Conference 7.286::digital

The answer seems to be that it must be left, but I suggest that you
read chapter 7 of the Benefits book and/or talk to Personnel.

    Speaking of our pension plan...just who is holding that money that
    DEC puts away for employees? Is there any way that the company can
    get hold of it? Is there really a chance (as .0 says) of my pension
    benefit being worth about the price of a cup of coffee?

    The company "directs" the pension plan.  Along the way there are
    "managers", "trustees", "custodians", etc. all forming a protective
    buffer around the employees' money.  So many pension funds went bust
    that a new body of law called ERISA has been legislated at the federal
    level to protect pension funds of the form Digital has.
    
    The .0 scenario referred to inflation, which, of course, is not under
    Digital's control.  The mathematics are that if the price of a cup
    coffee is now $0.75, and if the locked-up pension benefit today is
    $3000.
    
    In 50 years at 18% inflation per year, the accumulated inflation will
    be 4000-fold or 400,000%, making the price of a cup of coffee in 2038
    $3000.

    I put the attached spreadsheet together just to get some idea of
    what the retirement benefit is really worth.  You don't need to
    know about inflation to understand these numbers.  Moral ?  Get
    an IRA.
    
    
    
    The chart shows a hypothetical employee, starting in 1983 at $32,000
    annual salary, 5% annual increases, leaves DEC after 20 years of
    service, and retires at age 65.  Only partial benefits are paid
    if you retire before age 65.  You are not fully vested until after
    ten years (new laws have set limit to five years).  Annual benefit
    is AFTER retirement.

                  Predicted Retirement Benefit as of 24-Jun-88


      Year             
      with    Fiscal   Actual   5-year    Times   Annual   Monthly
       DEC     year    salary  averaging  1.5%    benefit  benefit   SAVE
    -----------------------------------------------------------------------
          21     2003   92,066   92,066    1,381   18,490    1,541  139,031
          20     2002   87,682   87,682    1,315   17,109    1,426  125,045
          19     2001   83,507   83,507    1,253   15,794    1,316  112,076
          18     2000   79,530   79,530    1,193   14,542    1,212  100,059
          17     1999   75,743   75,743    1,136   13,349    1,112   88,932
          16     1998   72,136   72,136    1,082   12,212    1,018   78,637
          15     1997   68,701   68,701    1,031   11,130      928   69,122
          14     1996   65,430   65,430      981   10,100      842   60,334
          13     1995   62,314   62,314      935    9,118      760   52,227
          12     1994   59,347   59,347      890    8,184      682   44,755
          11     1993   56,521   56,521      848    7,294      608   37,876
          10     1992   53,829   53,829      807    6,446      537   31,550
           9     1991   51,266   51,266      769    5,638      470   25,742
           8     1990   48,825   48,825      732    4,869      406   20,415
           7     1989   46,500   46,500      697    4,137      345   15,537
           6     1988   44,285   44,285      664    3,439      287   11,077
           5     1987   42,177   42,177      633    2,775      231    7,006
           4     1986   39,271   39,271      589    2,142      179    3,299
           3     1985   36,362   34,521      518    1,553      129
           2     1984   35,200   34,521      518    1,036       86     0.08
           1     1983   32,000   34,521      518      518       43     ----


    Salaries for 1983-1987 are approximate.  Salaries beyond 1987 are
    estimated based on expected annual increase of 5%.  SAVE is a
    payroll-deducted Keough.  8% of salary is witheld - expected return
    is 5% or better.


    What is the current vesting schedule?  Is it really 100% at 5 years
    or....
    
    /ed

        It's described in detail in the "Your Benefits Book -- 1988
        Edition", which was, I believe, mailed to EVERY DEC employee.
        
        See Chapter 7.  If it has changed since that time, I don't
        recall having seen notice of the update.  You should ask your
        PSA what the current schedule is.  (I just tried to ask mine,
        but she had stepped away from her desk.)
        
        Tom

         I seem to remember that DEC had until the end of the year (calendar
         or fiscal I'm not sure) to adopt a new vesting schedule. One would
         make one vested 100% at 5 years, the other at 7. Some other differences
         that I don't remember because I'll have 7 in January. Ask Personnel
         for more information. They should know. (But I would not put money
         on it.)

                               Alfred

    What is the interest rate used to calculate the present value of the
    annuity?
    
      Mitch