UPS Special Pension Buyout Offer - December 2016

[freeloader]

I received my offers today as well. Apparently I am in both plans (UPS Pension plan and UPS Retirement plan). Combined offer about $74k. My question to Bagels is this: how aggressive are pension plans invested? Meaning, can I do better investing it on my own by rolling it into a 401k?

I also noticed in the documents that you can elect partial payout/rollover. Debating on whether to take advantage of that and take a small amount out (need to put a new roof on the house).

 

[Bagels]

The payout is a joke... If I wait until retirement age, it would only take 3 years to get this lump sum. I would be missing out on the other 17+ years of payment for my part time service... I don't see how this would benefit any of us. It only benefits UPS to pay this out right now. My two cents on the subject. Take it or leave it.

It's just time value of money. Basically, UPS used IRS mortality rates to determine how long you're expected to live, determined the total payout you'd receive over that time period, then adjusted it to what that money's worth today. The power of multiplication is huge, so the younger you are, the less you'll get.

Of course this benefits UPS, why do you think they're offering it? As I've mentioned several times, beginning next year the IRS mortality rates will increase and the discount (reverse interest rate) will be tighter, hence the race to make this offer now.

 

[UpstateNYUPSer(Ret)]

Is this lump sum buyout for all of you UPS /Teamster Pension? I had 2 1/2 years as a part timer. I started in 1989. I went to full time driver in 1992 and was full time until I quit to become a police officer in 2006. I was told from the Union I would get $1430/month when I am 65. I am 45 now. The offer I got from UPS was for $9455. ??? Is there 2 different pensions? Am I missing something?

I believe the buyout is just for your PT years.

 

[Bagels]

I received my offers today as well. Apparently I am in both plans (UPS Pension plan and UPS Retirement plan). Combined offer about $74k. My question to Bagels is this: how aggressive are pension plans invested? Meaning, can I do better investing it on my own by rolling it into a 401k?

I also noticed in the documents that you can elect partial payout/rollover. Debating on whether to take advantage of that and take a small amount out (need to put a new roof on the house).

Your monthly pension amount is fixed -- there's no COLA adjustment.

For my offer, UPS used a discount rate north of 7%. That means I'd have to earn 7% annually in order to match the money that's owed to me. That's not going to happen. Additionally, statistically, you and/or your spouse have a 50% chance of outliving current mortality rates.

Remember, any monies used before you're 59.5 are subject to a 10% penalty. That's pretty costly financing. With interests rates so low, you'd be far better off taking a home equity loan (which, of course, has tax advantages) or opening a small line of credit at a credit union.

Remember... if you accept this offer, you're giving up your pension, so once the money is gone, it's gone.

 

[UpstateNYUPSer(Ret)]

I received my offers today as well. Apparently I am in both plans (UPS Pension plan and UPS Retirement plan). Combined offer about $74k. My question to Bagels is this: how aggressive are pension plans invested? Meaning, can I do better investing it on my own by rolling it into a 401k?

I also noticed in the documents that you can elect partial payout/rollover. Debating on whether to take advantage of that and take a small amount out (need to put a new roof on the house).

Your 401k is not one of the options for the rollover. You can roll it over in to either a Traditional or Roth IRA.

If you plan on taking out a small amount to fix your roof you will need to tack on 20% to make sure you have enough.

 

[Cheapskate Pilot]

Any advice would be greatly appreciated from whoever cares to chime in.

I worked for ups from 2005-2012 as a part time sup making somewhere around 22K-26K per year.....for 7 years. . . left the company on the road to bigger and better things after college.

Was told a few months ago the Present value of my account was $7004.00 and that my monthly payout at age 65 would be $290.00 per month.
I'm only 29 and have a long way to go (36 Years) until I could otherwise touch this money for $290.00 per month.

My question is this.....my offer was $7,000.....is that terrible, reasonable or good?

 

[UpstateNYUPSer(Ret)]

Any advice would be greatly appreciated from whoever cares to chime in.

I worked for ups from 2005-2012 as a part time sup making somewhere around 22K-26K per year.....for 7 years. . . left the company on the road to bigger and better things after college.

Was told a few months ago the Present value of my account was $7004.00 and that my monthly payout at age 65 would be $290.00 per month.
I'm only 29 and have a long way to go (36 Years) until I could otherwise touch this money for $290.00 per month.

My question is this.....my offer was $7,000.....is that terrible, reasonable or good?

$290*12*25 = $87,000.

What do you think?

 

[Cheapskate Pilot]

I think that if I live to see 90 years old, I would probably die trying to blow out all of the candles on the birthday cake.......But see your point.

The UPS offer definitely seems terrible when you lay it out like that.

Thanks for your reply.

 

[UpstateNYUPSer(Ret)]

I think that if I live to see 90 years old, I would probably die trying to blow out all of the candles on the birthday cake.......But see your point.

The UPS offer definitely seems terrible when you lay it out like that.

Thanks for your reply.

You have the advantages of youth (relative) and a stable financial position. In other words, you have another 30 years or so to work and don't need the money.

Decline the offer. Your grandchildren will thank you.

 

[Catatonic]

Any advice would be greatly appreciated from whoever cares to chime in.

I worked for ups from 2005-2012 as a part time sup making somewhere around 22K-26K per year.....for 7 years. . . left the company on the road to bigger and better things after college.

Was told a few months ago the Present value of my account was $7004.00 and that my monthly payout at age 65 would be $290.00 per month.
I'm only 29 and have a long way to go (36 Years) until I could otherwise touch this money for $290.00 per month.

My question is this.....my offer was $7,000.....is that terrible, reasonable or good?

On average, market value doubles every 10 years.
Allowing for 29 years, the value of this offer is around $55,000, without considering the effects of inflation.

 

[UPSandy36109]

Pension offer:<<<
To Be Paid:
December 2016
Single Payment of:
$12,468.83
Election
Direct Cash-Out Payment
Direct Rollover to an IRA or Other Eligible Plan – All
Direct Rollover to an IRA or Other Eligible Plan – Partial

Description:
This option will pay a single lump sum payment of $12,468.83 calculated as of December 2016 in lieu of monthly payments. Once this payment is made, no further benefits are payable to you or any beneficiary from the Plan.

Submission:
Upon making this election, you will be asked to provide your rollover information in order to facilitate payment of your lump sum. If you elect a partial rollover, you also will be asked to provide information on what portion you want to receive as a direct rollover.
>>>
or, the monthly payment of...
<<<
Starting on:
December 2016
Monthly Annuity Payment Options

Single Life Only Annuity ($57.56)
Qualified Joint & 50% Surviving Spouse Annuity ($54.50)
Joint & 75% Survivor Annuity ($53.09)
>>>
Personally, I'm rolling over the money int an IRA. Even if it's just corporate bonds, I can make at least 5% annually on it from just the interest.

<<<I'm probably going to (next tax year) withdraw almost half and pay toward various bills. Will put the other half in preferred stock paying between 5.5-7%.
I finish college around Christmas and have 2 jobs waiting on me so $$ won't be an issue insofar as retirement. Already retired from 1 job, pre-UPS.
Contacted Scottrade today, but may go with Fidelity. I was just partial to Scottrade because they have a local office.

 

[TonyC]

I got offered close to $17K and I only have $2K in my bank account. Easy decision for me!

 

[TonyC]

Pension offer:<<<
To Be Paid:
December 2016
Single Payment of:
$12,468.83
Election
Direct Cash-Out Payment
Direct Rollover to an IRA or Other Eligible Plan – All
Direct Rollover to an IRA or Other Eligible Plan – Partial

Description:
This option will pay a single lump sum payment of $12,468.83 calculated as of December 2016 in lieu of monthly payments. Once this payment is made, no further benefits are payable to you or any beneficiary from the Plan.

Submission:
Upon making this election, you will be asked to provide your rollover information in order to facilitate payment of your lump sum. If you elect a partial rollover, you also will be asked to provide information on what portion you want to receive as a direct rollover.
>>>
or, the monthly payment of...
<<<
Starting on:
December 2016
Monthly Annuity Payment Options

Single Life Only Annuity ($57.56)
Qualified Joint & 50% Surviving Spouse Annuity ($54.50)
Joint & 75% Survivor Annuity ($53.09)
>>>
Personally, I'm rolling ovee the money int an IRA. Even if it's just corporate bonds, I can make at least 5% annually on it from just the interest.

How long did you work PT or FT, union or non?

 

[Post Trippin]

If i have 8 yrs part time, and 7 years full time. And theyre paying out part time years only... Does the packet go into detail as to what your remaining benefit will be for the FT years?

 

[UPSandy36109]

My working years were about 5 1/2. Pt, union all the way.I was on the payroll a total of 7 years because of injury. I actually had some good sups at my hub who helped me when they had a right not to. So even though I got hurt on the job - and ed up for declining workman's comp- I think my declining signing the form is what made the sups cover for me to get my pension.
I got hurt on the job and my last workday was on limited duty-sweeping out trucks - New year of 2012. I got credit through April 2014. So I like to think that by getting along to get along. They did right by me.

 

[Junkguy]

Couple things here. First, you want interest rates to be as low as possible since they are using low rates to discount your future dollars. If interest rates were higher, you would get less of a buyout offer.

Second is taking the lump sum and investing it. May be an okay idea, but can you do it pre-tax with a rollover? Most stock purchase plans are after tax through one's paycheck. If you take the lump sum, you are losing out - if you are then faced with the IRS's 10% penalty, you have pretty luck lost the margin game.

Good luck, John

I noticed they used a low interest rate only for 5 years of the calculation and then raised it twice ending at close to 5%. I wonder if that's negotiable?

 

[Junkguy]

I just got off the phone with Tucker at the 1800 number provided, he informed me that packets would be mailed out tomorrow and I should receive it on 10/3 (Monday). He said that he didn't have any specific figures in front of him, but the lump sum offer is calculated by factors of current age, mortality rates, the monthly amount for your pension, and current interest rates. He also said that there is a website that will be available for you to make elections once you get your offer. The only part that bothers me is the part about using current interest rates, right now they are so low that it will severely lower any offer imo. I have a number in my head and if its remotely close to it, I'm taking the lump sum and reinvesting it with my current company's stock purchase option where I get a 15% discount.

The lower the interest rate the higher the offer. That is why they jacked up the rate artificially from 5 years on.

 

[Junkguy]

It seems they are giving conflicting information to all that calls. I was told that once I receive the packet I could elect online for a direct deposit of the lump if that was the route I chose. Then after reading some comments on here, I called back and was told that I could elect it online but could not get direct deposit, that I would have to wait until December for the live check??? I'm not sure whose right or wrong. I have been trying to calculate what the payout may be, I'm 36 years old, my estimated annuity payment is $608. per month. Any ideas on how to figure this out????

Were you part time your whole career?

 

[Junkguy]

Not correct. It is not for anyone 'Hired' from those dates, it is for anyone who is under 65 and left the company between those dates. Big difference.

Essentially, if you got a postcard you are eligible.

John

I have a friend that started about a year before me and retired right after me and he didn't get the offer and I did. We're trying to figure out why and can't seem to get an answer. Anybody know specifics?

 

[Catatonic]

I have a friend that started about a year before me and retired right after me and he didn't get the offer and I did. We're trying to figure out why and can't seem to get an answer. Anybody know specifics?

I don't want to see your junk guy!