NOTHING resembling a career. Simply put, in the absence of a real pension, the future Express won't be able to attract individuals who are capable (or willing) to operate with 'old methods' of making deliveries. They will need (MUST HAVE) a force of low intellect, follow the dots employees who will have a rate of turnover only rivaled by Wal-Mart - to get away with offering such a joke of a pension.

And you all are still sitting on your butts....

Wow! You must work in an "A" or "B" market. Out here in Socal couriers that were hired say around late '90's to early '00's are making 50+. I am an RTD hired in '98 and make 60+. The topped out guys make 70+ with OT of less than 10 hrs a week. Guys in Orange County, the Bay Area, Alaska and Hawaii make more than that. Regarding the "porta potty pension" (I LOVE that term)I had like 10 years of the traditional, so as you said guys that came after me should have quit right then, or figured on saving far more than the average human being does over his lifetime to compensate for the change. Anyway, you can call the plan administrator(I did like 3 yrs ago)and they can give you a computer projection factoring in 2-3% raises and all that for your expected retirement date. That's what I did and it came out to like 597 bucks a month. Under the traditional I was accruing 750 a month, so the difference becomes clear. This year I have finally started to see a more measurable difference in the numbers I see on that quarterly statement thingey and they are looking a lil better.
 

Goldilocks

Well-Known Member
It ain't much, but even after taxes and penalties it'll be enough in about 18 months for me to quit. I know of a number of places with a decent quality of life that cost about 30% of what it does in the States. Other than improving my Spanish I don't see that I'll need to do much to live there, just bide my time until I have enough to last until my pension kicks in.

See you at the Airport!!! We will be heading there too....
 

MrFedEx

Engorged Member
Wow! You must work in an "A" or "B" market. Out here in Socal couriers that were hired say around late '90's to early '00's are making 50+. I am an RTD hired in '98 and make 60+. The topped out guys make 70+ with OT of less than 10 hrs a week. Guys in Orange County, the Bay Area, Alaska and Hawaii make more than that. Regarding the "porta potty pension" (I LOVE that term)I had like 10 years of the traditional, so as you said guys that came after me should have quit right then, or figured on saving far more than the average human being does over his lifetime to compensate for the change. Anyway, you can call the plan administrator(I did like 3 yrs ago)and they can give you a computer projection factoring in 2-3% raises and all that for your expected retirement date. That's what I did and it came out to like 597 bucks a month. Under the traditional I was accruing 750 a month, so the difference becomes clear. This year I have finally started to see a more measurable difference in the numbers I see on that quarterly statement thingey and they are looking a lil better.

The bottom line is that the PPP is another takeaway that isn't a pension at all. When you get your PPP statement, there should be the accrued dollar amount, along with the puny monthly check that you will get when you retire. I'm not sure I'm buying your RTD math, because I'm an ex-RTD who stays closely in touch with my former co-workers, who are also in an upper level market. None of them are in the 60-70k range.
 
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