Aaron congrats again. I assume your going from represented to management. Is there any affect on your retirement?
One if the problems we have at our company is the retirement difference between management and union employees. We used to all have 401Ks. Then the company changed that to a cash balance for management and newly hired represented employees several years ago.
The problem is that the older employees who have many years of experience doing their job who would make great managers will not go into management because of the huge loss their retirement will take going from a 401K to a cash balance. So people currently being hired into management are new employees who have very little time in the field. Many may have never done the job! Just know the policy and procedures.
I have been asked to go into management myself but am apprehensive due to my retirement getting hit so hard. And the fact that the pay is more but there is no overtime and without that you actually make less! If the company allowed the employees going into management to keep their 401K they would get better candidates.
My retirement will be the same but I will get more monthly at retirement as it is based on a percentage of what you made monthly when you retire. Right now I am still on hourly and the overtime is pretty good. Like I said my union took a month bickering over the contract for me to have this job since it is interim for now. I've been sworn to secrecy of what will happen when the interim is up but I can say it is only good.
Sounds similar to our V assignments for management. You get to keep your seniority, retirement, etc because it is a voluntary and temporary contract. They give you a 3% raise but you go from hourly to salary and no overtime. These assignments have been pre-negotiated through the union contract with the company. It used to be that these V assignments would allow easy transition into management until they changed the retirements.
So if you go permanent does your retirement still stay the same? I only ask because it seems after the Enron fiasco most companies changed their 401K retirements. I am thankful I had enough time with the company(over 10 years) to be grandfathered in to keep my 401K. All the employees that had less than 10 years had their 401Ks rolled over to a cash balance program and took a hit.
The less time you have to retirement the worse the cash balance is when moving from a 401K. Starting at a young age with a cash balance is not bad because the gains are gradual through your life. You make more on your 401K during your last 10 years.
So the closer you are to retirement the more your 401K can be affected going to cash balance.
Also our retirements are based on the last three years of pay. So if you spend the last three years at a much higher pay scale it increases your retirement pay out.
