Syntex US Employee Pension Plan Lump Sum Offer

Discussion in 'Syntex' started by Anonymous, Oct 11, 2013 at 11:42 PM.

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  1. Anonymous

    Anonymous Guest

    Just received a letter from Roche regarding a limited time offer for a lump sum payout. Anyone else get this letter? Anyone know why they are making the offer now? It will be very interesting to get the offer details and see what assumptions they are making about life expectancy and interest rate going forward. Most importantly: what lump sum amount will they offer.
     

  2. Anonymous

    Anonymous Guest

    The new buzzword is "de-risking", as used in the concept of de-risking pension plans. This means that companies reduce their future risks and expenses by getting people off the pension roll now. This is done by getting future (or even current) monthly pension recipients to accept either 1) a lump sum buyout or 2) an annuity. *

    Why now? The Pension Protection Act of 2006 changed the discount rate that companies are permitted to use to calculate the lump sum. The rate is now higher than it had been. A higher rate leads to a lower lump sum calculation since the assumption is that the lump sum will grow at that higher rate over time and provide an income comparable to the monthly pension benefit it replaces. The lump sum recipient now assumes the future market and investment risk, once again "de-risking" the company's pension plan.

    Another change introduced by the Pension Protection Act of 2006 is that companies must be 100% funded for future pension obligations by the end of 2013 and the growth projections they may use to project that funding level is lower than the rate they may use to calculate the lump sum. Another great incentive for companies to get people off the pension roll. NOTE: the mortaility table used in the US is the IRS Unisex Mortality table which means that you have to guess whether you might outlive that life expectancy and therefore be better off waiting for the regular pension stream and declining both the lump sum as well as the separate annuity.

    The lump sum can be rolled into an IRA (in the US) to eliminate the tax bite. The IRA can grow tax-deferred until required minimum distributions must be taken (starts at 70.5 in US, whereas the Syntex pension must start by age 65). The required minimum distributions from an IRA could be less than the monthly pension payout would have, which is an advantage if income is not currently needed as it reduces taxes. The distribution can also be as large as desired, when extra income is needed.

    * Note: the annuity would be offered be through an insurance company and that payment stream would no longer have Pension Benefit Guaranty Corp protection. If the insurance company goes under, the only recourse in the US is state protection against insurance company defaults. That varies by state and usually has a cap (maxiumum amount) on it.
     
  3. Anonymous

    Anonymous Guest

    yup...got it this week too.
     
  4. Anonymous

    Anonymous Guest

    Was surprised to get offer as only worked there from 1991 to 1994 I think. Taking the lump as annuity will just cover golf fees...LOL. Wonder what other bene's Im entitled to working there only 4 years.
     
  5. Anonymous

    Anonymous Guest

    Are you sure you were only there for 4 years? Pensions typically didn't vest until 5 years of employment. What annuity did they offer and what insurance company would be responsible for the payout?
     
  6. Anonymous

    Anonymous Guest

    I worked for Syntex in Puerto Rico and also got the lump sum offer. Not being a State but a territory with different income tax laws, would they still deduct the 20% tax amount or just the PR tax witholding rate? I thought that pension income was not taxable, at least in PR...
     
  7. Anonymous

    Anonymous Guest

    Yup...only worked there 4 years. If you remember, part of the takeover deal was to roll up employees to a minimum of 5 years service credit. That's why I got packet. Took lump. Better than waiting until 65 to collect my golf fees check!
     
  8. Anonymous

    Anonymous Guest

    Did you (or anyone else) get a check yet? Still waiting...
     
  9. Anonymous

    Anonymous Guest

    Yup…mine came Friday.
     
  10. Anonymous

    Anonymous Guest

    My check arrived today.