PENSION 2019

I believe the lump sum pension option expires in 2019. This is why many long term employees will leave Merck this year.

 

Yes, Thomas L. Lyon III from Vaccines does suck. He's only here because his dad got him the job. He's overpaid and useless. He needs to go during the next inevitable layoff.

 

The lump sum will remain in 2020. The biggest change is starting in 2020, any future growth in pension will be through a much lower growth cash balance. Two small problems. One, cash balance pensions are funded at the end of the year and calculated on the previous full years earnings and CPI. If you leave mid year, you get boned.
Two, please call Ernst and young ask them what happens to the money you earned up to 12/31/2019 if interest rates start to rise. They will tell you 1% increase in interest rates = 20% drop in lump sum payout. You do the math if rates rise by 2%. 40% drop. Ernst and young will also say “I don’t know if there is a cap on lump sums dropping”. Ernst and Young will tell you the company does not do a very good job of educating its employees on the risks of staying beyond 12/31/2019..

 

That risk was the same before 2019.

 

Good point! No reason to stay after 12/31/2019. Take the money and run.

 

Run where???

 

Seriously????? Come on people use your brains if they haven’t turned to mush.... get out of pharmaceuticals and in to something that you find more fulfilling. There is a whole big world out there...

 

Most in big pharma have very few transferable skills. This is due to the majority of the actual work is being done by a small minority within the company. Most are along for the free ride.

 

Say goodbye to pension. It is almost 2020.

 

Hello maxed pension! Congratulations to everyone who has survived or thrived through everything. Long road since the merger and every function and division has been through the gauntlet of corporate and management pressure, molding and remolding of organizations.

I will drink a toast to all of us at year end knowing what we all have been through over 10 years.

 

Now we can sit back and watch the pension disappear once interest rates start to rise again. Don’t forget that 1% change in interest rates equates to a 20% change. One percentage point up means 20% drop in lump sump and so on.

 

And this is why I retired in 2018.

 

Is that true? Merck's pension balance fell 300,000,000 this year? That seems to be the case according to the year end plan summary.

 

keep in mind that’s there’s no reason to leave either. Merck will be one of the lady companies to drop the defined benefit pension. Everyone will offer just a 401K.

 

meant last not lady companies. Funny though.

 

Payouts, look at all the retirements leading up to 2020 pension max for 55+ers. Many of these getting .5 to 1 MM lumps.

 

The money can go very fast. How many thousands of employees are here? 600 employees pulling .5 million or 300 at 1 million lump sum payouts will wipe out 300 million from the fund. There are many more in the wings that will be leaving as well.

 

It’s time for the next generation to step up and get in the game. Unfortunately, the company made sure it will not be as lucrative.

The decision to eliminate the pension was made before Keytruda and the tight labor market were in play. Mostly by people who do not even work for Merck anymore. Sadly, the next step is to wipe out the cash balance just like ibm did.

 

The past tends to repeat itself! In this New World of no pension will the companies be hurt? Today there is no reason for most employees to stay with their current employer. The pension anchor is gone. With only 401ks there will no doubt be much turnover. The best talent will be incentivized to move to the highest bidder. The mediocre will remain. Especially in a tight market.

I know an engineer that is being offered a position with a competitor where he is working on a project. He is being courted by the local firm since that firm has been trying to fill an open position for over a year. He called me for advice. Three years in his current job and doing very well. I asked the engineer what he had to lose by moving for more bucks. Will you lose any benefits ie pension? He said no there is no pension just the 410k. He is very seriously considering the offer and will probably leave. If there was a decent reason to stay ie a pension or other incentive he may have otherwise decided to stay.

Yes corporations may save money by eliminating pensions but they will pay a price and lose key employees.
That may have been a problem historically and why companies did have pensions. We will see if the past will repeat itself and pensions may come back especially to hold key worker and make them happy.

 

The pension was the only reason to stay. The year 2020 will be a huge year of voluntary exits.