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<blockquote data-quote="Ricochet1a" data-source="post: 580231" data-attributes="member: 22880"><p>Out of curiosity, I checked the payouts for someone who had 25 years of service in May 2008 (age 50), and was capped for the DBPP and drew under the PPP for 5 years. I compared this to if the traditional pension plan remained in effect. If the traditional plan had remained, their average high would continue to increase for those last 5 years, whereas with the cap, their average high was calculated in 2008 and not when this hypothetical employee retires in 2013 at the age of 55. Most think they are double dipping. I used the following assumptions:</p><p> </p><p>Average high in 2008 = $48,000</p><p> </p><p>Average high in 2013 = $55,000</p><p> </p><p>Maximum PPP contribution for 2008-2013</p><p> </p><p>PPP balance paid out as annuity for 20 years at 5.5% ROI with 0 balance at age 80 is $2,360 per year.</p><p> </p><p>With the cap, this employee receives $24,000 from the DBPP (half average high 2008). The PPP has a balance of just under $28,600 in 2018. This will provide another $2,360 a year for a total of $26,360 a year pension.</p><p> </p><p>If the Traditional Pension had remained in place with no PPP, the annual pension based upon half of average high as of 2013 would be $27,500. </p><p> </p><p>The assumptions can be adjusted one way or another, but in the end, there is no double dipping going on. Even those that maxed out under the DBPP are at best staying even between the switch. I kind of suspected this before I calculated it, and the numbers proved it. With the average high being capped at 2008 levels, the PPP for these employees merely helps them from losing ground. </p><p> </p><p>The employees which weren't maxed out in 2008 are steadily losing ground. A very rough linear function of percentage pension lost can be described as number of years of service as of May 2008 minus 25, times 2.5%. So if an employee had 10 years of service as of May 2008 and they put in a 25 year career, the percentage of loss of pension can be very roughly described as (10-25) * 2.5% = -37.5%. This employee will lose just over one-third of the amount they would've received under the traditional plan. </p><p> </p><p>A new hire employee that puts in a 25 year career would lose (0-25) * 2.5% = -62.5%, or almost two-thirds the amount they would've received under the Traditional Plan.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 580231, member: 22880"] Out of curiosity, I checked the payouts for someone who had 25 years of service in May 2008 (age 50), and was capped for the DBPP and drew under the PPP for 5 years. I compared this to if the traditional pension plan remained in effect. If the traditional plan had remained, their average high would continue to increase for those last 5 years, whereas with the cap, their average high was calculated in 2008 and not when this hypothetical employee retires in 2013 at the age of 55. Most think they are double dipping. I used the following assumptions: Average high in 2008 = $48,000 Average high in 2013 = $55,000 Maximum PPP contribution for 2008-2013 PPP balance paid out as annuity for 20 years at 5.5% ROI with 0 balance at age 80 is $2,360 per year. With the cap, this employee receives $24,000 from the DBPP (half average high 2008). The PPP has a balance of just under $28,600 in 2018. This will provide another $2,360 a year for a total of $26,360 a year pension. If the Traditional Pension had remained in place with no PPP, the annual pension based upon half of average high as of 2013 would be $27,500. The assumptions can be adjusted one way or another, but in the end, there is no double dipping going on. Even those that maxed out under the DBPP are at best staying even between the switch. I kind of suspected this before I calculated it, and the numbers proved it. With the average high being capped at 2008 levels, the PPP for these employees merely helps them from losing ground. The employees which weren't maxed out in 2008 are steadily losing ground. A very rough linear function of percentage pension lost can be described as number of years of service as of May 2008 minus 25, times 2.5%. So if an employee had 10 years of service as of May 2008 and they put in a 25 year career, the percentage of loss of pension can be very roughly described as (10-25) * 2.5% = -37.5%. This employee will lose just over one-third of the amount they would've received under the traditional plan. A new hire employee that puts in a 25 year career would lose (0-25) * 2.5% = -62.5%, or almost two-thirds the amount they would've received under the Traditional Plan. [/QUOTE]
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