Transferring LLNS TCP1 Retirement Funds back to UC?
What would be legally involved to transfer LLNS managed TCP1 retirement funds for interested individuals back to UC? DOE/NNSA approval and a minimum of 1 full day employment with UC? Pros and Cons?
Note from Doobydew: ??????
44 comments:
I suppose such a transfer would allow one to work at any UC campus or Berkley lab with transferred service credit related benefits (VAC, etc.). When they did finally retire from UC, their monthly medical premiums might be less too.
However, UC medical and retirement benefits were reduced in the Summer of 2013(?) for those not meeting the minimum age and service credit requirement to stay in the old system. Another consideration would be the relative asset/liability health of the UC and TCP1 pension systems.
Sure, it is legal and possible for UCOP to take over management of the LLNS pension. Would probably lower the cost too. But why would they, what's in it for UC. So it's not going to happen.
Impossible.
UCRP and LLNS are now two separate legal entities with different leadership, governance and different beneficiaries. One is private and bound to ERISA, the other is a public institution bound by California law and UC Regents policies. They have different payout practices. Transfer is not currently allowed between them.
Hypothetically, The costs of making the transfer possible; getting institutional approvals and writing and approving the appropriate transfer agreements would take 100s of manhours in LLNS, NNSA and UCOP and in the legal consultancies they hire.
If there was a strong incentive and a strong coalition of champions pushing it perhaps the resources could be commited. But lacking that, this horse is dead.
What a waste of time to think of such things.
Sure you can. Why don't all you self proffessed wizards create a time machine and prevent the transfer from happening in the first place.
POS
Sounds like buyers remorse in choosing TCP1 over TCP2. Is that remorse flavored by the continued cost of employee contribution? They are contributing over at UC as well.
UC to LLNS TCP1 buyers remorse, bait and switch, or lemon law. An argument can be made for each.
No 'buyers remorse' here.
My TCP2 account is worth many hundreds of thousands of dollars after starting at zero at transition. Hard to beat that, plus my intact UC pension plan.
Everyone who chose either TCP1 or TCP2 at the transition knew, or should have known, what he/she was getting into. DB plans like UCRP and TCP1 are becoming much less prevalent in today's workplace, especially among private-sector employers, such as LANS and LLNS. At the same time, they are becoming less generous than in recent decades, as far as employee contribution goes. No one should be surprised at these trends.
Personally, I have throughout my career followed advice I got from a very successful and quite wealthy family friend many years ago: If you wish to accumulate wealth, you must ALWAYS live below your means. If you do, you will find that "below your means" rapidly becomes more and more comfortable. In my opinion, if you see a DB pension plan as a way to avoid the discipline and early discomfort of this path, you make a huge mistake.
If you wish to accumulate wealth, you must ALWAYS live below your means.
This, along with sensible investments such as low-cost index funds, is how most people of wealth accumulated their means. It is sometimes called the "get rich slowly plan." A book called "The Millionaire Next Door" describes this in detail.
As for the DB pension, sure, I wish we were still under UC. But we're not. I'm in TCP1 and have no regrets. It definitely was the better option for me. The value of my TCP1 pension grows by over $200K for each additional year I work (i.e., $1M every 5 years). The employer contributions if I was in TCP2 wouldn't come close to matching that.
And if the pension and PBGC fails ... I'll easily get by on the $2.5M in savings that I've accumulated during my 20+ years at the Lab. That includes investment returns on the savings. It may not be flashy, but living below your means is the path to financial security.
Same here, no regrets going with TCP1. Financially it was a no brainer. The only risk is if NNSA decides not to honor its obligation (which by the way is the very same obligation it has for those who froze with UC). Should the stock market turn south I'll still have a decent pension. If it stays healthy, I'll have what I have invested as well as my pension; hard to beat that. I don't know of anyone who has regrets, but I think there are a few who went with TCP2 who like to come on this board making it appear that way, for whatever reason.
I went with TCP1. No regrets. The math is unrelentingly in favor of TCP1.
The TCP2 match is generous compared to other company matches, but it is 5-10x less beneficial per additional year worked than TCP1 and it is not guaranteed. At least with with TCP1 you have PBGC, lawsuits, etc. With TCP2, they told you up front and in writing that they could stop the match at any time.
Also, the pension amount pushed over from UC to LLNS for TCP1 was very solid and TCP1 is currently running a ~10% surplus.
So, very happy with TCP1.
They can change the TCP1 contributions and even benefits arbitrarily at any time, that was also in writing up front. Don't kid yourself, nothing is really "safe" so you take your chances depending on your comfort level.
What?? Life is uncertain and not necessarily fair??!! Who knew??
I joined the lab after the transition. But if I had been here before, TCP-1 seems like an easy decision. The numbers are simple to churn, and it clearly wins over what I have. I'm not bitter about that, though. Life is what it is.
I chose TCP1. No regrets here. It was the best choice for me. Sure we contribute now, but even so, the retirement calculations look fine to me. Life is full of choices, sometimes you win, sometimes you lose, sometimes it's a wash. Press on, and enjoy life for what it is.
TCP1 made sense if you were willing to commit to spending the rest of your career at the lab no matter how bad it gets, and become a lifer. TCP2 made sense if you had many years of service with UC and wanted to keep your UC pension, or didn't want to commit to being a lifer. That's about all there was, since depending on your situation you could have played with the numbers to make either plan look better on paper.
November 10, 2014 at 10:27 AM
You are correct. Unfortunately, most who took TCP1 were under the impression that it would stay in lockstep with UCRP. That expectation ignored the fact (easily discernible at the time) that TCP1 (unlike UCRP) would be a closed plan with no way to meet increased demographic payout predictions except by raising contributions from existing members, thus decreasing their effective pension totals. I'm sure the actuaries hired by LLNS/LANS and NNSA realized this, as did the more aware of the transitioning employees, but it comes as a shock now, down the road a bit.
I guess calling yourself one of the "more aware of the transitioning employees" makes you feel better about your choice? Shouldn't make assumptions about those who went with TCP1. From what I saw plenty of research was done and it was well known contributions most likely would be required down the road. Many feel it is still the better plan, sorry to disappoint you.
What must the TCP1 surplus (asset/liability) be to trigger a reduction in employee contribution? Has this been defined or are we talking one way ratchet?
DB pension plans don't make much sense in an era of at-will employment and back-room hatchet men working for LLNS. You need to stick around a very long time for them to be worth much, meanwhile you can't leave but LLNS can kick you out the door if they want. What a deal.
sorry to disappoint you.
November 10, 2014 at 11:19 PM
I'm not disappointed at all. My being one of the "more aware of the transitioning employees" meant I took my UC pension and TCP2. Life is good.
Unfortunately, most who took TCP1 were under the impression that it would stay in lockstep with UCRP. That expectation ignored the fact (easily discernible at the time) that TCP1 (unlike UCRP) would be a closed plan with no way to meet increased demographic payout predictions except by raising contributions from existing members, thus decreasing their effective pension totals.
This isn't correct. The primary drivers that determine the success of pension plans are investment returns and existing funding levels. Demographics have less to do with it since demographic projections are already built into funding levels (i.e., funding percentage). While it is true that open plans have additional flexibility to raise capital, a well-funded closed plan such as LLNS will be successful if long-term investment returns are consistent with projections.
I believe employee contributions to UCRP are now 8%, whereas they are 7% at LLNS (admittedly, there is a before- and after-tax difference). Employer contributions at UC are 14%, whereas they are closer to half that at LLNS. In addition, UCRP began contributions before LLNS. So you are correct that LLNS and UCRP have not remained in lockstep, but the advantage so far has gone to LLNS. In this case the closed plan is doing better than the open plan, mostly due to the LLNS funding level at the transition.
30 years from now (year=2044), UCRP and TCP1 takes a hit (from stock market), both funding level at <50%. UCRP (Opened), ups the active employees contribution to support UCRP, while TCP1 (closed, no active employees) goes bankrupt (PGBC), with retirees payout reduce by 50% ...
a well-funded closed plan such as LLNS will be successful if long-term investment returns are consistent with projections.
November 11, 2014 at 9:40 AM
Hey, if you can predict the financial markets, why do you need a pension plan?
November 11, 2014 at 9:56 AM
Your scenario is entirely possible, but you don't need to postulate 30 years out. It only takes enough time so that the remaining active employees in TCP1 cannot possibly contribute enough to support the retirees. That will happen long before the ratio reaches 1:1. Also, it won't take a 50% hit in funding; 25% should do it.
You're forgetting that if UCRP decides to no longer fund those who froze with TCP2, which is entirely possible, NNSA will step in. UC is not without its issues. Same exact scenario for TCP1, NNSA has an obligation to fund it (PBGC only kicks in if NNSA bails). That part tends to get lost in these discussions. Ultimately we are all depending on NNSA and like it or not we're in the same boat.
Ultimately we are all depending on NNSA and like it or not we're in the same boat.
November 11, 2014 at 1:52 PM
Nope. Different boats, with different degrees of seaworthiness. And where do you think NNSA would get the money to fund any such shortfalls? Right, Congress. Feel better now?
"TCP2 retirees" are UCRP retirees, and get their payout from the UCRP pot (which is an open DB, >100K members).
TCP1 is closed with a couple thousand members, that will approach 0 over time. Assuming you live a very long time, I would not want to be in a DB plan, when it's down to few hundres or dozen members and runs out of $.
Hey, if you can predict the financial markets, why do you need a pension plan?
I don't need a pension plan. Because I live well below my means and save/invest much of my income, I easily will be able to live on either: 1) TCP1 pension; 2) investment portfolio; or 3) social security. If two of the three fail, I'm still safe.
We'll just have to wait and see years from now who sinks, who swims. Let's visit this again in 30 years? We can have lunch, I'll pay.
I would not want to be in a DB plan, when it's down to few hundres or dozen members and runs out of $.
November 11, 2014 at 5:43 PM
True only if you mean a CLOSED DB plan.
"TCP2 retirees" are UCRP retirees, and get their payout from the UCRP pot (which is an open DB, >100K members).
November 11, 2014 at 5:43 PM
Not true. Most new employees (after the transition) are in TCP2 (a 401k plan with match). They never had the choice of TCP1 or UCRP. If they subsequently retired with TCP2 they are NOT getting payout from UCRP.
"TCP1 is closed with a couple thousand members, that will approach 0 over time. Assuming you live a very long time, I would not want to be in a DB plan, when it's down to few hundres or dozen members and runs out of $."
While possible, this is unlikely to happen. And if it does happen, it probably will not be a catastrophe. If there are only ~100 people remaining in the pension plan and the plan runs out of money, the employer likely will be in a position to cover the shortfall because the number of retirees needing coverage will be comparatively small.
People claim that UCRP is better because the stream of plan contributors is ongoing. But this isn't the best way to think about it. The biggest contributor to UCRP and the biggest (potential) contributor to TCP1 are the employers themselves. So even if all TCP1 employees retire tomorrow it doesn't mean that contributions stop. TCP1 is closed with respect to future contributions only if LLNS and all successor organizations go away. Granted, it is much more likely that LLNS will go away than UC.
Most new employees (after the transition) are in TCP2...
November 11, 2014 at 7:29 PM
No, TCP2 was offered at transition to UC employees only. Since then, new employees get a different 401k plan that is not nearly as good as TCP2. TCP2 is a fantastic plan compared with what anyone else offers, or with what LLNS offers now.
The plan is the keep cutting benefits and salaries for newly arrived lab workers so that there is a continual "refresh" of staff who come to the labs for about 5 to 10 years and then move on. Even matches for the 401k will be further cut back for new employees to mirror what is happening in the corporate world where employer 401k contribution matches are rapidly being eliminated.
Managers will stay long term and continue their path to higher salaries and comfortable perks, but non-management will be treated as "disposable items" to keep costs down. It's the Bechtel way.
Managers will stay long term and continue their path to higher salaries and comfortable perks, but non-management will be treated as "disposable items" to keep costs down. It's the Bechtel way.
November 13, 2014 at 10:57 AM
Congratulations!!! The 3,000,001st post on this blog to say the same thing! Wow, you have really captured the feelings of the posters here, in a way that no one has done before. Original thinking!! Bravo!!
Congratulations!!! The 3,000,001st post on this blog to say the same thing! Wow, you have really captured the feelings of the posters here, in a way that no one has done before. Original thinking!! Bravo!!
And yours is the 4,000,001st post that criticizes people for providing an opinion. Your post got old after number 2.
And yours is the 4,000,001st post that criticizes people for providing an opinion.
November 14, 2014 at 11:34 AM
I wasn't criticizing "people," I was criticizing your hackneyed, boring opinion.
And another worthless "manager" weighs in.
I wasn't criticizing "people," I was criticizing your hackneyed, boring opinion.
I wasn't the individual who provided the opinion that you felt so boring. I merely pointed to the irony/hypocrisy of you posting a tiresome response criticizing another individual for making what you believe was a tiresome response.
Again, no criticism of the "individual" was made or intended. Why do you assume that your identity is tied irrevocably to your opinions? Get a broader perspective on life. Why is disagreeing with someone "irony/hypocrisy"?? I don't care at all that you think my response was "tiresome." Why are you so thin-skinned??
Can someone tell me if LLNL had a DB pension before 1992? Did the DB have a buyout option if someone left before retirement? My father spent 26 years in all at the lab as a machinist and when voluntarily left during down-sizing, he tells me he 'bought' out his retirement... I think he really didn't understand what that meant-because of the smaller contribution time to SS his account is very small and I'm wondering if there is a pension offset.
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