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: ??????
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: ??????
Comments
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.
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.
POS
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.
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.
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.
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.
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.
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.
November 11, 2014 at 9:40 AM
Hey, if you can predict the financial markets, why do you need a pension plan?
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.
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?
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 $.
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.
November 11, 2014 at 5:43 PM
True only if you mean a CLOSED DB plan.
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.
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.
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.
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!!
And yours is the 4,000,001st post that criticizes people for providing an opinion. Your post got old after number 2.
November 14, 2014 at 11:34 AM
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.