HAPC assumption
At the end of an older thread was this comment. Possibly interesting to many.
Anonymous said...
The HAPC is "frozen" at the start of a furlough claim has the faulty
assumption that month 1 (most recent) of pay, X, is lower than month
36, Y. Even with a 10% reduction that is not true for many staff
members.
At the point in time when month 1 pay X*0.9<=Y, the highest HAPC is in the past.
24 comments:
Many of the previous comments about HAPC have emphasized that there are many variables and that the potential impact of a furlough/closure on HAPC depends on the specific circumstances and salary history of each employee.
Specifically, a furlough/closure as proposed will not have negative consequences on the HAPC of TCP2 employees or on almost all TCP1 employees who do not retire from LLNL in the next few years.
A furlough/closure as proposed will negatively impact the HAPC and hence pension payout for the typical TCP1 employee who retires in the next 3-4 years. A likely scenario is that the HAPC and pension payout will be reduced by 1-2% relative to what they would have been (e.g., tens of thousands of dollars in life-time pension income). The impact of this pension reduction can be reduced/eliminated if an affected employee works a few months to a couple years longer than planned (the difference is largely one of perspective).
A furlough/closure as proposed may not negatively impact the HAPC and pension payout of those TCP1 employees who plan to retire in the near-future and have received large salary increases (e.g., > ~10%) over the last 3 years. However, not many employees fall into this category since average salary increases have been recently relatively small (< ~7% cumulative for SES employees, from ~2% "adjustments" in 2011 and 2012 and an actual raise package of ~3% in 2013). This is all the more true for most employees about to retire since salary changes for older employees tend to be more stable (i.e., younger employees are the ones more likely to receive larger percentage raises - applied to smaller base salaries).
Nice summary! Thanks!
Post 1:12PM is misleading. The furlough adversely affects the retirement income of all TCP-2 beneficiaries by reducing the employer contribution to the employee retirement (% of current salary which was reduced) and the possible reduction of The employer match because the employee reduced 401K contributions to cover the fixed expenses to be paid (college tutition, mortgage, property taxes, ongoing auto payment)
This portion of the employer TCP-2 contribution is never recovered.
And all TCP-1 beneficiaries who will retire in the next 3 years are adversely affected by the loss of retirement income for the rest their and their spouses lives. Losses as large as 1% OF TOTAL INCOME ARE PREDICTED for those who retire in the 12 month period after the furlough ends.
Notice that LLNS income in and senior managers on the bonus programs are not affected in the same way.
It is disappointing that LLNS does not make up the loss to the effected employees temporarily by contributing its fee to employees. After all, COMPARED TO DAMAGED EMPLOYEES, WHOLE THE LLNS LLC MAKES NO SIGNIFICANT CONTRIBUTION TO THE SUCCESS OF THE LAB.
Like NNSA, it is an unneeded parasite which lives of the efforts of lab employees. It takes credit for success and passes out blame.
Post 12:19 is misleading
As was stated in the very first post of this thread, if "losses as large as 1% of total income" are important to you, simply delay your retirement by 3-4months, and they go away. This is certainly a loss of 3-4 months of your retirement, no question. But compared to either your 30 year career or your 20-30 year retirement, it may not be that significant.
Especially compared to all the other things that can have comparable effect on your retirement living: health, inflation rate, stock market performance, where you choose to live, etc, etc.
I am not arguing that there is no effect from the furlough. Just to keep it in perspective.
March 25, 2013, at 12:29 am: I don't see how LLNS is a parasite living off the effort of lab employees, any more than Apple (or any other company) is a parasite living off the efforts of its employees.
Do you mean this to be an indictment of capitalism? If so, then isn't that an indictment of our entire American System?
Well you can badmouth LLNS, but we won't sit around and listen to you badmouth the United States of America. Gentlemen! [cue signing of My Country Tis of Thee]
There is definitely a lot of blind hatred for the LLCs here. Unfortunately it leads to a significant amount of fairly obvious confirmation bias in the recent posts on furloughs, layoffs, retirement, HAPC, etc. Not to mention the flat-out nastiness. I agree with March 25, 2013 at 12:25 PM: "keep it in perspective."
We really need some people who can actually do math here: Under the non-sequester plan (old plan), IF I retired at age 55 (3 years from now), I would earn $26,014 a month. If we go through only one year of the furlough, that amount would be reduced to $24,521. If the reduction in pay becomes permanent - that amount drops to $22,069. Either amount is a LOT less than 1% referred to above.
We really need some people who can actually do math here: Under the non-sequester plan (old plan), IF I retired at age 55 (3 years from now), I would earn $26,014 a month. If we go through only one year of the furlough, that amount would be reduced to $24,521. If the reduction in pay becomes permanent - that amount drops to $22,069. Either amount is a LOT less than 1% referred to above.
I don't understand. $26,014 vs $24,521 or $22,069. Don't you mean the amount is a lot more than 1%?
In any case, the 1% number is for a furlough/closure lasting a few months, or about 2% for a furlough going through the end of the fiscal year. Those seem to be reasonable scenarios, as indicated above.
There are many variables and possibilities. It is not possible to easily consider all of them.
March 26, 2013 at 6:31 AM: Could you please state your assumptions?
In particular:
- what are you assuming about raises in the next 3 years?
- what, exactly, do you mean by "one year of the furlough" - 12 months of 10% reduction? or "10% reduction from now through the end of FY13"? or what?
- any difference assumed in age or service credit between the cases?
I think that the only way the amount can go down at all is by offsetting the affect of future raises. For example, if you assumed no raise for 3 years your HAPC would be the same regardless of whether there is a furlough or not. So I think the raise assumption is important.
Also, it's odd that you calculate a reduction from $26k to $22k (15%) for a full-time salary reduction of only 10%. This doesn't seem possible, but I may be missing something.
So, would you please post your assumptions, and perhaps describe your calculations a little more, so we can understand them?
No one that pays tax in the US should have any sympathy for any one that is getting 300K per year pension at the taxpayer's trough.
"
No one that pays tax in the US should have any sympathy for any one that is getting 300K per year pension at the taxpayer's trough.
March 26, 2013 at 5:04 PM"
Who gets that?
Some is pulling your leg..
The age factor at age 55 is about 1.5% (from memory, I"m older). A post-doc who started working at LLNL at age 30 would collect about 37.5% of HAPC (1.5% x 25) at age 55.
To collect $20K ( + 0.375) a beneficiary would need to make about $50k per month.
No one at LLNL makes that much who is going to get retirement advice from a blog.
Must be April FOOLS time.
No one at LLNL makes $50k per month covered by TCP-1. Parney is a new employee, not covered by TCP-1. Moses and Goldstein are in it, but Moses was gone for about 5 years. The highest paid folks recently, Miller, Anastasio, Mara had their salaries disclosed at a UC Regents meeting a few years ago, because they needed to get approval to extend some over TCP-1 benefits approved (names escape me). They made under $400k per year, which is chump change for leaders, good or bad, of an 6000 high-tech firm in the Bay Area. The highest paid UC employees are med-center and law school leaders.
All did well for sure, retiring after age 60 with 35 years of service would gross them about 87.5% of HAPC before adjustments. Miller might have made 40 years, although I don't think so.
Everyone else collects much, much less. But still does very well. I think the average collection is around $50k +/- per year, still nice and will probably go up to 70% of the average salary which could reach $110k in a few years.
The founders of the lab recognized, like Henry Ford so long ago, that if an employee's hygienes were provided (human resources-speak for family and personal needs), they would focus their efforts on achieving excellence.
Good idea. And it worked until the trio of D'Agostino, Pryzbylek and Bodman, the new millennial-version of the three stooges, decided a little comic-relief was needed.
Actually the age factor is higher. I retired at age 57 and got just over 72% with 29 years service. (That was under UC).
Thanks for the reminder.
I the age factor at 55 is 1.83% , not 1.5% as mentioned previously, per year of service, so with 30 years our imaginary well-paid colleague would need to have an HAPC of about $40k per month or a salary of about $480k per year. Not likely for anyone at LLNL, other than Parnery. Maybe Moses or one of the Bruce's, but I doubt it.
As for your numbers, I envy you, for I cannot make a 2.08% age factor * 29 years of service = 72%. Are you sure that you didn't retire from UC under a 3+3 incentive?
9:06, how long ago was that? LLNS chart is the same as the UC chart; 29 years at 57 isn't 72%. As was mentioned you must have received additional incentive.
Apologies. Brain fart. I was using current numbers after a number of years of generous UC COLAs. Actual service credit 30.2 years (included a year of sick leave), age factor 2.08,; 64%.
You are all talking about nits and nonsense. The Lab will reduce your pay X%. It is non-recoverable, will reduce your income for the duration, and subtract from your earnings and pension calculations. The impact on retirement will be there for pension and 401K, however small that impact may be. Your benefits would not change for medical if you lost a day or 2 of work per month, it takes many consecutive days off to affect this beneft. This mumbo jumbo about protecting benefits is 100% BS. This is cut in salary to make Lab management's inability to generate revenue obsure. You pension folks are paying through the nose to make up for a pension that is not sustainable and getting a paycut with this action on top. The 401K folks are taking a salary hit, which may impact your ability to make ends meet. Quite an employer, eh? Moreover, I would bet this kind of reduction in pay requires HQ approvals, just like SIP raises take. The halarious part is management thinks they are actually clever. I am sure the Lab has been advised this is legal, but it is not, without some sort of warning. No legitimate reasons have been given, and no other Lab is doing this. Think about it.
Salary reduction should not have any impact on the pension for TCP1 for the following scenario:
Assume no salary increases in the last 36 months, so average HAPC is X. Now 10% salary reduction for say 12 months (0.9X). If I retire in about 1-2 years, my HAPC should be still X for pension calculations. So it still a impact on salary (10% reduction), there should be no impact on pension.
Please correct me if this is wrong.
Right, if you're happy with your current average HAPC then any reductions in salaries won't impact you. But if you were hoping to have this year's raise and any future raises count, you may be out of luck.
March 27, 2013 at 7:47 PM
You are correct. Highest average 36 months means just that. If your average goes down because of a salary reduction, your previous highest average 36 months still applies. The most recent (lower) salary does not affect the calculation. It is only those who anticipate ever-increasing salaries who will perceive a potential loss.
One way to look at it is that the rules anticipate someone who nearing retirement chooses to go on part-time status for a few years. Happens all the time. This should, and does, have no effect on his pension.
"One way to look at it is that the rules anticipate someone who nearing retirement chooses to go on part-time status for a few years. Happens all the time. This should, and does, have no effect on his pension."
Great point! Now if only Parney had made his furlough work like this (ie the normal way), everything would be fine. But no, instead he is going to *lower our salaries*, thus impacting our pension.
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