I found this on a different post. it gives a little explanation but not much. I set aside 30 minutes one day and called the retirement center about a different matter to get answers to many questions I had. They are very helpful and it also matters if you are Schering or Merck Legacy. Are you all a bunch of trolls? Merck changed the plan a year ago.We can retire under the current plan until 2019, after that it is a cash balance plan. They never change plans for the better. I will be 62 in 2019 so if I last that long I will be out of here with a lump sum approaching a million $$ There will be a huge brain drain that year because many Merckies will leave under the old pension. The current modeler shows I will get $300,000 less if I work past 2019. I am sure many will be in the boat, I will only have 25 years in. I have several in my district at 25 years already. Sorry younger folks, after 2019 the pension does get worse
What!? With all these cuts why are you so sure you'll be kept till then? I sure did not expect being cut...it was out of the blue!
On jan. 1, 2020 the calculation of the retirement benefit changes from an employer directed to a employee savings plan. So someone that has a number of years with Merck and is 55 may be wise to retire in Dec. 2019. You need to know your numbers...... The options of lump sum or annuity don't go any, the calculation method changes.
If you have not retired by 2016, your retirement benefits are cancelled and its your 401K that replaces Merck's pension program. Get ready to see additional benefits go by the wayside!!
So many idiots on this board. If you are a Merck employee, you have access to the summary plan descriptions on the HR website that explain the changes in detail. If you can't figure it out yourself, you are way too stupid to work here in the first place! After 2019, the pension goes to a cash balance program. Starting January 1 2013, the cash balance started. If you were hired prior to that date, you have the option to collect under the old program or the new up until the end of 2019 (you get whatever is the higher amount). Any new hires hired after Jan 1, 2013, are 100% cash balance and SOL! Anyone who joins this company now needs their head examined.
Benefits earned through 2018 are secure so pension changes are not a reason for an exodus. The Pension changes in 2019 are a shift to a defined contribution from a defined benefit plan. The impact is on how you accrue additional pension benefits for service years after that date. In general defined contribution plans are better for employees who only work a few years for a company and defined benefit plans are better for employees who work many years for a company and work right up to retirement. Bottom line is that leaving before 2019 will not increase anyone's pension. Service years after 2019 will have less value on pension benefits than service years before that date so there will be less incentive to stay with a job you don't like, but the posters that implied your pension will be higher if you quit before 2019 are off base.
Thanks for summarizing the CORRECT information about the programs which run in a dual track for legacy employees. And, it does not mean you must retire by end of decade to get the legacy pension plan - although many are planning this anyway.
Pension stops at the END of 2019. After that it will still accumulate but at a much lower rate based upon age and years of service. An example would be if your lump sum at the end of 2019 is $500,000, and you are 55 with 20 years of service, and earn $120,000. Add 55 to 20 and you get 75. 75 will put you at 10% cash balance. Merck will add 10% of $120,000 or $12,000 to a cash balance account. Every year you work after 2019 you get 10% of your gross added to a cash balance account. Better than nothing but about $30,000 a year less than if the current pension was left alone. If you retired in 5 years (2024) you would leave with alittle more than $560,000.00. If they did not change it you would get about $700,000.00 in 2024.
Working longer certainly won't lower your pension, but it won't raise it nearly as much as it used to. Under the old plan the years you worked at age 25 were multiplied by the salary you made at age 55. Under the new plan your service at age 25 is credited at the rate you made at age 25, and anybody who understands time value of money will realize this is a HUGE discount in benefits. So, there is no reason to just walk away from your job, per se. However, if you can do better elsewhere you probably should, and if you're young you're not really earning that much into your pension right now anyway so there is no reason to stick around to 2019. Under the old plan the main pension benefit you received when young was years of service, and those aren't worth much in the new plan. Unless you're close to retirement age today I'd basically look at the value of your job at Merck as the paycheck you receive each month. The pension really isn't much of a differentiator unless you're about to retire soon (5 yrs) and already have lots of service in. If you are over 50 sticking around may make more sense due to packages/pension/etc. Honestly, a bigger concern for anybody who is younger is whether Merck will even be able to fund the pension when retirement comes around. PD-1 may very well keep Merck out of bankruptcy for a decade, but unless we have about 5 more of them MRK is hardly looking like a growth opportunity.
Excellent advice. Also, understand that only 30% of the fortune 500 offer a defined pension. Its incredibly expensive and more and more companies are finding ways to reduce costs of which a defined pension is a huge component. Look at Bethlehem Steel - they crumbled under the weight of their retirees. As mentioned above - think of your paycheck, dump big into your 401K and if you feel you can do better elsewhere from a paycheck perspective you should consider it. In such difficult global economic times, loyalty to the employee falls below profits and viability. It is a business after all and we are each business men/women who owe it to ourselves to make the right "business" decisions for our families. The job market is not as bad as it was 2008-2012 and I think many of us, including myself, were shaken by those years and not willing to dip our toe in the waters to see whats out there.
Disappears. You must retire before 2019 or there will not be a company pension for you. Tough times in pharma.
Just run your pension calculator. Ran it this morning. Pension still available after 2019 as is lump sum. Because of the new formula, it is true that there will be a law of diminishing returns.
