Old Timers - did you get pension lump-sum buy offer?
KMB announced that they were offering about 10,000 former employees who had at least some vesting in the old pension plan (before they started the "RCP" in 1998) a lump-sum buyout. Any readers get one of these offers?
I got one and am struggling because it looks like a low-ball offer to me. But then, I'm still far enough away from actual retirement age that it's not clear to me how exactly to figure this present-time lump offer as against the future value of (e.g.) 15 or 20 years of retirement pay at the projected monthly amount.
Maybe the lump offer looks so small in comparison to the future amount because interest rates are very low right now? I gather this can depress the present value assigned to a future annuity. (And if so, then I'd guess that's why KMB (among a number of other companies) are making such an offer right now.)
I am NOT an ex KMB employee but I did take 2 lump sums from MAJOR company employers(i.e. much larger than KMB) that offered LS as an option to annuity.
LOW INTEREST RATES TYPICALLY INCREASE the lump sum offer in cases I am familiar with because the lump sum must increase to equal the amount you would receive in annuity payments over your projected remaining lifetime. In other words the lump sums are now at all time historical highs. Ask KMB to supply you with the interest rate they are using (30 treasury?) and the calculation formula they use to calculate your lump sum!
Run the numbers and decide. I beleive you'll find that the lump sum offer will not outweigh your collected monthly benefit, unless you have a shorten life past the time you can start collecting your monthly retiremnt benefit. Kimberly-Clark is simply trying to get out from under the long term liability in benefits owed to you. People that take the lump sum only allow the CEO to take more profits for his pockets..... Now if you don't see youself living past 65-70, maybe the lump sum is for you.
I decided against taking the lump sum and/or reduced benefits now. I may find out that it was a wrong decision when I retire...which at this point, I do not see happening for a very long time. The idea, way back when, was to invest your money and get an 8% rate of return and you would have a million dollars at retirement... of course, that was back when people were making 20% inthe stock market, etc...... The other day, I saw you could get 0.30% on your savings..... what is the point, might as well put the money under the mattress..... I would kill to have a passbook savings account that was paying 5% when I was a kid... but inflation was 10%, etc.... my first car loan was at 10% interest rate...from a credit union nevertheless.... Now today, you get 0% financing for 5 years......unreal...