More facts

There may be more facts than I knew a week ago.

There seem to be Federal laws relevant to TCP1 and TCP2.

I have been told that the proposed and implemented plans may violate these laws.

I am not a lawyer so I do not know whether these claims have a basis.

Just the facts

There are many facts that would help employees at LLNL or LANL.

The hard part is getting the employees to ask for the facts while there is time for the facts to do some good.

We will see what happens.

Lack of trust

Finally, I seem to understand at a deep level, where the lack of trust comes from in most of us who have worked or who are working at LANL or LLNL.

This insight should make me more effective in transmitting information about TCP1 or TCP2.

Later,

Eric

current information

I still have lots of useful information about TCP1 and TCP2.

It seems that most LLNL folks are opting for "roll your own."

So I am focusing on non National Lab projects and, a bit, on the Working at LANL blog.

The student's nightmare

The decisions about TCP1 and TCP 2 remind me of the college student's standard nightmare.

You have a final exam in a few minutes for a course you never signed up for. In this case, the course is advanced financial management for weapons scientists.

You have no acquaintances who have ever taken this course. The finance majors took average financial management for normal people but did not take this graduate level course that was never offered.

You however have to take the final in a few minutes. If you fail it, your future is ruined.

The test is scheduled for three hours.

If you had ever heard of this course, you would know that the test cannot be completed in less than six hours and that it is in German.

Welcome to TCP1 versus TCP2.

Do you want fries with that?

A matter of faith 2

On LLNL:The Corporate Story, I have read commenters saying that financial advise comes free at my bank.

If you have $100,000 in the bank and the expected rate of return is 8% but the bank gives you only 2% interest, where does the missing $6,000 go?

And you wondered how the bank could afford such a nice building and how your adviser could buy such a nice car.

Where I grew up, paying someone $6,000 a year to hold my own money was not considered free.

Actually, where I grew up Joey the Knife and Jimmy the Fish were more than happy to hold your money while you paid them to do it.

Just a thought.

A matter of faith

Many people at LANL and now at LLNL have the same belief.

They believe, in spite of the evidence, that the 'government will protect me and my pension.'

Do you believe this?

Hopeless

Over the last few months, I have tried to engage blog readers on LLNL: The Corporate Story and on LANL: The Rest of the Story either to protect themselves in their pension decisions or to present positive plans for the future of either Lab.

I have come to a strong conclusion.

The people who comment on these blogs are not interested in facts or in plans. They are interested in rants and attacks.

So, I am likely to go back to an older version of finding people, phone calls, word of mouth and emails.

This is too bad. There were people on line who are going to lose their future benefits, but they do not seem to be motivated to protect themselves, through me or through anyone else who has the skills to help them.

Oh, well.

More later.

Style

While the facts in this and in blogs such as Working at LANL are correct, the style can be improved, probably dramatically.

Over the next couple of days, I will see what I can do about the style.

A big thanks to a reader for getting me to think about the style more. The way that I was presenting the facts was clearly wrong.

Where can I buy $1,000,000 for $600?

You can do your homework well on TCP1 and TCP2 and make a choice intelligently.

Aren't I smart?

The following is a rant. As such it will probably disappear later today.

At Los Alamos this story happened thousands of times. It is now happening at LLNL.

In the decision to choose TCP1 or TCP2, 90% of people chose TCP1 because it required less thought and because the 'government will protect me.' Of those who chose TCP2, at least half of them chose it because of the thought ' I do not like my management.'

The cost of making better decisions was about $600 and ten hours of a person's time. The average cost of not spending the time and money was $1,000,000 over ten years.

So the person saved ten hours and $600 and cost themselves $1,000,000. This works out to a cost of $100,000 an hour.

The people who saved the time and money are proud of themselves for being frugal.

Either they get paid a lot more an hour than I do or the answer to the question, "Aren't I smart?"

is

NO.

The amazing thing to me is how hard it is to get people to understand that their decision was not so well thought out. I had to do a lot of work in psychology and sociology to realize that, to the person, the appearance of self reliance is worth more than $100,000 an hour and that it is mostly people with such a world view who choose to stay at weapons labs.

Later.

Calculators

There are a couple of calculators for TCP-1 and TCP-2 decisions.

I have these calculators. I have talked with authors of these calculators. As it says in the notes for these calculators, the calculators are toys and not designed to support hundred thousand dollar decisions.

A number of factors and risks have been left out of these calculators. Including the factors and risks, changes the answers for most people.

There are also calculators on line at Fidelity etc. These calculators are designed to increase the sale of Fidelity's mutual funds. The sale of these funds pays for the calculators. The average real cost to a person of using Fidelity's calculators is a few thousand dollars a year (in commissions from buying the funds),

Fidelity's calculators do not include the subtleties of LANL or LLNL. Fidelity's (and other calculators for financial companies) are aimed at the mass market. The mass market is different than the market in weapons towns.

I have battle tested calculators that are focused on TCP1 and TCP2 and that include all of the subtleties. These calculators are

Details, details, details

There are starting to be comments on the blog LLNL:The Corporate Story about details of various pension accounts such as 403B.

Some of the comments are about the rules for moving money to and from this account. Some of the comments are about when money can be removed from this account and under what terms the money can be removed.

I have found that these rules are complex and vary from one type of account to another and, sometimes, from one person to another.

So I suggest that, before taking an action, a person should make sure that they are using the correct rules for each account as those rules apply to them.

At the moment, I do not plan to post all the rules here. There are pages and pages of these rules.

Good luck

new information

There should be more posts by Monday.

It has been a busy week.

I just put a couple of thoughts onto the comment section of LLNL:The Corporate Story under the post "Just when you thought you had a friend."

These comments essentially say that when you transfer from UC to LLNS under TCP-1 your years of service become years of service with LLNS and your years of service with UC are set to 0. If you go to TCP-2, your years of service with UC remain with UC and can be added to if you do more work at a UC facility.

Cognitive Dissonance

Yesterday, current Livermore employees got their proposed pension adjusted upward. The rationale from a California congressman was that the pensions had to be adjusted upward so that Livermore could attract the "best and brightest."

A few facts:

1. The best and brightest among the 20 somethings are not interested in spending their careers husbanding old nuclear weapons designs. The siren call comes from the Internet, nanotechnology, and biotechnology.
2. With the improved pensions at Livermore, with corrections for cost of living, Livermore employees are getting 29% less per year for life than their colleagues at Los Alamos are getting. This is a lifetime net loss of $45,000,000 per family!
3. 105% of BenVal of comparables (companies that are defense contractors and mostly hire manufacturing techs) will not attract top quality Ph.D.s in computer science, physics, chemistry, or mathematics.

The words and the actions do not seem to go together in a way that will be good with respect to the employees.

Just a thought.

Annotated comment on TCP1 versus TCP2

The following comment was lifted from the post "In the aggregate"

I will annotate the comment where it seems to be appropriate. My comments start with ->

-------------------------------------------------------------------------------------------

I am not sure anyone see's the reductions. All they are looking at is what plan will gain them the most income at the end of their term wether it be 55 or 60 years old, not realizing that the reason the plan pays more as you get older is because you are closer to death ie 72, end of show...

-> To me, this statement has a few misunderstandings. People are comparing raw numbers many years in the future to other raw numbers many years in the future and picking the highest raw number. Questions that such people may want to consider include:

1. Are any of these future numbers likely to be real?
2. Do the differences between these raw numbers have any meaning? (Scientists are trained to realize that small differences in large numbers are not statistically meaningful.)
3. If you bet your retirement on a quick calculation that you made and that calculation is wrong, why would anyone else assume the blame for your mistake?
4. The reason that the plans differ is not related you being closer to death. Actuarial calculations and other calculations determine the listed values.
   
5. The assumptions underlying these calculations are multitude and not stated. For instance, the actuarial age of death was, as of last year, 78 not 72.
   

The sad part is that no matter how you run the numbers no one except for upper level management is going to get what they would have if NNSA would have left us in UCRP.

-> Even upper level management loses in most cases. The change from UC to LLNS does not seem to be motivated by pensions. There were strong political reasons for the change. These reasons involve many more dollars than are involved in pension changes.

The people that do the work and make management look good, all got screwed and have lost at least 50% of their pension and one-half of what their 403b would have been if they were able to continue contributions at the same rate.

->Some of this is true. Some is not. Different behaviors by both management and labor could have led to a different results. Different behaviors still could. The important insight towards a better future seems to be to understand the dynamics that have led to LLNS and LANS and to let these dynamics guide TCP1 or TCP2 choices.

When I look at going TCP-2 and therefore freezing my UC retirement I only gain 2% a year and even if I start drawing my pension and bank the maximum allowable 401K contribution with a 6% matching fund until the end of my career I am still $1000 a month shy of what I would have gotten if I was allowed to stay in UCRP, and my 403b grows no more.

-> This could be true. The question is "Is there a way to change any of this?" If there is no effective change mechanism, then doing best with what is possible seems to be the only plan. I understand the anger and the feeling of betrayal. I would like these feelings to become focused on self protection.


If you do as I have described about until age 60 and then assume you are going to live to 100, and start taking withdraws from your 401k equal to the difference between what you would have gotten from UC out of the 401k it will only last until about age 65. The only saving grace there is social security, and that does not make up the full amount lost after depleting the 401k.

-> A thoughtful program to counter this worry is many pages long. There is an answer but it is long.

Having said that most people are going to see TCP-1 as the saving grace, that is, until LLNS says hey people I now want 5% of your earned income and NNSA reneges on their funding promisees. Here is where the average person is going to have a cow. They are going to take a pay cut year after year that will be donated to the TCP-1 plan, making it impossible to build your own 401k that is to take the place of your 403b that you no longer have. Why? Because you had to give everything that you planned on saving to TCP-1, leaving your 401k dead to the point where you can not put 6% of your income into the 401k.

->Again this is a reasonable worry. Much of it seems likely to take place, driven by forces much bigger than LLNS or LANS. A critical question is what happens to your pension if LLNS stops running Livermore. It is not clear to me that a person's TCP1 pension survives the loss of LLNS.

-> For every person that we have talked to, there is an individualized plan that makes the future bright instead of bleak.

I guess this is where management once more makes out like a fat rat. This is the only group of employees that can afford to give 5% to LLNS TCP-1 and 6% to their 401k, simply because an 11% cut in pay doesn't affect their livelihood. Hell if you think about it, the salary increases that these guy are going to get can be 100% totally sheltered in the plans and in the end they again leave you poor and them rich.

-> Most people spend every nickel they get. So the cuts would hurt everyone. Each person, however, can avoid being poor by taking a few hours to make a plan.

Has it even dawned on you just how well you have been shafted? How sweet it is, for some. So I have a few more questions:

Do you believe for a minute that LLNS hasn't figured this out and planed their promises accordingly? Any good company like MERCER or Hewitt could have figured this out long before they gave the tactics to LLNS and NNSA to implement. So do you truly believe that you will never be donation 5% of your earned income to TCP-1 for all long as you have remaining? Can you afford 5% to TCP-1 and 6% to your 401k. If so TCP-1 is the way to go. If you can't you need to look out for yourself, take what is yours and use TCP-2 to do the best you can for _your_ future. It is obvious to me that NNSA doesn't give a damn about you. They are protecting their assets at your expense. PERIOD.

-> LLNS's promises make straightforward business sense and fit NNSA's Complex 2030 plan. I have not seen the malevolence that the author suggests. On the other hand, plans with consequences that were not clearly thought out and that fit short term goals of various parties can still have negative results.

->The only defense that I can see is to create a well thought out plan for a person and their family.

Their problem is resolved, your problems have just started.

Site meter for this blog

There is no site meter for this blog. The omission is on purpose.

Sitemeters allow visitors to find out too much about other visitors. I decided that the increased privacy from not having a site meter gave more value than the increased information of having one.

Wednesday

Other projects are mostly caught up. There will be more posts here tomorrow.

Motivation

If you are thinking about making a good decision with respect to TCP1 versus TCP2, how motivated are you to do the needed work for yourself.

If figuring out the right answer for yourself and your family requires 20 hours of your work, how many dollars do you have to get back from this work in order to motivate yourself to do it/

1. $1,000
2. $10,000
3. $350,000
4. $1,000,000
5. Some other quantity

The reason for asking this is that I now know many people who will not do the 20 hours of work even though not doing the work is costing them $1,000,000.

In the aggregate

DOE and NNSA are under orders to reduce their pension liabilities in the near and far term (the transfer of $1.25 billion from UC to LANS and the Complex 2030 plan seem to be aspects of this reduction).

So, to me, in reading the proposed pension and benefit document from LLNS, a reasonable question is "Where are my benefits, especially 5 to 10 years from now and beyond, being reduced?" A second question is "How much is this reduction and do I care?"

The third question is then likely to be "If this reduction is too large for me, what can I do to lessen the reduction?"

A suggestion for today is for people to read the proposal for pensions and benefits and try to find all of the reductions.

Forward looking statements

A number of posts in this blog could be considered 'forward looking statements' in the legal sense. (These are statements that make some prediction about the future.)

Such statements are protected by Safe Harbor provisions and do not constitute legally actionable predictions of the future.

Financial advisor

I am not a certified financial advisor.

Nothing on this site constitutes financial advice nor is any of it a recommendation to buy or sell a particular investment vehicle.

Legal disclaimer (first version)

I am not a lawyer.

Nothing on this site constitutes legal advice in any jurisdiction.

Substantially equivalent

The phrase "substantially equivalent in the aggregate" occurs throughout the proposed pension and benefit pages.

I take this phrase to mean (see legal disclaimer) that as long as, on average, people have comparable pensions and benefits ("comparable" is a tricky word here) then these people do not have a viable complaint.

Individuals may be hurt badly or may benefit tremendously. As long as the average result is comparable, then the terms of the deal apply.

Hecklers

There is an anonymous commenter on LANL: The Rest of the Story who routinely says "Eric Fairfield sucks. I am not going to listen to him."

Such comments strike me as irresponsible.

Say that my advice to a person is worth $50,000 to the person. This commenter is suggesting that thousands of people each throw away $50,000 because this person, who has never met me, has decidedly to act badly.

Now back to the story.

Disclaimers

There are a number of disclaimers that will be posted here.

Some of them will include words like:

1. "not legal advice"
2. "not a lawyer"
3. "not financial advice"
4. "forward looking statements"

These disclaimers are legally necessary. They do not decrease (or increase) the value of the advice for readers.

A couple of thought provoking questions

These questions and more to follow are ones that were critical in LANL employee's analysis of the benefit packages and were often unasked.

1. Is the package that appears better from an easy calculation actually the safer package?
2. What do the package designers know that I don't and need to?
3. Where are the risks in both packages?
4. Do I need to consider the unstated risks? (Yes)
   

This blog

This blog will be focused on content. It will seldom have clippings.
It will not have flames or off topic comments. It will probably disappear once the appropriate people at LLNL have finished with their need for it.

Eric

Welcome