Retired in 2021. Did not take the lump sum. Just received annual funding notice.
WTF is going on ?
On first page, it says the plan is actuarially underfunded to the tune of between $50M-$100M. A true funding status of somewhere between 69%~80%.
Then on page two, assets outpace current liabilities and it shows 107% "funded."
Dig deeper though. The plan uses a highly rosy assumed rate of return of 7.5%. Then, it used a lump sum option as the form of payment over a life annuity with 15 yrs certain. This is more favorable and a very rosy scenario.
Then get this. The asset mix was 80-20 in 2022. Then it went to 60-40 and now it is 50-50.
The reaso this is critical is that 2023 and 2024 were terrific yrs in the market and had historic returns. Meanwhile, people managing the Pension panicked and did what behavorial economics say not to do: Sell Low ! They went conservative when staying the course would have generated $30M more in assets and returns.
No way in h-e-l-l a 50/50 mix can get an assumed rate of 7.5%. Most Pension assumed returns are 6.5%-7% MAX.
The 60/40 mix in 2024 returned 8.49% before fees. The average balanced fund returned close to 14% in 2024.
Rich ran Cap Management for years. These decisions and assumptions about the pension make no sense and are not logical.
At least the one bright spot is the ATFP was 117% as of last year so there won't be a restricted lump sum for you as existing employees retiring in the next 2-3 years.
Someone needs to explain the poor management of the pension plan.