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<blockquote data-quote="CleverNick" data-source="post: 785974" data-attributes="member: 10293"><p>I think people are mixing up the pension with the 401k. Let me see if I can add some clarity to this discussion:</p><p> </p><p>The "new" pension (i.e. the one offered to those hired in 2008 and later) is not a 401k plan. The company sets aside money to a retirement account according to a formula based upon salary and years of service. I don't remember the exact details since I was hired before 2008. This money gets credited with a certain rate of interest and grows over time. If you leave the company, that money is yours to take with you. If you stay with the company and retire, you get however much money is in that account. I am guessing that you have the option to take the money as an annuity (i.e. yearly payments) but again I don't know for sure since I am not in that plan.</p><p> </p><p>Contrast that to the "old" pension where the company gave you some defined benefit when you retire based upon your salary and your years of service. UPS doesn't set aside money specifically for you so if you leave, you can't take the money with you (although when you turn 65 you can still collect whatever pension you earned while you were here).</p><p> </p><p>The advantage of the new plan is that if you do leave before retirement, you can take the money and continue to invest it on your own. The disadvantage is that if investment results are lousy, you take the hit. Under the old plan, since the benefit is defined by the formula, if the pension plan's investments do lousy, UPS has to kick in additional money to pay its obligations.</p><p> </p><p>All this is separate from the 401K plan where money is taken out of your paycheck and put into an investment account which you control. In addition, UPS provides a match. My understanding is that people under the new pension get a slightly better match to help equalize them with people on the old plan. Not sure exactly what that means, but that is what I understand.</p><p> </p><p>Anyway, I am not in HR or Corporate Compensation, so keep in mind that everything I said could be totally wrong!</p></blockquote><p></p>
[QUOTE="CleverNick, post: 785974, member: 10293"] I think people are mixing up the pension with the 401k. Let me see if I can add some clarity to this discussion: The "new" pension (i.e. the one offered to those hired in 2008 and later) is not a 401k plan. The company sets aside money to a retirement account according to a formula based upon salary and years of service. I don't remember the exact details since I was hired before 2008. This money gets credited with a certain rate of interest and grows over time. If you leave the company, that money is yours to take with you. If you stay with the company and retire, you get however much money is in that account. I am guessing that you have the option to take the money as an annuity (i.e. yearly payments) but again I don't know for sure since I am not in that plan. Contrast that to the "old" pension where the company gave you some defined benefit when you retire based upon your salary and your years of service. UPS doesn't set aside money specifically for you so if you leave, you can't take the money with you (although when you turn 65 you can still collect whatever pension you earned while you were here). The advantage of the new plan is that if you do leave before retirement, you can take the money and continue to invest it on your own. The disadvantage is that if investment results are lousy, you take the hit. Under the old plan, since the benefit is defined by the formula, if the pension plan's investments do lousy, UPS has to kick in additional money to pay its obligations. All this is separate from the 401K plan where money is taken out of your paycheck and put into an investment account which you control. In addition, UPS provides a match. My understanding is that people under the new pension get a slightly better match to help equalize them with people on the old plan. Not sure exactly what that means, but that is what I understand. Anyway, I am not in HR or Corporate Compensation, so keep in mind that everything I said could be totally wrong! [/QUOTE]
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