Eastern Railroad Discussion > CSX management losing pension and bonus program Jan 2020?

The rumor is going around that CSX is going to axe the manager pension and early retirement system starting in January. As it stand a now, managers can retire at 55 with X number of years of service and receive a portion of their pension. This will eliminate that. The other rumor is their incentive based bonuses for managers is going the way of the coo coo bird too.

Posted from iPhone

Wouldn’t surprise me. UP and more recently BNSF have also done away with management pensions.

Posted from iPhone

        I assume from the high wages they are being paid, they should have been funding their own retirement and the railroads have decided to make sure they do. . . . or did. . . .or should have.

If the rumor is true prepare for experienced managers to go back to their seniority as conductors or engineers.  BSB

dcfbalcoS1 Wrote:
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>         I assume from the high wages they are
> being paid, they should have been funding their
> own retirement and the railroads have decided to
> make sure they do. . . . or did. . . .or should
> have.

How high up on the management food chain will this apply?

Not defending their decision making skills but lower management's "high wages"
are not that high when the long hours are factored in.

back in 2002 they changed management pensions from a defined benefit to a savings plan which was 100% funded by the railroad. so now depending on how young you are you have anywhere from 4%-10%  of your salary set aside in a "pension plan" and when you hit 55 you can take the money and use it to carry you over until your regular railroad retirement check starts at age 60 or 67 depending on how many years of service you had in at age 55.

Most pensions can be described as either qualified or unqualified. Changing the qualified plan has lots of ramifications.

Pension law requires qualified pensions to not discriminate in favor of highly paid employees. So there's a cap on how much income can be counted toward the pension. So, you need to watch who gets covered, what % of income is covered, etc

Miss those marks and the company risks losing its tax deductions.

The nonqualified NQ pension can pick and choose who is covered, for how much coverage, etc. But it can't be advance funded.

Posted from Android

Yes, these kinds of things in many industries for other than top management are becoming a thing of the past.  And it's interesting how they can often justify doing it retroactively. ("Hey, but we have a  401(K)! for you!") My dad's generation like's to brag about its pensions. In the public sector, some law makers have also tried to chip away at the pensions of our men and women in the military. 

Victor A. Baird
http://www.erstwhilepublications.com

 



Edited 2 time(s). Last edit at 11/03/19 12:08 by wabash2800.

According to a recent CNN article only 18% of American, non-government workers have defined benefit pensions, with 14% out of that 18% having some sort of a defined benefit/401K combination.  GE recently did away with theirs.  This is not a unique event.

It would be interesting to compare that to percentages in the past.

Victor A. Baird
http://www.erstwhilepublications.com

njmidland Wrote:
-------------------------------------------------------
> According to a recent CNN article only 18% of
> American, non-government workers have defined
> benefit pensions, with 14% out of that 18% having
> some sort of a defined benefit/401K combination. 
> GE recently did away with theirs.  This is not a
> unique event.

Some companies kept benefit plans for lower salaried staff at a point where voting in a union wouldn't get them much.

with today's government emphasis on busting unions, the issue of parity is less important.

Posted from Android

God forbid that the RR's, with their lowest O.R.'s in decades, now decide to eliminate pensions.  They just HAVE to keep all the money.  

Whatever happened to respecting the working man and providing for his retirement?  I'm sick of the greed at the top--time for big, big changes!!

I sometimes wonder if alot of these people at the top all live in exclusive, gated communities that insulate them from the real world??

Now for some facts...

When BNSF eliminated the pension earlier this year it was replaced by a 401k grant IN ADDITION TO the existing 401k matching program.

BNSF employees had a 401k with 75% match on the first 6% contributed, a pension, and incentive compensation.

Now employees will get a 401k grant based on salary, age, and years of service. You get the grant regardless of any contribution to the 401k from your paycheck.

Then you get the 401k match from your paycheck, and the bonus.

Employees were given the option to stay in the pension for a few more years, depending on age. If you are 55 and within 5 years of retirement, you could stay in the pension through retirement.

I'm sure BNSF is money ahead on the deal. I would prefer the 401k grant. As it stands I have 15 years in the pension and would prefer the cash in a 401k I manage.

Railroad management does not have healthcare as good as the union employees they manage, but there are other benefits that offset some of that. BNSF employees have the 401k in addition to Railroad Retirement and free shirt term disability coverage. I saw a lot of UTUers go to the BLET for the opportunity to purchase a better disability policy.

Posted from Android

You know though with a pension you are guranteed x number of dollars per month after you retire. With a 401(K) you could loose quite a bit right before you retire if the stock market/bonds etc. take a dump. Of course, some of us would move our money into safer investments or cash right before we retire but even that has no guarantees. Of course, the flip side is that "potentially" you could make a lot more money by investing in your 401(K) rather than a fixed pension.

Then there are the many hidden charges that are deducted from your account...

Some politicians would like to drop social security and just set up a 401(K) style retirement. Again, there is pontential to make a bigger nest egg but.....

Victor A. Baird
http://www.erstwhilepublications.com

 



Edited 1 time(s). Last edit at 11/03/19 17:18 by wabash2800.

wabash2800 Wrote:
-------------------------------------------------------
> You know though with a pension you are guranteed x
> number of dollars per month after you retire. With
> a 401(K) you could loose quite a bit right before
> you retire if the stock market/bonds etc. takes a
> dump. Of course, some of us would move our money
> into safer investments or cash right before we
> retire but even that has no guarantees. Of course,
> the flip side is that "potentially" you could make
> a lot more money by investing in your 401(K)
> rather than a fixed pension.
>
> Some politicians would like to drop social
> security and just set up a 401(K) style
> retirement. Again, there is pontential to make a
> bigger nest egg but.....
>
> Victor A. Baird
> http://www.erstwhilepublications.com
>
>  

The pension which guarantees you a payment based on a formula of earnings and years of service is a Defined Benefit plan.  Companies are throwing them over board as fast as they can. Once the promise is made, the company has to substantially fund the program, or pay a higher premium to the Pension Benefit Guaranty Corporation.  They insure a portion of the obligation in the event the company defaults. Companies do not want the pension obligation on the balance sheet where it is subject to interest rate and discount changes, or the evil eye of bond rating agencies. 

In contrast, a Defined Contribution plan eliminates the company's obligation as soon as they make the payment to your cash balance pension, super 401(k) program. It's gone, and unlike a Defined Contribution plan follows the employee when they go to another job. And some plans offer the employee the opportunity to select a bond or stock investment for their asset.

wabash2800 Wrote:
-------------------------------------------------------
> You know though with a pension you are guranteed x
> number of dollars per month after you retire. With
> a 401(K) you could loose quite a bit right before
> you retire if the stock market/bonds etc. take a
> dump. Of course, some of us would move our money,
> into safer investments or cash right before we
> retire but even that has no guarantees. Of course,
> the flip side is that "potentially" you could make
> a lot more money by investing in your 401(K)
> rather than a fixed pension.
>
> Then there are the many hidden charges that are
> deducted from your account...
>
> Some politicians would like to drop social
> security and just set up a 401(K) style
> retirement. Again, there is pontential to make a
> bigger nest egg but.....
>
> Victor A. Baird
> http://www.erstwhilepublications.com
>
>  

But the pension can be lost if one loses or changes their employment, or just plain taken away by a company’s bankruptcy or the company just terminating the pension all together.

That's one of the many things I like about my company's profit sharing plan.  If I quit, get fired, die or the company ceases operation, myself or my wife can leave my money in the care of the plan administrator, they can write a check for the amount, or transfer it to another qualified retirement plan. The good part for the company is the day my account cashes out, they have zero future obligation going forward.

Many people have seen their defined benefit pension plan benefits slashed in bankruptcy process. And PBGC pays only a portion.

Taking your plan assets with you can be attractive to some people.

Posted from Android

> And PBGC pays only a portion.

Not necessarily. I'm on a PBGC simple-employer plan. Yes, there is a cap, but if people wait until they're 65 to start drawing the benefit, it takes a rather rich pension plan to activate the cap -- or service as a middle manager for a long period of time, or service as an executive. 

Multi-employer plans, different story.

As of the last accounting, PBGC has a small surplus of assets to cover obligations in single-employer plans, but the multi-employer plans are drastically underfunded. The multi-employer program protects 10 million workers and retirees. The single-employer program (they are legally separate) protects 26.2 million workers and retirees.



Edited 2 time(s). Last edit at 11/04/19 05:46 by ctillnc.

ctillnc Wrote:
-------------------------------------------------------
> > And PBGC pays only a portion.
>
> Not necessarily. I'm on a PBGC simple-employer
> plan. Yes, there is a cap, but if people wait
> until they're 65 to start drawing the benefit, it
> takes a rather rich pension plan to activate the
> cap -- or service as a middle manager for a long
> period of time, or service as an executive. 
>
> Multi-employer plans, different story.
>
> As of the last accounting, PBGC has a small
> surplus of assets to cover obligations in
> single-employer plans, but the multi-employer
> plans are drastically underfunded. The
> multi-employer program protects 10 million workers
> and retirees. The single-employer program (they
> are legally separate) protects 26.2 million
> workers and retirees.

I agree with these points, but note many plans allow full retirement after 30+ years and age 55+.  These guys were slammed with the PBGC coverage caps.  But, it's better than all the people whose plans were wiped out in the 1930s-1970s. Zero. Gone.

Millenials and Gen-Z employees don't necessarily view employment as something you do for 40 years in the same place and collect a watch and a pension. Employment is a process of collecting skills, while being paid for your contribution. It's a different viewpoint. Taking your pension/ deferred pay with you is considered a good thing.

Wait until the coal miner and some teamster multiple employer trusts blow up. That may happen early in the next Presidential term...