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 ->

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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.