Can this be true??

[Thrif-t]

FIL 73 said his gm pension was reduced by the amount of his social security check when he started receiving it. Example pension was 3k and social security was 1500, so they lowered his pension by 1500 so he only gets the same 3k. He retired at 62. Does this at all sound possible, or is it time for dh to start getting more involved with FILs finances? He retired with 40 yrs in the gm factory if that matters. Thanx

[Joan.of.the.Arch]

Yes, it can be true.

G.M. declined to discuss the situation, although it has said it intends to keep the plan going when it emerges from bankruptcy.

For decades, G.M.’s blue-collar workers have earned pensions with two components. The first is the “basic benefit,” currently about $1,590 a month, or $19,000 a year, for an auto worker with 30 years’ service. The U.A.W. won this “30-and-out pension” after a strike at G.M. in 1970, and still considers it something close to an inalienable right. In a 30-and-out plan, someone can go to work at 18, work nonstop for 30 years and retire at 48.

The second part is a supplement, worth what each worker’s Social Security benefit will be on the earliest date he can start drawing the benefits, currently age 62. (Even then, the workers are joining Social Security three years early, so they qualify for just 80 percent of the full benefits they would get at 65.)

Even in the days when G.M. was healthy, years ago, most of its 30-and-out retirees were too young to qualify for Social Security. The supplements were supposed to make up the difference until the retiree became eligible for Social Security.

From Has G.M. Overextended Its Pension Fund? - DealBook Blog - NYTimes.com

[jIM_Ohio]

Yes, it can be true.

G.M. declined to discuss the situation, although it has said it intends to keep the plan going when it emerges from bankruptcy.

For decades, G.M.’s blue-collar workers have earned pensions with two components. The first is the “basic benefit,” currently about $1,590 a month, or $19,000 a year, for an auto worker with 30 years’ service. The U.A.W. won this “30-and-out pension” after a strike at G.M. in 1970, and still considers it something close to an inalienable right. In a 30-and-out plan, someone can go to work at 18, work nonstop for 30 years and retire at 48.

The second part is a supplement, worth what each worker’s Social Security benefit will be on the earliest date he can start drawing the benefits, currently age 62. (Even then, the workers are joining Social Security three years early, so they qualify for just 80 percent of the full benefits they would get at 65.)

Even in the days when G.M. was healthy, years ago, most of its 30-and-out retirees were too young to qualify for Social Security. The supplements were supposed to make up the difference until the retiree became eligible for Social Security.

From Has G.M. Overextended Its Pension Fund? - DealBook Blog - NYTimes.com

Good post

It should be noted as a graduate of a college which bears GMs name, I find lots of things about GM interesting. I have never worked for GM, but do currently work for a spinoff of a spinoff of a former GM company (which has since been bought out by a larger company).

GM is a pension company which also makes a few cars. Its pension liabilities would more or less bankrupt any entity except the federal government.

Of course any company which creates its own college and used to pay 100% of the tuition for 100% of the students probably throws money at things without thinking about them LOL

[am_vanquish]

Sounds like a Social Security Level Income Option, which many people elect on purpose!! Of the 10-15 pension plans I work on, about 1/2 have such an option (usually the larger, more sophisticated plans), and about half of the employees in those plans elect that option. It's an easy way for them to get more money up front while they're waiting to get Social Security. Then, when they get to social security, there's no huge jump in income ... their pension falls by the exact amount as their social security, so net income stays the same.

In these cases, we adjust the payments so that the net present value would be the same as if they elected a regular single life annuity (where it's just one equal payment amount until the day they die). Example (1) Receive $100 for life. Example (2) Receive $130 until age 65, then receive $80 for the rest of your life. If he lives to meet the assumptions of the mortality table used by the actuary, those 2 examples have the exact same value in today's dollars. As you can see in that example, the benefit he received prior to social security was actually higher than what he was entitled to.

Not sure if this is what he elected or not. Either way, from an actuarial equivalence perspective, there's no difference in the different payment streams.

[Joan.of.the.Arch]

Back to say-- Though your FIL is probably correct in what he told you, that doesn't mean it is not time to give him some assistance with his finances. In fact, it may be that he had forgotten what the terms of the plan were and so found himself disappointed not to have a greater total income once he began collecting social security. But surely he must have known at the time he retired. Anyway, maybe you two should pay attention to whether FIL is still sharp with his math and ability to organize his bills, appointments, and so forth. (I've seen some decline in my own father's mental sharpness, which, should he live long enough, I expect could blossom into needing help at least now and then.)

[Thrif-t]

Back to say-- Though your FIL is probably correct in what he told you, that doesn't mean it is not time to give him some assistance with his finances. In fact, it may be that he had forgotten what the terms of the plan were and so found himself disappointed not to have a greater total income once he began collecting social security. But surely he must have known at the time he retired. Anyway, maybe you two should pay attention to whether FIL is still sharp with his math and ability to organize his bills, appointments, and so forth. (I've seen some decline in my own father's mental sharpness, which, should he live long enough, I expect could blossom into needing help at least now and then.)

Thanks for the explanations!! I'm not confident that he actually knew how his pension would work. He's not the kind that goes out of his way to educate himself. His FIL/my dh's grandfather took care of their finances and investing. Now that GF has been passed away for 10 yrs FIL just left things as they were. He trusts no one to tell him anything and is very stubborn. We try to help but he won't let us. My DH is laid back and just lets it all go. I as a DIL don't really have a say and my SIL is just not financially adept. Its really sad to see them lose all this money they made thru out their life cause they don't know how to take care of it. He goes to HR Block and thinks they are finacial planners :-(

I'm wondering was there any benefit to him working till 62 and 40 yrs of service? He could've went out earlier and maybe still had roughly the same pension since they were paying the supplement social security. I really don't think he knew of this becuase he retired in Jan and would've turned 62 in May then started collecting SS. It just boggles my mind when people don't take an interest in their own finances. But thanks for putting my mind at ease that he was somewhat right in saying his pension check had been cut. I was just worried if something shady had been going on.