Conference 7.286::digital

    I've just watched a NBC News "Summer Showcase" program about the
    pension "Cookie Jar." It dealt with corporations' siphoning surpluses
    from pension funds for their own use.
    
    Does anyone know if Digital maintains the kind of pension fund that
    can develop surpluses?  Does anyone know Digital's position regarding
    the use of such surpluses?

    Digital's pension plan is a defined benefit plan.  So are most of
    the pension plans offered by major corporations.  Under these plans
    the pension each employee is entitled to under the plan is defined
    in $$ terms, and the company contributes the present value of the
    benefit to the pension fund.  If the value of the assets go up above
    the present value of the future liabilities, there is a surplus.
    If the present value goes below the future liability, the company
    must add more money to the pension fund.
    
    The other type of pension plan is a defined contribution plan. 
    Under this plan companies contribute a fixed amount to the pension
    fund now, and employees receive the future value of those assets,
    whatever that future value turns out to be. 

anyone know what changes are being made?
    
Subject: Heads-up on Pension changes
Date:	05-Feb-1996
Posted-date: 05-Feb-1996
Precedence: 1
To:     See Below

    The U.S. Pension plan is evidently to be replaced by something called 
    "Cash Balance Plan"   TODAY...brochures and account statements are 
    being mailed to all employees homes and should arrive there Wednesday 
    or Thursday of this week.  This Cash Balance Plan is being administered 
    by Hewitt Associates.  All employee questions on this are to be 
    directed to Benefits Express which is operated by Hewitt.  There will 
    be a hot line number in the mailing for employees to call.  
    
    There is discussion of sending all employees a readers choice 
    announcement on this later today.  This will likely be very superficial 
    and not contain much information.
    
    This is all I have learned at this point.
    

    I called Hewitt, and they said there were options being added to
    the pension plan.  Specifically people leaving the company can get
    a lump sum, and there is an additional method being added to
    calculate the old-style payments if people choose not to take the
    lump sum.  Hewitt claims as far as the latter
    is concerned it's whichever is the best, the new or the old procedure.
    I'd like to believe this, but I wasn't able to extract any concrete
    info about it.  Supposedly the written stuff being mailed has
    complete details, customized to individual vesting, etc.
    

    
    	Sounds to me like more layoffs is in the works...
    
    		the Greyhawk

>>>    	Sounds to me like more layoffs is in the works...
>>>    
>>>    		the Greyhawk

...and the new TFSO golden parachute is... "take your retirement benefit as
a lump sum"...

Nah, it couldn't be that bleak.

Hey, we are making money again, things are looking brighter.
Maybe we are returning to the good old days where a "benefit improvement"
actually means some additional benefit to the employee?

Nah, it couldn't be that rosey.

Lets hope for revenue neutral.

Rick

From:	LANDO::BIBEAULT "FINANCE 223-0683  06-Feb-1996 1248"  6-FEB-1996
12:51:37.84
To:	@RESULTS.DIS
CC:	BIBEAULT
Subj:	PENSION PLAN CHANGES

TO: See Below

Subject: I:CASH ACCOUNT PENSION PLAN                                 


                  I N T E R O F F I C E   M E M O R A N D U M

                                        Date:     02-Feb-1996 
                                        From:     GINGER ABRAMS @MKO
                                        Dept:     NNE HR                      
                                                          Dept:     NNE HR
                                        Tel No:   DTN 264-7918


Subject:  CASH ACCOUNT PENSION PLAN                              

  
  New Cash Account Pension Plan Replaces Current Plan Effective March 1
  
  A new plan, called the Cash Account Pension Plan, will replace our 
  current pension plan effective March 1.  An announcement letter from 
  Sid Ferrales, a brochure and a personalized statement showing each 
  employee's benefit under the new plan will be mailed to employees' 
  homes on February 5.
  
  The major features of the Cash Account Pension Plan are:
  
  o The plan is easy to understand.  Employees start with a pension 
    account balance based on an enhancement to the value of the benefits 
    under the current plan.  The company will credit each employee's 
    individual account on a quarterly basis.
  o It provides consistent growth.  Benefits will accumulate more evenly, 
    making it easier to plan for retirement.
  o It's portable.  As employees leave the company, they can choose to 
    take their account balance with them, regardless of age.
  
  The new plan will be administered by Benefits Express, the same 
  organization that supports the SAVE Plan and our recent open enrollment 
  efforts.  Trained representatives will be available to answer 
  employees' questions beginning February 5.
  
  Employees can reach Benefits Express by calling 1-800-890-3100.
  

>  o The plan is easy to understand.  Employees start with a pension
>    account balance based on an enhancement to the value of the benefits
>    under the current plan.  The company will credit each employee's
>    individual account on a quarterly basis.


    Well, it took me 5 tries to parse the 2nd sentence (the one right
    after "The plan is easy to understand") and I still don't know what
    it means.  Sounds like double-speak to me.
    
    				-John

    Re .8:
    
    If the words mean what they would mean if spoken by a honest person,
    then they mean:
    
    	Figure out what your benefits would be under the current plan.
    	Write down the dates and amounts of cash you would get.
    	Discount the amounts for interest to get their present values.
    	Add up the present values.
    	Enhance the value by adding a bit more.
    	That's your account balance.
    
    Thus your account balance would be enough to give you the benefits you
    would get under the old plan, if they earn the assumed interest rate.
    
    On the other hands, if the words are spoken by a marketer, lawyer,
    bureaucrat, or other obfuscator, they have no meaning.
    
    
    				-- edp
    
    
Public key fingerprint:  8e ad 63 61 ba 0c 26 86  32 0a 7d 28 db e7 6f 75
To find PGP, read note 2688.4 in Humane::IBMPC_Shareware.

    Don't forget, the NAFTA legislation that established the NAFTA treaty
    included a payoff/bribe to Corporate America for their support/neutral-
    stance on NAFTA........
    
    The payoff was to allow corporations to reduce the Present Value of
    future pensions by assuming higher future rates of return on pension
    funds.
    
    So now, cashing out your defined benefit pension (to convert to
    a defined contribution pension) will result in less money in your
    name.
    
    
    

    Is this a corporate raid on an over-funded pension plan? Will Digital
    Equipment Corporation come out of this "conversion" with a big wad of
    free cash, or will the Corporation be able to stop it's contribution
    to the pension plan for some period of time?
    
    Will a Digital employee see any benefit out of this, other than the
    peace of mind that comes from knowing that you're on your own, don't
    count on retiring above the poverty line?
    
    Geoff 

    
    	No, this is not a "raid" on the pension fund. Yes, Digital will
    come out of this with a substantial "wad of cash". Digital has not
    contributed to the pension fund for years (I believe last tome was
    1989).
    
    	Yes, you will see a benefit as an employee (for example, you will
    be actually able to "see" your accrued benefits as a $ amount). If
    Digital has any corporate brains at all, they will allow us to invest
    our pension dollars exactly like our 401 (k), but in a seperate
    account. This would allow you to "beat" the current rate of interest
    on the PV caculations, and come out far ahead  in 20 years.
    
    	One can only dream...
    
    		the Greyhawk

    So exactly what happens to this money?  Do we have investment options
    or does it just sit in some account that we can watch but can not
    touch?
    
    Larry

    The one that got me was...
    
  o It provides consistent growth.  Benefits will accumulate more evenly, 
    making it easier to plan for retirement.
    
    Does this mean that the current plan provides inconsistent growth, 
    and that the current plan accumulates less evenly (than what?)
    
    Sounds to me like a shift from a defined benefit to a defined
    contribution plan. ie Digital contributes a fixed percentage of 
    your salary to the plan periodically, and the benefit you get 
    will be subject to how the investment (in what) performs, rather 
    than the benefit you getting being defined, regardless of what 
    it takes investment/contribution -wise to realize the benefit.
    
    Wouldn't there have to be some kind of Dept. of Labor papers filed 
    on this kind of a plan change? I haven't heard of any notices other
    than the stuff last year about the SAVE plan changes.
    
    Dave

   There is one very good thing about this change.  You can get your
   money out of the plan when you leave the company.  Before, Digital
   decided whether you could cash out or if you had to leave the money
   in the pension plan.  
   
   This decision was based on how much money was owed to you at the
   time.  If the balance was under a certain amount, you would get the
   money; if over then no. Unfortunately, I could never get a consistent
   answer out of the benefits people when I wanted to know what the
   threshold was.
   
   So if you had $7K in the plan, and had to leave it there upon
   departure, you were stuck with a fairly useless pension account
   because you had to leave the money with Digital.   Pension plans pay
   off because someone keeps contributing to them over a period of many
   years.  
   
   The neat thing would be if we could just roll the current pension
   into the SAVE plan and go from there.

    What (if any) is the impact of this on retiree medical benefits?

        The other, more esoteric stuff, that we loose is the access to other
    benefits such as lifetime medical, etc, insurance at the then current
    contribution rates.

    Pensions must be paid out (supposedly) even if the company has to fund
    in current dollars at the time.  Digital is ahead of the ball currently
    as I understand it which is why they haven't needed to contribute to
    the plan in a while (1989 does sound right).

    (PLEASE DO NOT TAKE THE FOLLOWING AS A POLITICAL STATEMENT, IT IS TOTALLY
     HYPOTHETICAL)

    Having not seen anything on this, my worry is that the commitment gets
    down to being a current contribution, with no future guarantees after
    you retire.  This can be good and bad both.

    For instance, I tend to be a conservative, but fairly successful
    investor.  My wife thinks that putting it in the bank is just fine and
    has no interest in being more involved in that.  The problem,  lets say
    I make it to retirement, and therefor have access to this pool of funds
    (perhaps a puddle in terms of future dollars ?).   Now, 5 months after
    I retire, I drop dead from a hear attack, and my wife must rely on the
    leftovers of the "pension" to survive till whenever (hopefully a ripe
    old age).

    She takes it all out of the investments (lets say I aimed for a 10%
    return with fairly high safety and that I need about 11% feedout to pay for
    our retirement).   She goes down to the local bank and deposits it in a
    high rate savings account at 4% (it's a bank).  She needs to draw 7%
    for living expenses, insurance, etc....

    There is a problem in this case:


    Yes I know:

    1) I could set up a trust in my will (I probably would)

    2) My wife really does have more of a clue than that

    3) I know according to MS word, wife and husband are inappropriate
       and it should be spouse, so call em old fashioned.


    (END OF EXAMPLE)

    I guess we can only wait till we here about our "benefit", but what I
    would like to see, at least, would be a parallel set of options to our
    401k setup, possibly restricting out the more risky investment options,
    or at least a pooled balanced fund approach to investment (rebalancing,
    say, quarterly). 

I mentioned this development to a Dean Witter VP last night, and he was
not at all surprised. Said quite a few large corporations are doing this
(whatever "this" is, as far as we've seen in the mail we've received). 

I wasn't surprised, since Digital is a member of an intercorporate
compensation panel that meets and agrees on general ground rules for pay,
benefits etc. ...sort of price fixing, in some eyes.

Art

I have not yet received the mailing, but I don't see the connection with
retiree medical benefits.

				Steve

Re: .14

>   Sounds to me like a shift from a defined benefit to a defined
>   contribution plan. ie Digital contributes a fixed percentage of 
>   your salary to the plan periodically, and the benefit you get 
>   will be subject to how the investment (in what) performs, rather 
>   than the benefit you getting being defined, regardless of what 
>   it takes investment/contribution -wise to realize the benefit.

    If this is what is happening, I for one would welcome the change.
    I'd like to see it go one step further, though.  My last employer
    made contributions to an employee designated and managed SEP/IRA.
    Its totally up to me how my funds are managed (bonds, stocks,
    funds, etc.) and I can get some or all of the cash if I need it
    (subject to applicable penalties taxes).

    Bob

    If there's anything this current item makes clear, however, it's
    that the benefits communication process badly needs fixing.....
    
    

>    If there's anything this current item makes clear, however, it's
>    that the benefits communication process badly needs fixing.....
    
    ... and outsourcing communications is exactly the wrong thing to do
    from my viewpoint. With all the horror stories about dental plan
    administration I'm not too keen on having to deal with a 3rd party
    when it comes to my pension.
    
      John (18� years and boom boom "still going" boom boom)

  I smell a rat...

  My biggest concern is that the brochure focused stronly on the "cash
value" of the account,  and fluffed over the fact that under the old 
rules, you got your pension until you died,  and under the new rules,
you get a pension until your balance runs out.   

  The catches, as I see them  are as follows:

	1)  The "enhancement" you get is arbitrary, and may not represent
		a full distribution of the value of the old plan assets.

	2)  The investment rate of return is  7%, "set every july"  (But
		no mention of what index, if any, it's tied to.  (Since
		the 401k "Stable value fund" is currently paying about
		3%, I'm inclined to believe the 7% is a teaser rate...

	3)  There is no mention of whether the pension is governed by 
    		ERISA laws and federally guaranteed as the old one was 
    		(Important for a company only 5 quarters in the black).

	4)  The "investment choices" are determined by DEC.  The previous
		plan was heavilly invested in DEC stock, and thus suffered
		a negative return on assets for many of the recent years 

	5)  There's no guarantee that DEC will maintain the 4% contribution
		rate over time.

	6)  There's a nasty paragraph about cash-out values being lower
		after july due to different mortality rate calculations
		required by GATT.  (I decided on the spot to vote for
		pat bucannan when I saw that -- what international trade
		has to do with pension calculations is beyond me...)

  Overall,  I believe what happened was that with the sudden run up in 
DEC stock  made the pension fund "rich enough" that  dec could basically
give each employee an "enhancement" out of the proceeds, buy a 
cheap annuity, and pocket any remaining  cash, without affecting the 
corporate bottom line. 
    
   My big question is whether you can stay in the old plan,  or would
you be forced into the new one.  (And likewise,  if forced into the new
one,   can you "cash out at termination"  and do better rolling it into
an IRA, or would you have been better off being able to draw a pension
at age 65 under the old rules?    (And what happens to people who terminate
    before 3/1?)

  I'm probably more cynical than most,  but I bet that when you get the
brochure,  you'll agree that there's just too much fluff and sunshine for
it not to contain a rat underneath.

  I'm going to call the 800 number tonight to see if I can get something
    more detailed (like the actual plan documents) to read. 
    
							-al

    re:

>	1)  The "enhancement" you get is arbitrary, and may not represent
>		a full distribution of the value of the old plan assets.
    
    Do we have any rights/recourse if it isn't a full distribution?

    	As I see it, there was a great deal of fluff.   The focus was
    on how the initial individual balance was to be computed, and NOT
    on the fact that Digital would "only" contribute 4% of your salary
    each quarter ever thereafter.  What this does, in effect, is to shift
    the risk (inflation, rising salaries, etc.) to the individual.
    
    	Under the old pension plan, you were "guaranteed" (I guess that's
    not the right word) a fixed income at retirement, and the amount was
    adjusted each year based upon your last 5 year's salary.  Digital
    assumed the risk that interest rates might be low (so that they needed
    to add to the pension fund in order to maintain our defined benefit
    amount).  Under the new plan, while the fund does earn interest, 
    Digital contributes a FIXED (percentage) amount each year, independent
    of the current interest rate.  Thus the eventual payout is more
    affected by the interest rate(s), and less by one's salary.  So the
    individual assumes the risk.  This is the primary difference between
    a defined benefit plan (old) and a defined contribution plan (new).
    
    	There was nearly no discussion of how one could choose to receive
    the money at retirement.  I would guess that one can still receive a
    fixed amount - which depends ONLY upon the individual's account balance
    when they retire - per month.  Or maybe take the whole thing as a lump
    sum.  I would, however, defy anyone to try to calculate what their
    monthly retirement benefit would be under the new plan.  Under the old
    plan one knew (Digital assumed the risk).  One received both a "current
    benefit" and a "projected benefit" (based upon earning the same amount
    from now to retirement).  You CANNOT do that any more.  Too much depends
    upon the interest rates between now and retirement.
    
    	And if you happen to have a salary that is rising rapidly, you will
    not get to "spread" that happy fact over your early years, which is
    what the current formula provides.
    
    	Just a few thoughts to get things moving...
    
    Cheers!
    Dave Eklund
    

    It is unclear to me from the statement whether we get 4% each year,
    paid quarterly, or 4% four times a year (quarterly), which would be 
    16% a year. Does anyone know for sure?

    
    I believe Digital contributes once every quarter to your account,
    an amount equal to 4% of your pay *for the quarter* ...
    

    So, you work 25 years and they put a year's salary away for you...
    
    	:-(

    Replies to Topic 3510.....specifically 3510.25, .61, .69, .75 discuss
    in more detail the impact of the NAFTA legislation (leading to the
    approval of the NAFTA treaty) on how the Current Value of your Future
    Pension(s) has been reduced.    THIS IS NOT A POLITICAL STATEMENT....
    PLEASE KEEP ALL COMMENTS FOCUSED ON OUR PENSIONS!!!!
    
    						Thanks, Jim P
    

    
    Some time ago, to a not-very-warm reception, I predicted that this was
    coming (note 3843.several).
    
    The ongoing 4% contribution makes the immediate impact of this less
    than I feared when I first saw the storm clouds on the horizon back
    then.
    
    However, as has been noted, this basically "outsources" the whole
    pension plan, and gets the plan out from under the Defined Benefit
    conditions of ERISA 1974 and out from under Digital's responsibility. 
    The pension plan is being liquidated and part of the cash value spun
    out to be administered by the SAVE plan administrators. No assurance of
    future outcome and, I believe, no assurance that the 4% contribution
    level will hold constant for the long term.
    
    When you get your numbers, you should do the following calculations
    using Excel or your favorite financial planning technique:
    
    1. Take the lump sum value that you get, and calculate what it will be 
       worth when you retire, factoring in the putative interest rate that
       is being used to determine your lump sum, assuming tax-free
       re-investment of all income, and assuming 4% of your current salary
       is added every year.
    
       This will yield your putative balance at retirement using today's
       assumptions.
    
    2. Now, take your balance in 1. and the monthly "Current Benefit"
       from your most recent pension statement, and do the following
       calculation.
    
       On a monthly basis, subtract the monthly "Current Benefit" from
       your balance.  Figure the monthly income on what is left, and
       add that back in.  Keep doing this until the balance reaches
       zero (0).
    
       Figure out how many years it takes to reach zero.
    
       If it is fewer years than you thknk you should reasonably plan to
       live in retirement, then you have a big problem with respect to the
       new defined contribution plan versus the old defined benefit plan;
       assuming constant benefits, your money will run out before it would
       have stopped under the old plan.
    
       If it is more years than you think you should live in retirement,
       then you (or, at least, your heirs) have won big with respect
       to the change in pension plans, because the pension benefit will
       out-live you.
    
    3. Figure out what balance is actually needed at retirement to provide
       the "Current Benefit" on your last pension statement for as meany
       years as you think is reasonable to assume.
    
       Then, work backwards to figure out what monthly contribution is
       needed on top of the lump sum (according the the assumptions being
       used to calculate the your initial lump sum at the plan change)
       to reach that amount by retirement.
    
       If that amount is less than 4% of your current salary, then the
       difference is your effective Raise provided by the change.  If the
       amount is more than 4% of your current salary, then the difference
       is the effective pay cut provided by the change in plan.
                               

    The tiny amount of info I was able to extract over the phone
    said something about a choice.  So, there is no choice to continue
    with the current pension setup, it gets turned into this
    hope-you-don't-live-long method for everyone?  What choice
    were they referring to?  (Sigh - my grandmother lived to be 94,
    and my mother is going strong at 80.)
    

    Just got off the phone with someone in the treasurer's office.
    
    "Legally" speaking, this is not a change to a 'defined contribution'
    plan; the plan will still be catagorized as a 'defined benefit' plan. 
    
    Requests for the 'actual plan documents' are to be directed through
    Benefits Express.
    
    The plan's financial report for July 94-June 95 should (theoretically)
    be avaiable April 15th.
    
    The entire plan assets will remain within the plan.
    
    
    The above is my restatement of the key points of the conversation,
    and should not be taken as any kind of official statements.
    
    Dave
    
    PS - I wonder why this conference became temporarily write-locked...

The write-lock was accidental (I and many others thought otherwise!)

				Steve

    
    Now I'm completely confused.
    
    If the plan is still in practice (as opposed to just in non-practical
    legal jargon) a "defined benefit" plan, meaning that a certain defined 
    benefit is assured for life after retirement;  and if the (overfunded,
    I am told) assets of the plan are all transferred; then, the change in
    plan has as it's effect making pension accounts portable and more
    liquid, with no change in benefits at retirement.
    
    This would be <insert your favorite food> on a silver platter for
    employees;  a benefit enhancement.
    
    Wonder how to get to the bottom of what's really going on here?

    The person I spoke with commented that from an employee viewpoint this
    would appear to be a change from defined benefit to defined contribution,
    but that legally, the plan's classification remains "defined benefit".
    Hey, I ain't a lawyer, nor have I studied the applicable regulations;
    seemed like double-speak to me too, but that's what was stated.
    
    And when I asked if all the plans assets were being distributed into
    these cash accounts, the response was to the effect that no money was
    being distributed (unless you choose so upon termination) and that all
    the plan's assets would remain within the plan. Again, your guess is 
    as good (or perhaps better) than mine as to what this really means.
    
    Again, the above is from memory; I didn't take any notes...
    
    Dave

Re: .23

>         4)  The "investment choices" are determined by DEC.  The previous
>                 plan was heavilly invested in DEC stock, and thus suffered
>                 a negative return on assets for many of the recent years 

From past Form  5500 filed by Digital, there is no Digital stock in the
pension plan.  (Technically there are  some shares that may be held as part of
an indexing strategy.)

Could you cite your source of this information?

Gim

Re: .25
>         Under the old pension plan, you were "guaranteed" (I guess that's
>     not the right word) a fixed income at retirement, and the amount was
>     adjusted each year based upon your last 5 year's salary.

That's not correct.  Under the old plan, the formula (using Standard
formula) was as follows (from an old VTX file):

o  Replace every year's fiscal base salary on or before 1989 with the
   average fiscal years' base salary for the years 1985 through 1989.

o  Multiply each year's new total by 1.5% to get your benefit for each year
   of benefit service.

o  Total the Benefit per year column to get your annual pension benefit.
   Dividing this number by 12 gives your monthly pension benefit, payable
   at age 65.

Gim
    

  Being on the left coast, I probably won't see anything in the mail for a few
more days but based on what I've seen in here and in digital_investing, this 
new plan has some benefits.  The major benefit is the portability of the fund 
when you move on to a new employer.  We've all heard about companies that 
have pension funds that disappeared, health benefits for life that disappeared, 
and layoffs that occurred shortly before an employee is due to retire.

  How many of us really have the job security that would allow us to retire 
with a full lifetime pension?  I know I wasn't counting on having either a 
pension or social security.  Even if this benefit turns out to be less robust 
than the current plan, it's something that we can now count on to add to our 
other savings and investments.

Just my 2 pennies.

				SQ

    
    Having just received my package in the mail, I did the calculations
    that I recommended in note .-several.
    
    Somebody better do the calculations for themselves and check me on
    this.....
    
    If I am doing this right, then assuming
    
    	- Retirement at 65
    	- Starting balance as shown in my package
    	- A 7% putative return on investment, compounded annually untaxed
    	- A monthly payment beginning at age 65 that is equal to the
          "guaranteed benefit" under the old plan
    
    Then,
    
    	My pension account would run out at age * 100 * years.
    
    As to the hypothetical "raise / pay-cut" calculation that I
    recommended,  assuming 88 years to mortality (which is pretty typical
    for the side of the family that I get my physical traits from),
    then
    	
    	To have my account last until I am 88 would require about a 2.4%
    	contribution to the account by Digital until I retire, which
    	works out to an effective 1.6% raise versus the current plan.
    
    Hmmmmm.......   Absolutely fascinating.
    

    
    This is beginning to maybe look pretty good, but all is not clear yet
    (and my figures in .-1 haven't been independently verfied, and may be
    bogus).
    
    The small print on page 11 of the package says
    
    	The Pension Plan provides a predictable, guaranteed
    	benefit........ We make investment decisions and assume
    	all investment risk associated with the pension plan.
    
    I really can't figure out what this means in the context of a
    personal "account" that grows according to some varying annual return,
    from which your benefits are paid out at retirement.
    
    For example, what happens if the actual annual return drops to 1%, and
    you live to be 120?
    
    Can't quite reconcile all of this yet....
    

    I received my packet, and was surprised at how small the current plan
    lump sum value is after 17 years....I recalcuated 17 years of wages
    at Digital, and the amount in my lump sum came to about 4% of the total
    17 year wage amount.  Just 4% after 17 years seemed low.  The 3rd
    special opening balance formula was more than 100% higher, and maybe
    by coincidence, was 100% of my current annual wage.
    
    I guess I just had a vision that after 17 years, the amount in my
    lump sum value would be higher.
    
    Mark
    

    You weren't alone.
    
    Jim C.
    
    

What they probably mean is . . .

  The Pension Plan provides a predictable, 
                              ===========
        Predictable on a yearly basis, in that they set the interest rate
        for a year at a time.  Also "predictable benefit" in the sense of
        the next point:

  guaranteed benefit...
  ==========
        Guaranteed (and predictable, too) in the sense that you can take
        your pension as a lifetime annuity (actually one of three types of
        annuity) that pays you a fixed amount per month.  In fact, the
        documents state that the law requires you to take a joint with
        survivor annuity if you're married unless your spouse agrees
        otherwise.

  We make investment decisions 
          ====================
        Unlike SAVE, employees have no choice in how these funds are
        invested.

  and assume all investment risk associated with the pension plan.
                 ===============
        Also unlike SAVE, Digital sets an interest rate at the beginning of
        the year (July 1) and guarantees that funds in the plan earn that
        rate.  If the actual investments earn less, Digital makes up the
        difference.  I don't know what happens if the investments earn
        more.

    It seems clear the main thrust of this is to make pension money
    portable. DEC has no long term responsibility to past or present
    employees. I think it is a real benefit improvement to employees.
    
    I suspect it is also likely to be cost savings to DEC. They move the
    whole lump of pension assets to Benefits Express (whatever the real
    company name is). BE credits it out to each indiviual, but still has
    one lump of assets to manage. If they can make over the required
    interest, for the first year 7.13%, then I suspect that covers the
    guaranteed interest DEC is promising. If they make more, I suspect
    there is some profit sharing between DEC and BE that DEC uses to offset
    its required 4% contribution. Net outflow to DEC is likely lower. If
    the economy changes and its not a saving, then DEC just changes the 4%
    to whatever lower number they wish.
    
    Note on the last page of the brochure an answer to a question that
    notes DEC does not pomise this or ANY (where any is in red letters)
    benefit will remain unchanged.
    
    I see this as a real benefit. After 27 years here I an rather hooked
    into the pension plan. Now the money is in my account, Im more free to
    consider other options. Loyality to the company takes another big hit.

    
    Is the interest rate set by (T-bill avg) + 1%?  
    
    Is this a commitment?  The docuemnt seemed a bit vague?
    
    How has the base T-bill rate done rel. to inflation over the last 30
    years?
    
    Jon
    

     re [.gim]
>From past Form  5500 filed by Digital, there is no Digital stock in the
>pension plan.  (Technically there are  some shares that may be held as part of
>an indexing strategy.)
>
>Could you cite your source of this information?

    I'm embarrassed to admit that I might have been wrong.   My "source"
    is the DEC 10k-405 filed on 9/22.  (found as an edgar hyperlink for the
    symbol DEC from the secapl quote server on the web.)  Lots of
    interesting reading there, as well as a good cure for insomnia.

    
    The text in question (note G:) says in part:
     
      "The assets of the plan include corporate equity and Debt securities
       Government securities and real estate".
    
    Looking more closely,  the word "corporate" isn't capitalized,  but
    on my initial reading, I assumed it referred to DEC.
    
      Interestingly enough,  under "significant actuarial assumptions" 
    (as of last july),  the long term rate of plan return was listed
    as being 9%.  The rate quoted in the brochure was 7%,  which may just
    be the result of a conservative fudge factor.
    
      In any event,  I really feel like somebody's trying to zing a
    fastball by me.  20 days' notice isn't much time to really understand
    the implications of something as complex as this (and something which 
    has life long impact),  and the glossy brochure did little to ease my 
    misgivings...
    
    						-al

    I may have missed sonthing, but I did not read anything about
    the ability to continue medical, dental and life insurance under
    this new plan.... As we could elect to do under the old plan..
    
    JJ
    

    >                20 days' notice isn't much time to really understand
    > the implications of something as complex as this (and something which 
    > has life long impact),  
    
    We can't do anything about it anyway, so why does it matter whether the
    notice is 20 days, 200 days, or 2 days?  I've got 17 years to go before
    retirement...that's enough time to figure out the implications.
    
    As Ron said a few notes back, the biggest implication seems to be that
    one's pension is now much more portable.  
    
    To know whether it will be a net gain or loss 17 years from now vs. the
    current plan would require predicting the future. Yogi Berra said it was 
    hard to make predicitions, especially about the future.
    
    I would like more detail on the lifetime anuity payout option though.

This "CASH ACCOUNT PENSION PLAN" did not mention anything about the medical
insurance, is it still part of retirement package ?  Anyone has info on that ?

JS

    If i was planning on retiring today, should i wait till March 1st?
    
    Really need an answer to medical benefits question. Also if i leave
    Digital today, can i cash out on March 1st?
    
    
    
    thanks
    
    steve

    I have just read the stream of messages associated with the new Cash
    Account Pension Plan in this Conference.  Lots of emotion involved, as
    well as a justifiable skepticism towards the company and its motives. 
    Ever since Digital announced that it would contribute directly to our
    Save plans, I have been stating that it would scrap the existing
    Pension plan, and replace it with something less costly to the
    corporation.  Quite frankly, I thought it would be worse than what I am
    seeing here in the brochure that arrived in yesterday's mail.  Let me
    put in my thoughts, some of which have been echoed by previous noters
    in this space.
    
    -How many of you have truly based future spending habits on a potential
    pension payout from Digital?  I for one have never "assumed" that I
    would receive anything directly from Digital or the Federal government,
    but would rather have to survive on what I could gather through my own
    resources.  If there was anything else, fine, but it has never been
    depended upon.  This new plan, which replaces a vague defined payment
    plan that Alan Greenspan could probably not decypher, is a welcome
    change.
    
    -Although the brochure is admittedly a marketing tool (did anyone
    expect to receive a brochure saying we are scrapping the existing plan
    in favor of a sh**** plan?), it does contain a lot of useful data. 
    Granted, we are in a time that no investment is guaranteed - but how 
    many of your own personal investments are?
    
    -The caveat of protecting near-term retirees (within five years) by
    calculating benefits under the old and new plans, and paying out the
    more generous of the two, will help assuage the fears (but perhaps not
    the distrust) of these current workers.
    
    -Receiving monthly statements, ala the SAVE plan, will help overcome
    the mystery surrounding what is available at retirement.  It may also
    help consumption-oriented individuals save more of their hard-earned $
    to fund their own retirements, so individuals who have sacrificed will
    not be asked to do so for another class of future retirees who did not.
    
    -I admittedly am disappointed in the guaranteed return, currently 7+%,
    that will be paid on the account.  I would much rather direct the
    investment of this money myself, particularly since this past year saw
    me gather in returns of 50+% on one retirement account I have (check
    out the 1995 return of the PBHG Growth fund.)  Even taking in the
    occasional stumble of certain mutual fund investments, it will take
    quite of few years of 7% returns to equal 1995's average of 30+% on
    Index 500 funds.  Perhaps this will change sometime in the future,
    making this retirement money more akin to a self-directed IRA.  On the
    other hand, Digital may also be justifiably concerned from a fiduciary
    standpoint, and its potential legal liabilities, if it wanders away
    from "safer" investments.
    
    -Portability of this investment is a great feature.  Many of us know,
    whether one wants to admit it or not, that we will not close out our
    careers at Digital.  Being able to roll this $ out into a self-directed
    IRA, or transferring it into the SAVE account if you so desire, is a
    powerful change.  Do that under the old plan.
    
    I'll end and let others take up some of your valuable time.  Make sure
    you look dispassionately at this new plan, and how it fits into your
    future.  I believe many of you will be pleasantly surprised, again as
    some of the previous noters in this string have been, when you read the
    brochure.
    
    Chuck
        

    	While I may not have "based future spending habits on a potential
     pension payout from Digital", I did look very closely each year at
    what I could expect to receive at retirement (the monthly figure,
    provided with each retirement update).  I asked the simple question,
    "Can I survive on that comfortably".  I sumbit that this is an easier
    question to answer than the same question asked with only a current
    lump sum amount (plus projected increase) over not a small number of
    years - with an unknown interest rate.  It takes rather an interesting
    computation to figure out what I can expect to have available (monthly)
    under the present scheme.
    
    	I am disappointed in the new approach, and with the complete break
    with the past.  Notice that over many years (17) DEC continued to allow
    the 1979 "grandfather" formula in addition to the later formula(s) for
    those who happened to have been with the company in 1979.  I would have
    liked/expected Digital to do the same this time.  If the new plan is
    "better", the old plan(s) would have been allowed as alternatives. 
    This tells me all I need to know about whether I'm better off now.
    And I ran the actual numbers for myself at varying interest rates.  At
    3% I'm in big trouble.  At 9% I can live forever (or longer).  It
    takes about 7% to break even with the old plan (warning - I did a very
    rough calculation!).
    
    Cheers!
    Dave Eklund
     
    

    .51
    
    >>It may also help consumption-oriented individuals save more of their
    hard-earned $ to fund their own retirements,<<
    
    Assuming that you earn enough to be able to "save more of their
    hard-earned dollars."  This whole change is a bitter pill for those 
    of us who have not been earning an engineer's or manager's salary and 
    have stayed with DEC for 20 years because the company "promised" a life 
    time pension; even though outside companies paid better wages than DEC.  
    In spite of having saved every penny I can toward retirement, I had better 
    not now plan on living longer than 66, 67 if I count in my SAVE plan.
    

    From my reading, it seems that new employees and about to retire
    employees should be cheering.  I'm not so sure about those who have 10+
    years with Digital and far too long till retirement.
    
    Since the old plan pays most of its benefit into the retirement account
    toward the end, (or near retirement), those who are ready to retire
    would be foolish not to stay with the old plan.  New employees see
    their retirement account grow consistantly, (i.e. - a fixed percentage
    per year with a 4% salary kicker versus the old plan whose growth was
    largest during those years right before retirement).  For those in the
    middle, who I believe fair the worse, have a lump sum starting balance
    which is very low based on the weighted contributions of the old plan. 
    After 15 years with Digital, I thought my starting balance would be
    much higher.
    
    Steve

I think that this is, in general, a good move.  The biggest concern
I have is around the 'Digital will make your investment decisions
for you' part.  Granted, this has been the way the pension plan has
always worked, but with this new 'cash account' scheme it seems
that it would be fairly simple to let the employees make their own
decisions regarding investment options.

Clearly, an emplyee who is approaching retirement age has very different
investment concerns (stability) than a new college hire who will be
working for 40+ years (GROWTH!).

I myself, plan to continue working for another 30 years and don't 
consider a guaranteed 7.1% annual return very reassuring.  I hope that 
those responsible for the administration of this plan will take the 
concept one step further: 
 - provide a fixed, guaranteed vehicle for those employees who need/want it
 - provide alternative vehicles which address the needs of others.

It would seem natural to tie this into the SAVE program if legal/regulatory
issues don't get in the way.

Let's get the discussion started with the benefits folks to see what can 
be done.  I'd be glad to participate; does anyone know how to start?

Tom Lemire

    Although one can't choose how the pension fund is invested, this
    way of looking at it may open up choices in other areas. This 
    structure may tend to give more latitude in one's SAVE plan choices,
    for example.  I may now be more inclined to contribute less to the 
    Stable Value fund, since the pension fund now more clearly serves 
    as the "stable" portion of a sound retirement invenstment plan.
    
    Figure (for example) 10% contribution to SAVE + 4% contribution to 
    pension fund, the pension fund is then 4/14, or 28+% of one's overall
    retirement investment portfolio.  
    
    
    

    
    1.5 years ago I wrote a note predicting that we would be cashed out of
    the pension plan.  I was surprised it didn't happen in Q4 95 when
    Digital really needed the cash.  I would have done it if I'd been in
    Mr. Palmer's shoes.
    
    Financially, I'm unwilling to count on assets I don't own, which
    included Digital's pension plan, US social security and inheritance
    from a long lost maiden aunt.  Now the plan is in my name and it's
    somewhat portable. 
    
    Digital's pension plan was only a promise to pay X $ to me in twenty years.
    It didn't promise that the monthly payment would be enough to pay for 
    a phone call.  As the baby-boom generation retires, we'll have 2-3 workers 
    per retired person.  It won't work.  Congress can fix it by cutting 
    benefits or inflating the dollar to effectively cut benefits.  Digital's 
    pension pay out is in today's dollars.  Who knows what it will buy in 20 
    years?  The yield on the new plan should cover some inflation risk. 
    
    I'm pleased to have the money in my own name. I'm glad to be able to
    take it with me if I have to leave.  The amount is bigger than I
    expected.  A year ago I figured out the net present value of my
    retirement annuity.  It was $2,000 lower than option #1.  Option 3
    is much better.
    
    This program is better in its death benefits.  The old program paid
    nothing to my wife if I died before retirement and, at best, half after
    retirement.  The new program gives her what ever is in the account.
    
    I would like to be able to invest my account like we invest in the 
    "Save" 401K program.  As an investment, the new program is like a safe bond 
    fund.  With 20 years to go, I'm ready to take more volatility for a better
    return.
    
     
    

My view has been that the pension has been a "conservative" investment, which
is generally recommended to be at least a part of an overall retirement
strategy.  The other funds I have invested for retirement are generally in
riskier (and therefore higher yielding) investments.  I never did have a firm
handle on just how to consider the pension in my planning, now it is much
clearer.

I haven't yet received my packet so I haven't been able to crunch the numbers
yet.

				Steve

    
    
    	I haven't gotten my information in the mail as of yet.  So, does 
    	anyone know if this change applies only to current employees?
    
    	What about those fully vested folks who left the company,
    	voluntarily or otherwise?  Will they now be given the option of
    	taking their pension dollars and rolling them over to an IRA,
    	or are we the only ones who will have that option?
    
    	Thanks,
    
    	Diane

    
    I contacted the administration group of the new plan.  "There is no
    option".  On March 1, the old plan $$$'s are transferred into the new
    plan account in your name, and they are invested conservatively.  No sense 
    in complaining.  I see the real downer as not having the flexibility
    (such as we have in SAVE today) to manage what investment portfolio we
    choose, and be able to re-allocate the $$$ in the new account to the
    investment(s) of your choice.  Take for instance the last 12 months 
    the Equity Index Fund (in SAVE) returned a nice 25%.  I quess DEC
    cares about us so much that they don't want us to blow what they
    depodited in our name for us all these years.  "Are you buying this".
    
    
    Cheers,
    
    BT   

    Mine Pension book came in the mail yesterday, but I've not read it.  If
    you haven't received yours yet, you should over the next few days.

I don't know why everyone is so confused and paranoid about this change.  It is
long overdue.  My husband has had a similar "cash" component to his pension
benefit for a long time.  The administrators of his plan issue a report to him
annually, rather than quarterly.

They also state that this cash amount can be listed among one's assets, as would
the cash value of an insurance policy.  I was surprised that Digital did not
tell us the same thing.

Elaine

>I was surprised that Digital did not tell us the same thing.

Maybe there was a reason 8^)

	mikeP

    I feel somewhat better about this, having just burned up about
    15 minutes on the phone with Benefits Express, this time having
    reached someone who could tell me actual numbers and details.
    After getting over the shock of finding out that my opening
    balance after approx 15 years of employment was half my current
    annual salary, I found out that, at least for people in my age
    group (I'm 52), there are guarantees that what would have been my 
    benefit amount under the old plan will still be in place as a
    guaranteed minimum.  At least, if I understood this correctly.
    Plus it extends that guarantee in an increasing fashion over the
    next 5 years of employment in the way that the old plan would have
    grown the benefit.
    

    
>    	I haven't gotten my information in the mail as of yet.  So, does 
>    	anyone know if this change applies only to current employees?
    
>     	What about those fully vested folks who left the company,
>     	voluntarily or otherwise?  Will they now be given the option of
>     	taking their pension dollars and rolling them over to an IRA,
>     	or are we the only ones who will have that option?
    
The brochure doesn't say, but I called Benefits Express and they tell
me that the change does NOT affect former employees.

I was told that anyone who was an employee on or after December 18, 
1995 is eligible.

John

    re: .64
    
    > After getting over the shock of finding out that my opening
    > balance after approx 15 years of employment was half my current
    > annual salary...
    
    How is this possible?  Isn't the formula for 15 yrs something like
    15 * .06 * current salary?  Seems that should be more like 90% of your
    annual salary.
    
    BTW, I can't figure out how they got the number they got for me.  Does
    anyone know if they round off your years of service to the closest 4
    months or something?  The only calculation that worked out cleanly for
    me was based on 8 2/3 years of service.  And that's exactly 8 2/3, i.e.
    8.6666667.  This is off by several months in one or the other direction,
    depending on whether they're calculating based on adjusted years of
    service, or time since hire date (I was hired as a co-op so I have a
    few months that probably don't count since my hire date).  I recall
    that my 'vestedness' was based on hire date, and not on adjusted years
    of service, but this may have been an oversight.  
    
    And it all seemed so simple from the brochure!
    
    	Steve

    I was also wondering about the ex-employee, and talked to one last
    night that was more than slightly curious. He had not yet received any
    mail.
    
    It seems to me they must be included, else DEC is still in the business
    of runing the old plan. They have an obligation to 60K+ people under
    that plan. There are laws that protect ones equity in pension plans.
    
    My view, as a 27 year employee is a gigantic relief. Now the money is
    in my name, and DEC fate is less important to mine. Of course, now
    Benefit Express is investing my money, so I guess I should worry about
    their management.
    
    And that damn GATT legislation would have cost me dearly when I want to
    retire, assuming I want a lump sum, in a couple years.

    
    
    	re: .65
    
    	Interesting...that must mean that Digital will be running two plans
    	for as long as there are ex-employees that are vested and taking
    	benefit of a pension.  This could be decades!  
    
    	For one, my husband had some 19 years as a DECcie, before he was
    	summarily laid off, and isn't planning to retire for some 10-15
    	years from now.
    
    	I may have to call Benefits Express myself once I get the stuff.
    
    	Diane

    
    	I've read this string of notes, I myself was also shocked/curious
    that my lump sum payout in the old plan was really low.
    	For those who want to control where there pension money gets
    invested, just like SAVE. If I'm not mistaken the government doesn't
    allow it. It is a pension plan, the money HAS to be GUARANTEED.
    Sticking it in something like SAVE, could ruin a lot of peoples
    retirement plans if the stock market crashed. The 7.13% is based
    on T-Bill prices. Each July a new % will be calculated, by taking
    the average T-Bill interest for the month of June. This sounds like
    BE will take our pension money and buy government T-Bills. I'm not
    quite sure but aren't T-Bills guaranteed? This is where the
    GUARANTEE comes in on the interest.  In any case the feds won't let
    them run a pension plan like a SAVE plan. A pension plan is suppose
    to be secure, not potentially risky like a SAVe plan.
    	From someone who is still under 30. A big change I like is that
    my beneficiary gets ALL the money I have accumulated, if I die before
    retirement. The old plan, nothing was paid out and Digital got the
    money.
    
    Ron

Think about this ...

Digital is going to save millions ... I think at our expense .
Someone correct me if I am wrong !!! Pleaseeeeeee ssss

Example...
If an Employee makes $40,000 this year then ...
	Under the Old Grandfather Plan ...
		Digital would promise to pay that employee $705 per 
		year after age 65 for the rest of his/her life
		$135 + ($30,000*1.9%) = $705
	Under the new plan ...
		Digital makes a one time contribution of $1600 ... period

A person at Benefits Express that I spoke with confirmed with me that
the 'Estimated Annual age 65 Pension' is calculated based on contributions
by Digital up to the current date.

Previous Benefit statements we have received presented an 'Estimated Annual
age 65 Pension' based on an assumption that the employee continued to work
for Digital until Age 65. I have 25 years to go and have computed that my
Projected Age 65 pension would be 3.5 to 4.5 times greater (depending on
salary projections) than what is advertised in the new pension plan 
statement.

So when you compare the two programs we should project out what the pension
benefit would have been at age 65 and deplete out projected account balance
at age 65 at that rate to see how long it would last.

Depending on the rate of interest ... 
If I deplete my projected account balance by my projected benefit under
the old plan then... my $$$ Well will run dry in 15-20 years and then
nothing will be left versus under the old plan I will continue to receive
my benefit until ... gulp ... the end.

    I would believe that the lump sum amount would be the net present value
    of a payment stream beginning at age 65 at a conservative investment intere
    st rate
    as of March 1---in addition actuarial tables come into play --so in
    determining the lump sum they would assign a life expectancy to you
    based on your  sex (males live to age 79 according to those
    tables)--your expected payment stream would be 14 years. It doesn't
    matter whether you live 50 years after retirement or 2 years --they use
    14 years for males to determine net present value
    
    rick 

What a Morbid subject ....

Under the old plan I could elect a joint survivorship(sp) benefit.

For a trade off of a little less of a pension benefit ...
both my wife and I would have some guaranteed pension benefit
no matter who went first. The benefit would continue until the
both of us met our demise. 
My bet would be that together or each individually we would collect more 
than the value of our projected account under the new plan.

However under the new plan if we both die right after I retire then
the kids make out great !!! ... Don't tell them ! 

    The net present value of a pension is torn to shreads by the time to
    retirement.  
    
    If you use the Future Saver program Digital sent out last
    spring, you can figure out the lump sum value of your retirement
    benefits.  It's about the same as option #1. Put in the smaller number 
    from the last pension report. This is the one that says the amount you 
    are really owed.  The large number is based on the assumption you will 
    work for Digital until you retire.  Tell the program you are 64 and ask 
    for a lump sum.  Divide by (1+i) ^n, where i= interest rate and
     n= number of years to retirement. To make it easy, at 7%, divide by 2 
    for ten years to retirement.  Divide by 4 for 20 years to retirement.  
    
    Digital's old pension plan was typical of plans designed in that era. 
    It was heavily loaded toward the last few years of work, so the company
    didn't have to put much cash into the fund.  When it was designed,
    the aveage Digital employee was in his/her 20s-30s and the company
    hired anyone who could fog a mirror.  It didn't cost much to fully fund
    a pension plan because no one would collect any time soon.  Times have
    changed, we're older.  
    
    The new plan hasn't taken anything from us.  It was never really there.   

The brochure also mentions that an updated version of the Future$aver
program is available which "reflect[s] the new Cash Account Pension
Plan, as well as 1996 tax and social security information and the new
matching contribution to SAVE". I called at 6:00pm, got a representative
in under a minute, and ordered the update.

-stephen

    Lets take a future example sample...
    
    Joe gets hired this year at age 41 at a salary of $50000 and lets just 
    say that he doesn't get any raises ever (not so far from the truth).
    
    Under the old plan Joe would acquire a $750 Annual pension for
    each year worked till age 65 (24 years = $18000 / year pension).
    
    Under the new plan Digital would contribute $2000 (4%) to his account
    each year for a total of $48000 ... he would earn compounded interest
    @7.13% = $76500 for a grand total at age 65 of approx. $124500.
    
    At age 65 ...
    Joe continues to earn 7% on his accumulated amount but withdraws $18000
    from his account each year (like the old pension plan would have paid) ... 
    Result...
    Joe would deplete his account before turning age 75 (10 years).
    It's All gone !
    
    Also note ... 
    Joe's $124500 is dependent on earning 7% which is not guaranteed.  
    The $18000 under the old plan is not dependent on interest rates.
    
    
    
     

    The opening balance calculation does take the edge off of the impact
    to the long term employee. I have 18.75 years .
    
    In my case
    If they used the current formula for my opening balance I would have
    depleted my account by age 73 (8 years if I withdrew at the rate of the 
    old pension benefit). But since my opening balance under the special formula
    is larger (Digital values long-term employees) I calculate that it
    will extend my withdrawals until age 82 (17 years).  
    But then ... 
    I could have afforded to live to be 100 under the old pension :<
    
    

It's really depressing to have so many people be so negative and cynical.
Rejoice!  This is good news!

*  The old pension plan was LOUSY.  The new plan is substantially better.

   Under the old plan:
     If you worked for 30 years at Digital you got less than HALF your AVERAGE
     salary when you retired at 65.  NO adjustment for inflation.

   Under the old plan:
     If you worked for 10 years at Digital just out of school at an
     average salary of $30K/year you'd get around $5K/year pension.
     BUT you'd have to wait 30 years for the pension and the pension
     would not change during that time.

   Under the new plan:
     If you worked for 10 years at $30K/year you'd have a kitty of
     $12K that would have been earning compounded interest during
     that 10 years and could continue to earn interest for the next
     30 years.  You'd have a very nice pile of money to buy an annuity
     with.

*  You have a real death benefit.

   Under the old plan, there were many restrictions, eg only a spouse
   would receive anything, it was only a fraction of your pension, ...

   Under the old plan, if you were a single parent raising kids, your
   kids got nothing from your pension if you died.

   Under the new plan, your beneficiary gets the whole amount.

*  You can take it with you.

   Under the old plan, if you left the company, your money simply sat 
   under the Digital mattrass.

   Under the new plan, you can take the money with you and invest it
   however you want.

*  You are being given a free bonus.

   Digital has calculated how much your pension is worth today in present
   dollars (not much if you're young), and depending on your years of
   service and recent salary, is giving you credit for somewhat or
   considerably more money.  

*  There is no choice for how the money is invested, but there was no
   choice in the old plan.  The money is likely to earn a conservative
   but reliable rate of return.  Something most folks would choose for
   their 'retirement' money anyway.

-------------------
To respond to earlier notes:

>       1)  The "enhancement" you get is arbitrary, and may not represent
>                a full distribution of the value of the old plan assets.

so what?  We were not entitled to the value of the old plan assets.
I'm pleased that Digital chose to assign us a larger percentage than
what we were allocated under the old plan.

>        2)  The investment rate of return is  7%, "set every july"  (But
>                 no mention of what index, if any, it's tied to.  (Since

The brochure DID say - Treasury note rate plus 1%

>         3)  There is no mention of whether the pension is governed by
>                ERISA laws and federally guaranteed as the old one was

I believe that the plan IS covered under ERISA.  (An oh by the way, I
certainly would not be comfortable depending on federal insurance.  I'd
rather have a fully funded plan.)

>   My big question is whether you can stay in the old plan,  or would
> you be forced into the new one.  (And likewise,  if forced into the new
> one,   can you "cash out at termination"  and do better rolling it into
> an IRA, or would you have been better off being able to draw a pension
> at age 65 under the old rules?    (And what happens to people who terminate
>    before 3/1?)

no - current employees can not stay in the old plan (although there is a
provision for ensuring that folks near retirement will get at least as
much as under the old plan)
yes - you can 'cash out at termination' 
how well you do relative to the old plan is dependent on many factors -
I'd easily bet on the new plan

>    So, you work 25 years and they put a year's salary away for you...

The point is they're giving you a bonus.  In my case, my current pension
value was only 1/3 of my current salary.  Because I've been here 15 years
I now get my entire current salary (.06 * 15).  By the way yours should
be at least 175% of your salary (.07 * 25).

>      In any event,  I really feel like somebody's trying to zing a
>    fastball by me.  20 days' notice isn't much time to really understand
>    the implications of something as complex as this (and something which
>    has life long impact),  and the glossy brochure did little to ease my
>    misgivings...

I'm impressed that the company was able to keep it as quiet as they did.
Not having much notice means that folks weren't trying to play games, such
as trying to get raises in before the change, and people postponing leaving 
just to get the lump sum, ...   

>    If an Employee makes $40,000 this year then ...
>         Under the Old Grandfather Plan ...
>                 Digital would promise to pay that employee $705 per
>                 year after age 65 for the rest of his/her life
>                 $135 + ($30,000*1.9%) = $705
>         Under the new plan ...
>                 Digital makes a one time contribution of $1600 ... period

It all depends on the employee's age!
If I'm 25, you better believe that I'd take the $1600 today, rather than
$705/year for life 40 years from now.

    
    .78 makes an interesting point.
    
    In .-many, I noted that according to my calculations, my pension
    account under the new plan would last until age 100 years, assuming
    constant salary until age 65, identical retirement benefits versus the
    old plan 65, and a constant 7% return.  This seems pretty reasonable,
    and will probably leave something nice to my heirs unless medical
    science does some surprising things in the next 60 years.
    
    However, as .78 notes, my analysis begins with a nice starting balance
    (which is larger than my current annual salary, and grows by 4% each
    year).
    
    Is this a real bad deal for 30-ish / 40-something people who join the
    company after next month and don't get the big initial balance to
    jump-start their compound interest?

    .81,
    
    	If we can take a lump sum and transfer our money to someone
    elses pension plan if we leave. I would think a 30-40 year old
    person who was working somewhere else for 10-20 years. Already has
    a lump sum of money in another companys pension plan. If there old
    company lets them take the money, like Digital does now. I would hope
    that Digital would let them take there lump sum and deposit it into
    Digitals pension plan if they want. If they can't or they don't want
    too, then yes there Digital pension isn't that great.
    
    Ron

    Not to be cynical, but...
    
    What does Digital get from all this?  
    
    They still seem to be in the Pension business for all the ex-DECies 
    that haven't yet retired.
    
    They have to come up with cash now to fund the accounts since any of
    use may leave the compnay tomorrow.
    
    They have to pay Hewitt to run this plan.
    
    				-John
    

.75> Under the old plan I could elect a joint survivorship(sp) benefit.

The booklet explains that the old full life payouts are still available:

	Life time payments to you until you die.

	Joint survivor to spouse until their death.
	Reduced benefit to you based upon % option:
		50%    benefit to survivor
		66.67%   "
		100%     "

	Lump sum (now you can compute how big that lump is going to be)

The law requires you to take the Joint survivor option if you are married
at the time of retirement unless the spouse agrees to another option in
writing.

The booklet clearly says that you can select the option when you *leave
Digital* whether or not you are retiring when you leave, that's the "take
it with you to invest if you like" part.

I guess I don't understand all the FUD floating around.  This seems like
a pretty good deal.

Yes, I've been around for awhile (22.5 years) and the initial lump
calculations help.  Looking at retirement planning for folks just getting
started, the company is putting up

	4% salary in pre-tax dollars for retirement cash account
	2% salary matching (again, pre-tax) available to SAVE.

to get the maximum benefit of 2% from DEC, I'm pushed into putting away 6% of
my own money (pre-tax again).  Putting away 12% per year (1/2 yours, 1/2
company match) is not bad if you're in it for the long haul.

Chuck

    I whipped off a simple VAX BASIC program to figure out the numbers.
    Fill in values where noted.  No implied warranty for fitness of use or
    elegance of programming, or of correctness....
    It's pretty ragged in that it assumes a yearly lump-sum withdrawal,
    for instance, instead of calculating it by the month, but the effect
    of that is to make the numbers slightly conservative.
    
1 A =    ! put current age here
5 E = 100  ! put final age here
6 R = 65   ! put retirement age here
10 L =   ! put in starting lump sum value here
20 S =   ! put in current salary here
25 w =   ! put in how much you want to withdraw per year
30 I = .07 ! anticipated interest rate
40 C = .04   ! Digital's contribution percentage
51 print "Interest rate assumed: ";I
52 print "Yearly withdrawal assumed: ";W
56 print
60 FOR N = (A+1) TO R
70 L = L + (I*L) + (C*S)
80 PRINT N, L
90 NEXT N
95 print
100 FOR N = R TO E
110 PRINT N, L
120 L = (L-W) + (L-W)*I
130 NEXT N

re.-.2

Is conversion to this new plan an elective of the existing employees?
Can we opt to stay with the old plan ???

It looked to me that participation in the new plan was mandatory ... 
no choice except for those age 50 or older on February 29th,1996

Re: .86

You don't have a choice.  You're switched to the new plan if you're employed
on March 1.  Even those 50 and older are in the new plan, but there is a
guarantee for five years that their lump sum payout will not be less under
the new plan than the old.


I ran the numbers through Quicken's retirement planner, and it doesn't look
like a bad deal for me (24 years till retirement). 

				Steve

    Im not sure how anyone sees this as a bad deal. You still have a
    guaranteed pension plan, it still offers a lifetime payoff option if you
    wish.
    
    But, you now have the flexibility to take it with you if you leave.
    Your estate gets it if you die even before retirement. And even  if you
    take the lifetime payout option, and die before you have used all the
    ammount, your estate gets that.
    
    I also suspcet its better for Digital in some way (likely a closely
    kept secret among a few bean counters) since unlike DEC, Digital doesnt
    seem to be in the mood to just do nice things for employees. 
    
    Its a real improvement for employees. Enjoy it.

It's an improvement for many employees, not all. In particular, those who
work for Digital only a few (less than 10) years before retirement make out
like a bandit under the old plan, not so under the new.  However, I think
that the old plan was unreasonably generous to such people and the new plan
fairer.

				Steve

RE: .1
It's only a bad deal when you compare it to the old benefit. 
For those of you who thought that the old plan was bad ... 
the new plan does seems to provide less of a payout benefit at your 
age of retirement.

Yes, we still have a lifetime payoff option and yes we should always 
be thankful for what we get...
but comparing the old versus new plan the lifetime payoff under the
new plan will be considerably less than the old plan would have provided.

The benefit of portability is great but the benefit of future payoffs
leaves much to be desired.

    re:78
    
    "  Lets take a future example sample...
       Joe gets hired this year at age 41 at a salary of $50000 ....."
    
    The key assumption in this examle is that Joe engineer will work for
    Digital until retirement.  It might have been a good assumption in the
    50s but it doesn't match today's world.  Joe could quit, get fired,
    become redundant, become disabled, Digital could merge with another
    company, etc.  Few people can count on a lifetime career.
    
    Try these examples under the old and new plan:
    
    	Joe engineer gets hired at 41 and laid off at 55.  Congress runs
        the inflation rate up to 8% per year.
    
    	Jane engineer gets hired at 22 and works for Digital for 10 years.
    	Inflation is a modest 5%.
    
    In the old plan the connection between inflation and your retirement
    benefits is a PRESUMPTION that you salary will rise with inflation.
    For current employees the presumtion is tenuous.  If you leave or are
    left behind, the connection is totally broken.  Your benefits are based 
    on your salary when you left.  Inflation destroys your buying power.  
    Twenty years ago $15,000/ year was a good wage.  Now its below the poverty 
    level.
    
    In the new plan, you own the money.  The if "interest" on the fund is
    tied to Federal notes, you'll at least keep even with inflation.    
    	
        
        
    

re: Note 147.83 by TLE::REAGAN 

>    Not to be cynical, but...
>    
>    What does Digital get from all this?  
    
    The booklet says "We(Digital) make investment decisions and assume all
    investment risk associated with the pension plan".  
    
    Digital will pay us 1% over the T-Bill rate in interest.  If the pension 
    money is invested more aggressively Digital could make a lot of money.  
    
    
    If, as many people have said in the past, Digital's pension plan is over
    funded, Digtal might be able to get some of that money by converting to
    this new plan.
    
    -Bruce

    re: 88
    
    "I also suspect it's better for Digital in some way (likely a closely
        kept secret among a few bean counters)" 
    
    What's in it for Digital?  No secret.
    
    1.  Yearly pension contribution is know.  In the old plan it could
    fluctuate wildly from year to year totally outside of management's
    control.
    
    2.  Pension contribution is tied to total salary.  Predictable and
    "manageable".
    
    3.  It's a message. "Paternalism is dead. Grow up and learn to take care of
    yourself".
    
    4.  It better matches industry practice, reducing the risk we'll find
    ourselves at a competitive disadvantage.
    
    5.  It treats employees (almost) like they are viable adults (see #3)
    capable of managing their own lives. (Treat us like adults, give us
    investment options!) 
    
    6.  Cash.  Some day Digital will  pocket the unclaimed cash.
    
    
    In these notes I keep seeing the assumption "if it's good for Digital,
    it's bad for the employee".  In this case, we're both better off. 
    
    

Re:.84
Thanks for the pointer about still having the survivorship choices.
I missed those very important details!

That is what happens when a Benefit change is announced on Feb 7th
to be effective in 21 days. There is not much time time to digest
the information and understand it's impact. 

Re: .78
Trying to understand Annuities versus Lump Sum
-----------------------------------------------------------------------
The basis difference in comparing these 2 plans is that...
  - under the old plan Digital tells you the pension annuity benefit and
    the lump sum value is a calculation based on the future annuity
    payments and/or life expectancy.
  - under the new plan Digital tells you the lump sum value but I don't
    know what kind of annuity I can purchase with it.
I find it difficult to compare to two.
-----------------------------------------------------------------------
Under the theoretical example in .78 I figured that Joe would have
accumulated an amount equal to $124,500 in his account under the new plan.

Under the old plan Digital would have given an $18,000 /yr pension pmt.
Under the new plan Digital makes available a lump sum value of $124,500. 

Now I predicted that Joe would deplete his lump sum account in 10 years.
But this assumed that Joe would take the lump sum and invest it @7%
and withdraw amount @ $18,000 / yr.
---------------------------------------------------------
If Joe wants an annuity payment instead of the lump sum...
what kind of annuity can Joe buy/elect for $124,000 ?
Can he get $18,000/year for the rest of his life (assumming that
an insurance company would gamble that he would die before 10 years
and Joe gambling that he would last lonnnggger than that)?

I don't know how annuities and actuary (sp) tables work in buying one.
Can anyone help explain this?
-----------------------------------------------------------------------





Under

> That is what happens when a Benefit change is announced on Feb 7th
> to be effective in 21 days. There is not much time time to digest
> the information and understand it's impact. 

  If there's nothing you can do about it (short of resigning),
  what difference does it make how much notice the corporation
  provided?
                                   Atlant

    And if we do resign?

>>  If there's nothing you can do about it (short of resigning),
>>  what difference does it make how much notice the corporation
>>  provided?

I believe there are people who are deciding whether to retire today or after
March 1.  There are probably people who are deciding whether to resign today or
after March 1.  There may be people for whom a significant negative change in
the pension plan would be enough of a push to resign.  In these cases, it
probably makes a difference.

						Brian

    
    	The more I look at the better I like it. I would recomend people
    get into VTX BENEFITS_US, and look under pension. Unless you have
    been with the company since 1973. Digital currently takes your base salary
    * 1.5% and adds it to your pension. For the years from 1973-1989, take
    your average base salary for the 1985-1989 years, and use that base
    average base salary for the years 1973-1989. From 1990-on it is base
    salary * 1.5%.
    	Under the old plan, say you averaged 50K a year and worked for 30
    years. You would have ~(50k*.015)=750*30= 30K, a 30K pension after
    making 50K a year for 30 years. Yes, you would get 30K a year until
    your died. How many long term employees, actually average 50K a year
    in salary? A pension in the 20K range is probably more realistic for
    most.
     	They are now going to add 4% of your quarterly pay, every quarter.
    This 4% is not just based on your base salary anymore, it includes
    bonuses, and other forms of compensation.  Plus you are going to earn
    T-bill rate +1%, which is now 7.13%. I read in today's paper that the
    30 year T-bill rate is at its LOWEST pt. in a long long time.
    	The average life expectancy of a man is 79 years old. So figure I
    reach 85, and need to collect for 20 years. I just have to figure out
    what I need at age 65, to collect 25K a year. If interest rates hold
    at 7%, 300K is 21000 interest a year.
    
    Ron 

    Is the 4% quarterly contribution based on BASE or ACTUAL salary?
    
    Recall (in a differant note) that Digital is moving to a 'variable
    compensation' system (for example sales folk who have actually had
    a BASE pay reduction, with add-ons based upon metrics).
    
    Dave

    RE: .100
    
    All compensation, including commissions and so forth, are factored into
    the 4% payable each quarter, same as the SAVE plan.  They are very
    emphatic about that in the brochure.
    
    The only "income" that is not counted are items like recognition award
    amounts added to your W2, and ESPP amounts.  But those are not
    calculated for SAVE or anything else, so there is no mystery there
    (they are just be cautious to explain as much as possible.)
    
    Chuck

    As for the decision to retire before March 1 or not, it seems to me
    that the 5 year "monitoring" period eliminates the need for that.
    If you are within 5 years of being eligible to retire, they will, when
    you retire or after five years, add to your account whatever sum is
    necessary to equal what you would have gotten as a lump sum payout.
    
    				Steve

Uh, from personal experience, I can say bonuses are definitely counted
towards SAVE and ESPP (that is to say SAVE and ESPP contributions are
deducted from bonuses).  

        Re: SAVE

    ESPP shares SOLD count towards determining your max contribution
    level to SAVE, but it is not income from which SAVE contributions
    are deducted.

    (I'm referring to the portion of proceeds that is "regular" income
    when you sell shares held less than 18 months).

    re: .95
    
    In your example, did you keep adding 7% per year on the remaining
    lump sum as you withdrew the 18K/year?  
    

    One of the claimed side effects of balancing the federal budget is to 
    reduce interest rates by 2%. Come next year this time the yield could
    be 5% not 7.13%. Stuff that in your spreadsheet.
    
    Cross posted in digital_investing 

You expect a balanced budget to miraculously appear next year, when even the
most optimistic Republicans are saying seven years? (And if you believe that,
I have a bridge for sale.)

			Steve

RE.99
   >Under the old plan, say you averaged 50K a year and worked for 30
   >years. 

RE:>You would have ~(50k*.015)=750*30= 30K, a 30K pension after
   >making 50K a year for 30 years. Yes, you would get 30K a year until
   >your died. How many long term employees, actually average 50K a year
   >in salary? 

750 * 30 Years = 22.5K Pension / year (not 30K)

RE:>A pension in the 20K range is probably more realistic for most.

If you think that you can live on 20K / year now ...
You will need $47K+/year 30 years from now to compensate for a 3% 
Cost of living inflation rate.

RE:>If interest rates hold at 7%, 300K is 21000 interest a year.

After 30 years the value of your Pension @4% compensation +7% interest
would be $202K... The interest on this amount per year = $12k
You could withdraw $25K/year and it would last you until age 75
before it would be completely gone.

    re: .105
    > re:.95
    > In your example, did you keep adding 7% per year on the remaining
    > lump sum as you withdrew the 18K/year?  

Yes

       set flame on
      I am one of the people, who in my way of thinking, are not being
    treated right by Digital. I am 49 years old and have been with Digital
    17.5 years. The small amount that I was given to start this account
    will never be enough in the time I have left before retirement. I
    was hoping at least once a week to share a good can of cat food with
    my wife but this seems to have taken this dream from me. I am as
    usual, a day late and a dollar short, too old to be able to build
    this account up so I can retire in comfort, and too young to be allowed
    the option given to people over fifty

    Has someone seen their PROJECTED SERVICE YEARS used is miscalculated?
    Mine is by 2 years even thought the hiring date is correct.
    
    Guenther

    re: .111
    
    > Has someone seen their PROJECTED SERVICE YEARS used is miscalculated?
    > Mine is by 2 years even thought the hiring date is correct.
    
    Yes.  I called B.A. about it, and they're checking into it and will get
    back to me.  If you think there is an error, call them on it!
    
    	Steve

.112>Yes.  I called B.A. about it, and they're checking into it and will get
.112>back to me.  If you think there is an error, call them on it!
    
    I already did. Had to listen to their message system for 30 minutes
    this morning. Was told I shouldn't expect a call back before 1�-2
    weeks. 
    
    In my 3rd calculation box the projected years were 14.0000000. I don't
    expect anything .000000 here. Do others have some non-zero digits
    there?
    
    Guenther

re .110

>       set flame on
>      I am one of the people, who in my way of thinking, are not being
>    treated right by Digital. I am 49 years old and have been with Digital
>    17.5 years. The small amount that I was given to start this account
>    will never be enough in the time I have left before retirement. I
>    was hoping at least once a week to share a good can of cat food with
>    my wife but this seems to have taken this dream from me. I am as
>    usual, a day late and a dollar short, too old to be able to build
>    this account up so I can retire in comfort, and too young to be allowed
>    the option given to people over fifty

  I hope you don't take any of this the wrong way, but IMHO none of us 
should have been counting on either our pension or social security to be 
there when we retire.  Given those two very depressing thoughts, the 401k 
isn't enough either.  The good news now is that the pension (however, small 
it is) WILL be there -- something to add to your other savings/stocks/bonds/
property.

  Unfortunately, our large social security and medicare taxes make it harder 
to save more than the 401k maximum but we don't have a choice if we want 
more than cat food in our retirement.  I was very disappointed that the 
brochure perpetuates the myth that social security contributions by both 
Digital and us will be there for our retirement.  The harsh reality is that 
these are taxes that pay for current retirees and will be bankrupt by the time
we're eligible.  Social security is nothing more than a pyramid scheme and 
the big baby boom bubble can't collect.

  I'm in your age group and certainly share your frustration.  I just think 
that the new pension is an improvement over the old one: it's portable; it 
can go to our heirs; it will be there when we retire and it's fairer to the 
young (and they need something in their favor since their taxes will a lot 
worse).  The old guaranteed pension really wasn't much of a guarantee, and 
layoffs continue.  I guess the real target of my frustration is the current 
retirees.  Every time I see one of those rotten bumper stickers that proudly 
proclaims they are spending their children's inheritance, I want to scream, 
"yeah and you're spending their retirement money too!"

It must be Monday.

				SQ

Re: > I hope you don't take any of this the wrong way, but IMHO none of us 
    > should have been counting on either our pension or social security to
    > be there when we retire.  
    > The old guaranteed pension really wasn't much of a guarantee, and 
    > layoffs continue. 

I thought being VESTED was a guaranteed amount that could never be taken
away. Was I wrong? 

Was the Vested amount ever at risk if Digital went 'deep six'.
I thought that this amount was guaranteed by an outside party.

    	Well, yes, there are really no "guarantees".  Consider the
    following.  Let's say that under the old plan, you were "guaranteed"
    to have "accrued" a $1000.00 per month pension.  This meant that if
    you quit today, wait until 65, you get $1000.00 per month.
    
    	OK, so now there is this new plan.  If the question you are asking
    is, "Am I still guaranteed that $1000.00 per month?", then the answer
    is NO.  What you have instead is a lump sum amount, computed in several
    ways, but still a lump sum.  If you quit today, you have several
    additional options (like you can take it with you).  If you leave it
    with Digital, you can expect that this lump sum will grow at an unknown
    rate or interest until you are 65.  Then you may get WHATEVER amount
    this number of dollars can provide.  Depending upon the interest rate
    between now and your age 65 (and the number of years involved), you may
    be better off or worse off than before.  A low interest rate is very
    bad for you; a high interest rate is preferred (unless inflation takes
    off as well!).  The way the lump sum has been computed, you should at
    least "break even" with interest rates at about 7%, do worse with lower
    rates, and do better with higher rates.  This depends upon how far away
    your retirement is, and how long you have been with Digital.  In other
    words, the break even point requires an interesting computation with
    future interest rates a crucial factor.
    
    	I believe that if Digital goes 'deep six', as you put it, the
    pension plan money is separate, and hence still available.  That does
    not mean that the plan cannot be changed (again).  The simplest change,
    for example, might be to drop the contribution level from 4% to 3%
    to... based upon the health of the company or other factors.  As
    others have said, there continues to be no real "guarantee" as to what
    will happen in future years.
                                           
    Cheers!
    Dave Eklund
    

Don't get me wrong ...
I am NOT challenging anyone in this conference.
I think that through healthy discussion we will all benefit.
-----------------------------------------------
What I meant by my guarantee question was ...
.114 inferred that there was no guarantee under the old pension plan.

but what I was saying was that the vested future payment under the old
plan was a guarantee (Guaranteed by who I was not sure)...

    Re: 116  
    
    I believe this is not correct for everyone.  Benefits Express
    swore up and down (during two separate calls) that those of us
    covered under the five year safety net would, if we terminated
    employment up to the end of that safety net be able to elect
    an option at age 65 that would pay the old plan's "guaranteed"
    monthly amount for the remainder of our lives, where the 'old
    plan's "guaranteed" monthly amount' increased as it used to
    during that five year safety net.  Even after the five year
    time, that monthly amount would be a guaranteed minimum available.
    

    
    	For starters I have never planned for Social Security to be around
    when I'm eligibile in another 30+ years. Just imagine how difficult
    it will be for the Government to get rid of it?  Your talking years
    and years of lawsuits, until it is resolved once a case reaches the
    Supreme Court. I can see a class action suit, with every American being
    the plantiff against the United States Government.
    	Between the money I put into SS and the money Digital puts in to
    SS. It ends up being more money then what is currently going into the
    Pension plan. Yet, will get more money out of our pension fund then
    from SS. When you think about it, you realize how bad the SS system
    is setup and run since its beginning.
    
    Ron 

    
    
    
    
    Is it possible that DIGITAL was motivated to some degree to make these
    changes to the pension plan to make the company less attractive to a
    hostile takeover?    Other companies with lush (over-funded) pension
    plans have been taken over in the past, then their "excess" funds
    used to help pay off the debt incurred for the takeover.
    
    It is possible that DIGITAL is doing us a BIG favor by making these
    changes now, which make our pension more visible to us individually...
    if we are taken over in the future, it will be much harder for the
    new management to redefine (i.e. minimize) our pensions in order to
    maximize the excess funds available for other purposes. 

re .117

>Don't get me wrong ...
>I am NOT challenging anyone in this conference.
>I think that through healthy discussion we will all benefit.

  I agree completely and I hope everyone else agrees.

>-----------------------------------------------
>What I meant by my guarantee question was ...
>.114 inferred that there was no guarantee under the old pension plan.
>
>but what I was saying was that the vested future payment under the old
>plan was a guarantee (Guaranteed by who I was not sure)...

  Yes, there was a guarantee for those of us who were vested, but that 
guaranteed amount was in the cat food category.  In order to qualify for 
the really juicy package, you had to survive until retirement at age 65. 
That is what isn't guaranteed.  Sorry I wasn't more clear.  I find this 
topic hard enough to discuss verbally without introducing the additional 
problems in written communication, but it's important enough to all of us 
to keep trying.

				SQ

    Time for a rat hole:  I never have understood that cat food myth.
    You can buy normal people food such as grains, etc. to form complete
    protein more cheaply.  Maybe Benefits Express will come out with
    a cookbook next.
    
    signed,
    
    late in the day
    

Unfortunately, it is not a myth, many of our elderly Americans that have
no money resort to eating cat/dog food to survive.  It is a crying shame.

    I found it hard to believe that they could screw up my years of service
    to the point they did, hire date 2/28/77, years as of 2/29/96 =
    18.33333? I don't think so, Tim.
    
    .mike.

I'm inclined to put more faith in Social Security than many think
it deserves because of other changes that will occur as the baby 
boomers age and retire.  In about 15 years the first of the baby 
boomers will reach age 65, and the retirement bulge will last for 
20 years beyond that.  All those who have so confidently saved in 
their mutual funds and 401Ks and IRAs will be drawing them down.
Not just interest, but the principal too.
Just a demographic check, folks, but who's gonna buy the shares we're
trying to sell?  ("Will trade blue chip stocks for food.")
It's going to be a buyer's market, and the value of wealth accumulated
in the 1980-2010 timeframe is going to decrease, if not tumble.
It's not going to matter much what vehicle you choose now to fund your 
retirement then - stocks, precious metals, debt instruments, whatever.
We're all going to be looking to sell at the same time, and those
post-boomers (and late-boomers) aren't going to have a lot of free
cash to bid up the prices of what we're letting go.
The Social Security safety net will be expanded to cover the shortfall,
exacerbating the younger workers' cash position.

Put your retiurement savings directly into food now, cut out the middleman.
Yum, twenty years of beef jerky....

- tom]

    
     
      If you think the senior citizens lobby is strong now,  wait...
    
      By the time the Late baby boomers get  ready to retire,  the  
    flower children will have experienced pensionless poverty first-hand.  
    
      As the government starts looking more closely at the prospect of 
    supporting all those pensionless retirees,  I'd expect to see the 
    pendulum swing the other way, with legislation again making corporate 
    pensions attractive for employeers to offer.  (Or to put it another
    way,  it'll either be pensions or business profits taxes...)
    
    			
    						-al

    
    Am I the only one who hasn't received this package in the mail yet?
    The supposed mailing date was February 5, and I'm still waiting
    for it eight days later.
    
    Lou
    

    .124   
    
    Did you ever go out on disability.  I believe all time benefits stop
    when you are out. 

    
    re: .122 (poor folks eating dog food)
    
    I agree 100%.  I've asked my friends in the mental health field.
    They tell me that people that lose there minds go for dog/cat food.
    Sane poor folks buy a 10lb bag of potatos and take butter, salt and
    pepper from a condiment counter. 
    
    Potatos w/ butter, salt and pepper = $0.09 /pound
    Dog food                           = $0.25 /pound (canned, Alpo)
                                       = $0.11 /pound (dry, Alpo)
    
    * When you get old eat potatos/rice/ect... Skip the dog food..
    
    Jon
    

    
    Would that a potato[e] constituted a balanced diet...
    
    I hope some corporate types are catching the exquisite irony here: an
    "improvement" in our pension causes a group of intelligent and highly
    talented people to discuss the cost/benefit tradeoffs of tubers vs.
    puppy chow for long-term human subsistence.
    

    
    
    re:125                                       
    
    Good observation.  Our economy is life-cycle driven.  For the next
    15-20 years our paper wealth will balloon as we aging boomers wake up
    to the idea that we're on our own.  Uncle Sam has no money.  Our social
    security pension will be paid by our kids.  Digital and every other
    corporation will have ended their paternalistic programs to stay
    competitive.  
    
    So we'll save to make up for all the lost years and we'll create a
    great economic bubble.  It will be a great time to make serious money. 
    
    When we consume our paper wealth after we retire, it will unravel.  The 
    ballon will pop.  Look at the Japanese economy over the past 10 years
    to see what it will be like.  The Japanese baby-boom happened before WW2,
    their baby-bust happened in the late forties and fifties.  The Japanese
    economy is living through the collapse of their stock market and real 
    estate bubble.  We'll see the same.
    
    It will be unpleasent, but the world economy will not shatter.  The
    young Asian economies will be the world engine by then, preventing a
    repeat of the Depression.
    
    The next 15 years are a great money making opportunity.  After that get
    into "safe" investments and go international.  
    
    
    
    

To continue this digression just a wee bit longer...

i beg to differ. In time, there will truly no longer be a "domestic" stock 
market different from an "International" market. Economic conditions will 
play a role in determining the value of debt/equity instruments (i.e., P-E, 
Yield/Dividend rates, growth potential, etc) NOT the size of the retiring 
American investor. While this group will have SOME impact on the demand side 
of "the market", it's really [increasingly] negligable. While Domestic labor 
markets may very well [continue to] suffer, capital flows to the best 
investment opportunities, anywhere in the world.  Do you see/predict the 
decline of our economy/corporate entities (ATT, GE, IBM, DEC, GM, Ford, 
Lockheed/Martin, etc, etc, etc)? The market/economy IS global (where do these 
companies sell & make their products/services?). What % of these "American" 
companies debt & stock do you believe are owned by non-Americans? Do you 
think this % is likely to increase or decrease over the next 20 years?

Show me a "free" market significantly outside the ranges below over the last 
100 years, and I'll show you a market that corrected...up or down.

PE = 12-20, 1 yr. Yields = inflation + 1 to 5

Sure there'll be problems dealing with the boomers retiring, but predicting 
precipitous declines in the value of investments for those that planned ahead 
as a result of a statistical blip on the world scene aint one of 'em.

IMHO, of course :-)

SteveS

    >> ...pension causes a group of intelligent and highly talented people
    >> to discuss the cost/benefit tradeoffs of tubers vs. puppy chow
    >> for long-term human subsistence.
    
    Puppy Chow contains a mix of nutrients intended for the young and
    growing mammal, and thus is not recommended for Digital retirees.
    Digital retirees should instead consider Cycle 4, which is especially
    balanced for the later years in the creature's lifetime.
    
    Chris

 >    re: .122, .129 (poor folks eating dog food vs. potatoes)

 >    They tell me that people that lose there minds go for dog/cat food.
    
    Maybe they choose cat/dog food because it's the cheapest "meat"
    they can buy.

    Most Americans I know couldn't imagine an entire week without meat.
    When you grow up on meat and potatoes, you need meat for energy and
    to feel well.  I can imagine that some people might lose their minds
    from trying to live on potatoes/grains for too long! 

    -J. 

My report had my years of service as 17.41666, which is correct.

				Steve

    No problem for me then.  As I've been told elsewhere it's a small step
    to move from Spam to Alpo.  (is a ;-) necessary?)

    re:132
    
    Good comment.  The Japanese bubble grew in a pretty closed
    financial system.                     
    
     
    
      

    perhaps someone here will know.. why the cap on contributions due to 
    the GATT ?? why is my retirement the concern of a global trade 
    organization?

>    No problem for me then.  As I've been told elsewhere it's a small step
>    to move from Spam to Alpo.  (is a ;-) necessary?)

Yeah, but which direction is considered an improvement?

    RE: GATT
    
    GATT has noting to do with pensions per se.
    
    It has to do with a Congress that is used to tacking all manner of
    unrelated pork barrel onto their laws. They hung a clause on GATT that
    allowed corporations to pay off pension lump sums based on a lower
    interest rate. Hence corporations could skim off some pension money.
    
    Would be interesting to know which senators got paid off for that one. 

    Does the impending layoffs on the 19th have anything to do with the
    timing of the pension plan changes?  What will the people TFSO'd get,
    the old lump sum payoff or the new?  A significant saving for Digital
    if its the old.
    
    Or maybe its the old plus 10 bags of Cycle (2,3 or 4 depending on age)
    per year of service.

    Re. .137 & others,
    
      Japanese real estate 'values' were also, I understand, excessively
    inflated by Government policies, including subsidies for rice farmers
    which held (hold?) land prices artificially high. Thus patchas of
    farmland can be found in even densely urbanised areas, while the
    relative lack of incentive to sell up created a severe shortage of
    building land, in an already small and crowded country.
      That's not to say that demographic and other factors are not involved
    as well, but they don't tell the whole story. There are one or two
    Japanese noters around; any of them care to comment, or tell us more?
    
      Incidentally, you aren't alone in the US in having to worry about
    your pension funding. The UK government has been trying for years to
    encourage people not to rely on the (miserably low) state pension. It
    has always funded pensions in the same way that the US apparently does.
    Your pension contributions are not put into a fund to pay for your
    pension, they are used to pay current pensions. Your children's
    contributions will pay for yours, if they don't revolt. Prime example of
    Newspeak; it may be called a pension, but the truth is that it's just a
    combination of a tax and a social security handout.
    
    Ken

    �Your pension contributions are not put into a fund to pay for your
    �pension, they are used to pay current pensions. Your children's
    �contributions will pay for yours, if they don't revolt.
    
    More or less the same here in Germany. The government calls it the
    "generation contract". FWIW, I haven't signed a contract with any
    generation...
    
    Company pensions are a bit different though.
    

re: <<< Note 147.82 by SNAX::ERICKSON "Can the Coach..." >>>

>    	If we can take a lump sum and transfer our money to someone
>    elses pension plan if we leave. I would think a 30-40 year old
>    person who was working somewhere else for 10-20 years. Already has
>    a lump sum of money in another companys pension plan. If there old
>    company lets them take the money, like Digital does now. I would hope
>    that Digital would let them take there lump sum and deposit it into
>    Digitals pension plan if they want. If they can't or they don't want
>    too, then yes there Digital pension isn't that great.

     According to benefits express, new employees CANNOT transfer any money 
     or pension value of any type INTO Digital's pension plan.  The balance
     starts at $0 for every new hire.  

     You could, however, transfer your previous company's pension balance
     into a SAVE account if you wanted.

     I don't see this pension plan being very 'portable' as far as
     retaining your pension plan across companies.  I only see that
     they are adding an option for you to move your pension accumulation
     into your own retirement account somewhere down the road.  I would
     have thought that this pension system might be getting popular with
     other companies and would have allowed us to move our pension from
     company to company, but it doesn't sound that way so far.

     Why would Digital not allow us to transfer prior pension plan
     balances into Digital's pension plan?  Is it any difference to
     them if they take, for example, my 30,000 previous balance into
     the plan and invest it and give me the 7% return on that, compared
     with giving me 7% on a new small balance?  Wouldn't they like to
     have that additional money to invest?  

     -J. 

Why would you want to transfer money into the pension plan?  Roll it over into
SAVE and invest at much better rates.

				Steve

    RE: .99
    >	The more I look at the better I like it. I would recomend people
    >get into VTX BENEFITS_US, and look under pension. Unless you have
    >been with the company since 1973. Digital currently takes your base salary
    >* 1.5% and adds it to your pension. For the years from 1973-1989, take
    >your average base salary for the 1985-1989 years, and use that base
    >average base salary for the years 1973-1989. From 1990-on it is base
    >salary * 1.5%.
    
    Maybe I'm reading this differently, but I don't think that the current
    plan puts 1.5*your_base_salary, but rather the formula used increases
    by 1.5% * how_long_you_have_worked_for_DEC.
    
    From http://www.digital.com:80/info/careers/benefits.htm#pen:
    
      After you've worked at Digital for a year, you'll be enrolled in the
      pension plan automatically, at no cost to you. After five years of
      service, you'll be 100% vested in the plan. Which means you'll
      be eligible for pension benefits whether or not you stay at Digital for
      the rest of your career. Your pension benefit in retirement will be based
      on a formula that increases by 1.5% of your annual pay each year you
      work at Digital.
     
    so, the numbers that get pluged into the formula to determine what gets
    placed into the pension fund for you would be:
    
    	year 1  1*1.5 =  1.5%
    	     2  2*1.5 =  3.0%
    	     3  3*1.5 =  4.5%
    	     ...
            10 10*1.5 = 15.0%
    
    Obviously, this a plan like this favors someone making a good salary
    that has worked for the company a long time. 
    
    Deb
    

    re .146,
    
    	In reading VTX BENEFITS_US it was pretty clear that under the old
    Pension plan, you got 1.5% of your base salary. Added each year to
    your pension total. Here is an example of a 24 year employee, there
    total yearly pension is under 10K a year.
    
    Ron
    
    	Here is one of the charts from VTX BENEFITS_US Chapter 8.12.3
    
              --------------------------------------------------------
                      Actual  Benefit service
              Fiscal  fiscal  salary using 1985-89    Times   Benefit
              year    salary  5-year averaging        1.5%    per year
              --------------------------------------------------------
    
              1994    $37,030 $37,030            x    1.5    $555.45
              1993    $35,610 $35,610            x    1.5    $534.15
              1992    $34,240 $34,240            x    1.5    $513.60
              1991    $32,920 $32,920            x    1.5    $493.80
              1990    $31,060 $31,060            x    1.5    $465.90
              1989    $29,585 $26,485            x    1.5    $397.28
              1988    $28,170 $26,485            x    1.5    $397.28
              1987    $26,830 $26,485            x    1.5    $397.28
              1986    $24,840 $26,485            x    1.5    $397.28
              1985    $23,000 $26,485            x    1.5    $397.28
              1984    $21,300 $26,485            x    1.5    $397.28
              1983    $19,720 $26,485            x    1.5    $397.28
              1982    $18,260 $26,485            x    1.5    $397.28
              1981    $16,910 $26,485            x    1.5    $397.28
              1980    $15,650 $26,485            x    1.5    $397.28
              1979    $14,490 $26,485            x    1.5    $397.28
              1978    $13,420 $26,485            x    1.5    $397.28
              1977    $12,430 $26,485            x    1.5    $397.28
              1976    $11,510 $26,485            x    1.5    $397.28
              1975    $10,650 $26,485            x    1.5    $397.28
              1974    $9,860  $26,485            x    1.5    $397.28
              1973    $9,130  $26,485            x    1.5    $397.28
                                                           _________
                              Annual pension benefit       $9,316.66
    
                              Divided by 12 months   (divided by) 12
                                                           _________
                              Monthly pension benefit       $ 776.39
    
     Note: The employee in this example was hired on July 1, 1971 and is
    fully vested, so this sum would be payable in full as long as he or she
    is retiring at age 65.

re:  << Note 147.145 by QUARK::LIONEL "Free advice is worth every cent" >>>

>Why would you want to transfer money into the pension plan?  Roll it over into
>SAVE and invest at much better rates.

    I was thinking that some people might prefer something like the
    pension plan where the value keeps growing and it doesn't lose
    value based on the market conditions, like a retirement account can.
    But I forgot that the retirement account has a guaranteed option.

    I guess a person could do essentially the same thing with SAVE that is
    done in the pension plan--put the money in a guaranteed fund earning
    a low rate--if they wanted.

    -J.

Yep - or start an IRA with an outside investment firm.  The pension plan
is too restrictive to be considered for rollovers.

				Steve

    I just read through the 149 responses. I do not believe
    the medical benefits question was answered. How are they
    affected ?
    
    						Thanks  Robby
    

    No effect from what I can tell, but I didn't see why there should be
    any connection.
    
    				Steve

    One line in the Brochure said the plan would be in effect for (if I
    remember 2 to 4 years) before any additional changes would be made.
    
    I would expect at that time for all pension monies to flow to SAVE,
    eliminating Company pension totally. Whether or not Digital matches or
    contributes remains to be seen.
    
    Larry

    To clarify 147.150 "Medical coverage"
    
    I believe what .150 is asking is under the old pension plan if you
    retired early, say at age 55, you were covered under the Digital Health
    plan at least until medicare kicks in at age 65.
    
    So the question is, has medical coverage for early retirement gone
    away with the new plan ?????
     

    Absolutely not, the two have nothing to do with each other.  If you are
    eligible as a retiree (55 + 10 yrs) you are eligible for retiree
    benefits that include medical and dental, no matter what you do with
    your pension fund.
    
    Thats now (subject to change at a later date) 

To The best of my analysis at this point I have made the following
personal conclusions based on present value analysis,future payments,
average 16 year life expectancy after age 65, etc.
It's pretty detailed and I would hate to explain it...
But ...for what it is worth ...

A new employee who joins the company today and works 25 years
will start out with a balance of $0 ... Under the new pension plan...
the anticipated annual pension payment would be approximately 2/3 rds 
of what would have been assigned under the old plan.

An existing employee of 18+ years ...
...for the future years he/she will not acquire as good of an anticipated 
   pension payment under the new plan as he/she would have acquired under 
   the old plan.
...but because of the additional funding (under the special formula) at
   the front end of the opening balance (sometimes 3x what the current
   plan stated) ... it offsets the future negative projections and 
   seemingly becomes neutral. No financial benefit either way. 
   We should not view at the extra front end Special Funding as a gift 
   because it only neutralizes the end result.

For an employee between the 0 and 18+ years...
I sense that the financial impact would lean in the negative direction
but the benefit of portability is still there.

Phil

Re; .78 and .95

I, too, had the question about what annuities would come from the new 
plan.  I expected that the current, updated, and special opening balance 
scenarios would be parallel, doing the annuity calculation for the third 
case with assumptions like keeping same salary, retiring at 65, Digital gives 
4%,....

So, I called up BE.  They said that after March 4, we can use the touchtone
system to play what-if games.  They also said that I could estimate the amount
by seeing how much of an annuity the other two lump sum values would buy.

Seems to me they could have avoided questions by just printing the estimate.

- S.

Re: -.1 > I, too, had the question about what annuities would come from 
	> the new plan.  I expected that the current, updated, and special
	> opening balance scenarios would be parallel, doing the annuity
	> calculation for the third case with assumptions like keeping same
	> salary, retiring at 65, Digital gives 4%,....
	>
	> Seems to me they could have avoided questions by just printing
	> the estimate.		      ^^^^^^^^^^^^^^^^^

Maybe that's what they were trying to do ....   avoid questions.
						---------------
Especially for those with only a few years with the company ...
----------------------------------------------------------------
	It seems clear that a projected annuity under the new plan 
	(including future years of service) would fall considerably 
	short of what would have been projected under the old plan.

To follow up on the hypothetical 'Chris' Example 
on Page 8 of our package...

This example starts with an opening balance of $16,500.
Chris in this case is probably a longer-term employee with
15-20 years and will probably break even given the benefit 
of the special formula opening balance.
*****************************************************************
However, 
Begin with an assumption that Chris is a newly hired employee with a
$0 opening balance...

Under the old pension plan Chris would have projected a pension benefit
of $13,400 per year or a present value of $139,396 at age 65.

Under the new plan we can forecast his/her account balance in 20 years
as $71,842 (the present value at age 65) which could only support a 
$13,400 payment for 6 years.

Using the $71,842 Chris could only buy a $6,900 annuity (based on 16 years)
which is only 1/2 of what the old pension plan would have provided.

Soo.... Chris's Annual Projected Pension...
		Old Plan	New Plan	Diff
		--------	----------	-------
		$13,800		$6,900		<$6,900>
Conclusion...
I think that Digital has more to entice Chris to join the company under
the old plan.

OK.

So who do we complain to when BE gives totally unacceptable responses?

I have yet to receive my package.

I called HR.  

They referred me to BE.

I called BE.

they said, <shuffle, shuffle> " It seems that there was a group of employees
whose calculations are significantly more complex than most, so they could
not be completed when the mailings went out."

ME: "So, when are they going out?  When do I get my package?"
BE: "Well, I don't think you'll be actually getting a package.  You can 
	just look at things on the regular statements when they come out."
ME: "It's not acceptable to me to be forced into a new pension plan and have
	it be in effect before I am even informed of the particulars of
	the new plan.  I want a statement."
BE: "OK, I'll see if I can do anything for you.  I'll call back in a day or 
two."

I have since gotten a message that "it's in the mail."
but the whole situation is hogwash.  First of all, there is NOTHING
in my history or profile which would cause any anomalies in these
calculations.  Secondly, we all know that the calculations are automated,
so the line about them taking longer makes no sense.

Basically, I called BE with a legitimate concern, and was LIED to about
the processing of my pension information!

Who do I take this to?

Kevin

    
    Your attorney?
    

> ME: "It's not acceptable to me to be forced into a new pension plan 
>      and have it be in effect before I am even informed of the 
>      particulars of the new plan.  I want a statement."

Does it really matter ?
    This new pension plan is a 'PUSH'... \
    it doesn't matter how anyone feels about it. 
    There is no choice even if we don't like it.

** However we are clearly justified in obtaining a statement so that we
** can re-calculate what we need to do to compensate for the change in
** what we had perceived to be our future retirement plan.

Digital can't take away what we have vested but it has always put that
statement about 'can't guaranteeing any benefit plan into the future'.
It appears that it is the company's choice whether to continue a future 
pension program or not. It could have suspended the pension program
entirely but has instead decided to reduce the projected benefit for
newer employees. For older employees the impact of reduced benefit 
contributions has been somewhat offset by the 'special formula'.

    
    I believe that being able to receive a statement is covered by SEC 
    regulations.  So, even if someone does not agree with the changes, 
    that person still is entitled to documentation. 
    

    
    
      The Department of labor is the proper agency to handle official 
    complaints under ERISA,  (if it comes to that),  but there are 
    folks in dec  who seem to be willing and able to break the logjam,
    before anything drastic needs to be done.
    
      Contact me offline,  and I'll give you the phone number of
    someone in the corp. benifits group who has been  very helpful to
    me.  (I got his name from BE,  but don't know if posting it
    here is appropriate.)
    
      (And if anybody in DEC HR is reading this,  the absence of local
    PSA's makes it REALLY difficult to solve simple issues before
    they turn potentially ugly -- Please bring back the local contacts.)

    
    
    	I received the latest "Money" magazine (March issue)
    	yesterday and in it was a discussion on whether to take
    	a lump sum or the annual annuity payment.  I will have
    	to get the magazine and put in the "decision maker" for
    	those who are interested.  It basically said to ask the
    	company what the %return was on the monthly annuity
    	pay out and compare that to 30 year treasury notes?
    	I may be off on the terminology but what they were
    	saying is that if the return Digital is giving is less
    	than you can get yourself then take the lump sum.  I'll
    	check the magazine and put in the actual wording.

I'm another one of those who didn't get the pension package.
BE told me they didn't have historical data for me. They have to
do some more calculations before they can send it out. Then I
contacted our local HR person, who contacted someone from US HR,
and I got back a message saying that Corporate is aware of my
problems and I should get the package by 1-March. I still have
no idea what the problem is/was.

Manisha

    
    
    Sundays New York Times (02/25/96) has a long story in the business
    section comparing the standard pension plans with the newfangled
    cash account plans.  Interesting reading.  Has pros and cons of
    each type of plan.
    
    My personal opinion after reading this is that our new plan is good 
    for most employees.  
    
    Together with the 2% match for the 401K, the total 6% of salary company 
    contribution seems on the low side compared to companies I know of that
    match up to 8%.  Hopefully, once Digital has moved further into growth
    mode, the 401K contribution match can be increased to 4%.  In this
    scenario, the total retirement package would be quite competetive.
    
    Kaizad

I received a complaint from the Corporate Benefits Communications Team that
the Pension Plan Administrator, named in the former .166, was suddenly
receiving a deluge of phone calls with routine questions that are more
properly directed to Benefits Express.  At his request, I am reposting the
note with his name removed.

If you have questions, please start with Benefits Express.  They will help
you escalate issues as required.  I was also told that several hundred
pension statements got returned as undeliverable by the Post Office - if you
haven't received yours, please make sure Digital has your correct mailing
address.  These statements are being sent to BE for handling.

					Steve - co-moderator


             <<< HUMANE::DISK$SCSI:[NOTES$LIBRARY]DIGITAL.NOTE;1 >>>
                        -< The Digital way of working >-
================================================================================
Note 147.166                  Pension Plan question                   166 of 168
STOWOA::KOJM                                         16 lines  23-FEB-1996 15:01
                    -< Part Time Employee Pension Problem >-
--------------------------------------------------------------------------------
    I wanted to point out to all current part time employees that formula 2
    (Updated Pension Formula) and formula 3 (Special Opening Balance
    Formula) assume that you have worked part time for your entire Digital
    career and calculates your pension as if have always worked part time.
    Both formulas fail to give you full time pension credit for the years
    you worked full time.
    
    Benefits Express said that they didn't make the formulas and that I
    should escalate the issue to the Pension Plan Administrator, <name
    deleted>. So my letter to him goes into the mail tomorrow.
    
    I recommend all current part time employees who worked full time
    earlier in their Digital career read their pension literature carefully
    and also appeal to the Pension Plan Administrator for redress.
    
    Sheila

Re: .166

As a follow-up - the Corporate Benefits office is aware of the problem 
regarding people with a break in service and they are addressing that.  
Call Benefits Express if you have a concern.

				Steve

Re: .169

>As a follow-up - the Corporate Benefits office is aware of the problem 
>regarding people with a break in service and they are addressing that.  
>Call Benefits Express if you have a concern.

Except that BE said to call the Corporate Benefits office.  With BE's track 
record who would want to risk/waste a second call on them :*(

re. .167
    > After reading the package, I wonder if the new plan encourage
    > employee to leave Digital compared to old plan.  Since the new
    > plan will let people leaving the company take whatever it is worth
    > in the plan with him.

Slight encouragement to leave but only if I could find a new employer who
would contribute more than the future -reduced- contributions that Digital 
is going to provide... otherwise things stay the same.

If I could find a new company that would contribute what Digital was 
contributing under the new plan (ie: Approx 7.75% not 4%) then the extra
2x lump sum $$$ addition at the front end would be a definite additional 
incentive to move on...

Note:
For a new employee ... Digital would have to contribute 7.75% under the
new plan to yield the same annuity that the old plan would have provided.

Re: .170

Corporate Benefits wants you to call BE first.  If you did, and they referred
you to CB, fine.  But what has apparentlty been happening is that many
people are skipping BE and calling CB directly, even though their questions
could be handled by BE.

					Steve

Re: .168
>    Hopefully, once Digital has moved further into growth
>    mode, the 401K contribution match can be increased to 4%.  In this
>    scenario, the total retirement package would be quite competetive.

Yes... the 4% contribution + a theoretical agreement to match the 
401k plan would bring the combination of both plans competitive to the
old plan ... but only for those who can afford to contribute to the 401k.
             -----------------------------------------------------------

Re: .172

>Corporate Benefits wants you to call BE first.  If you did, and they referred
>you to CB, fine.  But what has apparentlty been happening is that many
>people are skipping BE and calling CB directly, even though their questions
>could be handled by BE.

That's not what happened to me.  I called BE like I should, and was told to
just go away and be quiet.  "Everything's OK.  Trust us."

Well, I have no break in service, just 9.5 continuous years here.  So why is
it that my case is so complicated that they couldn't generate a statement?
Is there something screwed up in my records that makes it look like a break
in service?  If so, who do I call, BE?  NOT!  How do I find out?

Kevin

Did you not get a statement?  Call BE and find out why.  Make sure that
Digital has your correct mailing address.

If you are not satisfied with what BE tells you, ask them how you should
escalate the issue.

				Steve

See .159
I did not receive my statement.
I called BE.
I was told that "since my calculations were significantly more difficult
than most employees, my statement could not be completed by the time
of the mailing.
I was further informed that I might not receive one at all.

I was not told that there was anywhere to escalate my concerns to.  I was
simply told that they would call back.

I have never worked part-time.

I have never had a break in service.

I assumed that BE was giving me a line of bull since I can think of nothing
out of the ordinary in my profile.

Now, I'm nervous about trusting BE to get the information that forms the
basis for this portion of my retirement correct.

Kevin

re:. .171

> Note:
> For a new employee ... Digital would have to contribute 7.75% under the
> new plan to yield the same annuity that the old plan would have provided.

Actually the amount that Digital needs to contribute under the new
plan to match the annuity under the old plan is variable and a 
function of age. For someone who is 25 years old, Digital, under
the old plan, does not begin the annuity payments for another
40 years.  For someone who starts at age 55, the annuity stream
begins in only ten years.  The impact of 30 years is a factor of
appropriately eight, i.e. Digital needs to contribute only 1/8 the
amount, under the old plan, for someone who is 25 vs 55.


Gim

    Kevin,
    
    I think Steve meant "Call BE again."  It sounds as if you made one
    phone call and did not try again.  It's been almost a week, maybe
    the situation has developed over there and they can now find your
    information.
    
    Mark

    The NY TIMES story noted a few replies back is worth reading. It does
    confirm one of my suspicions about how this is good for DEC. Since DEC
    only promises to pay interest at a Tbill rate, which is very
    conservative, if they can make more money on the investment, they
    can use it to offset their contributions. So DEC may not even have to pay
    the 4% of salary, or not the entire ammount, since its quite likely
    with decent management they can earn well more that the 7% interest.
    
    This also explains why they apparently did not make this same plan
    available to ex-employees. Most of them would obviously have taken
    their lump  sums immediaetly out of the plan, lowering the total 
    asset base and the probable income form it.
    
    Looks like DIGITAL has found another way to save some money.
    
    The article makes it very clear these plans are best for young
    employees that are likely to change jobs several times during a career,
    worst for long time employees. It noted that many companies were
    making 'special formulas' for near retirement age folks, to ward off
    probable lawsuits.
    
    My 27th anniversary was last week.

    Ron,
    
    I don't believe that Digital has needed to contribute directly to the
    pension plan for some years.  This has not changed.  Looks like Digital
    is following a trend in compensation plans that will make it more
    attractive for future employees.
    
    Mark

    re -2
    >Looks like DIGITAL has found another way to save some money.
    
    I would say it looks like DIGITAL has found another way to make money
    off of its employees,
    
    rj/

I invite you to speculate on the ease and effectiveness of trying to deal
with Benefits Express from Europe.

But not on a full stomach.

___Pete

    this stuff kinda reminds me of the movie "wall street"...
    
    rj/

============================================================================
SUBJECT:  CASH BALANCE PLAN ADOPTED BY DIGITAL
SOURCE:   Pensions & Investments
DATE:     April 2, 1996
----------------------------------------------------------------------------

  Pensions & Investments : MAYNARD, Mass. - Digital Equipment Corp. is the
latest corporation to convert its $1.8 billion defined benefit plan to a
cash balance plan. 

  DEC moved all active employees into the cash balance plan March 1.

  The move was made primarily to provide employees with a core retirement
plan that is more portable and easy to understand, said J. Richard Brophy,
retirement programs manager.

  The conversion is cash neutral for the company, Mr. Brophy said, with the
same long-term economic cost commitment as the old plan.

  ``The same targeted percentage of payroll will go to funding the cash
balance plan as we used for the old defined benefit plan. The difference is
in when we deliver the funding. The accrual pattern changes in that we are
delivering a larger portion of the benefit earlier in an employee's career,
giving it more time to accrue investment gains, leaving the company with a
smaller amount of funding to deliver at the end of an employee's career,''
he said.

  No investment management changes are planned, said A. Raymond Schmalz,
director-benefits finance and investments.

  ``We looked at the management of the portfolio carefully and don't think
we need to make any changes now to the managers or the duration of fixed-
income investments,'' Mr. Schmalz said.

  The move outsourced the administration of the remaining piece of DEC's
retirement plan programs to employee benefit consultant Hewitt Associates
L.L.C., Lincolnshire, Ill.

  Hewitt has been the record keeper for DEC's $1 billion 401(k) plan since
its revamp last year. Hewitt will provide record-keeping services and
quarterly employee account statements to cash balance plan.

  Under the new Cash Account Pension Plan, DEC will make a quarterly
contribution of 4% of total compensation (including overtime, bonuses and
shift differentials as well as base pay) to each eligible employee's
account.

  The old defined benefit plan formula, which guaranteed employees a benefit
equal to 1.5% of base pay for eligible years of service, will be maintained
for retired and terminated employees.

  Employees within five years of retirement were given the option of
remaining within the old defined benefit plan or moving into the cash
balance plan, whichever yielded the higher benefit.

  Under a service-graded conversion formula, long-term employees were
granted account credits in the new plan that will provide equal or better
benefits than under the old plan formula, said Mr. Brophy.

  Cash balance plans are defined benefit plans with many features of defined
contribution plans. Investment risk is borne by the sponsor and investments
are typically employer directed.

  But like defined contribution plans, employees receive regular statements
and their accounts are credited daily with interest growth.

  The plans provide for lump-sum distributions for vested assets upon
employee termination or retirement, making them easily portable. DEC
employees can leave their assets in the plan when they leave; the company is
on a five-year vesting schedule for the cash balance plan.

  Retirement plan administration, meanwhile, has been consolidated into a
single department within DEC, with Hewitt handling most of the workload for
both the 401(k) plan and the cash balance plan.

  The consolidation provides employees with a ``one-stop shop,'' although
DEC does not intend to provide combined defined benefit and defined
contribution statements yet to employees.

  Mr. Brophy said DEC executives had been thinking about design changes
since the late 1980s, but business conditions prevented the company from
acting until last year.

  From employee focus groups, executives learned employees didn't understand
the value of the defined benefit plan and would prefer to move their assets
when they changed jobs.

  Employee investment education was enhanced last year with a multimedia-
based splash for the 401(k) plan. As a result, DEC employees reduced their
allocation to the stable value option to 32% of assets from 55%.
Participation in the 401(k) plan jumped 20 percentage points last year, to
65%; Mr. Schmalz intends to improve participation even more.

  Education is continuing to receive a lot of emphasis at DEC, following the
move to the cash balance plan.

  <<Pensions & Investments -- 04-01-96, p. 4>>

[04-02-96 at 15:49 EST, Copyright 1996, Crain Communications]

    Re. -1
    * From employee focus groups, executives learned employees didn't
    * understand the value of the defined benefit plan and would prefer to
    * move their assets when they changed jobs.
    
    	Ths is my question.  After 14 years here I plan on moving on.  I am
    now trying to decide what to do with this pension plan. What are your
    thoughts?
    
    
    Les Baczko 
    SUBPAC::BACZKO

    the best news is that now YOU have a choice. before, you simply left
    that value with DEC, and hoped that someday you might get some of it.
    
    What to do, is a complicated financial question. If your new employer
    has a better plan, move it, else leav it.

    
>    	Ths is my question.  After 14 years here I plan on moving on.  I am
>    now trying to decide what to do with this pension plan. What are your
>    thoughts?
    
I would look into moving it into an IRA in mutual Funds After talking to a 
financial adviser. 

    	I recently received the "Notice About the Cash Account Pension Plan
    and SAVE Plan" which invites comments regarding Digital's application
    to the IRS regarding these plans.  I do not remember receiving any
    previous notification (at least not in a LONG time).  Does anyone
    know whether this is the first such notice that applies to the new
    Pension Plan?  In other words, is this the first time that we have
    asked for IRS blessing on the new Pension Plan?
    
    	The reason that I ask is that I have never been satisfied with
    the responses/assurances that I have received that the new plan
    qualifies as a "defined benefit" plan rather than a "defined
    contributiuon" plan.  If this is the first application to the IRS
    (and Department of Labor), then I might be motivated to challenge
    this claim formally.  I have reviewed the applicable ERISA law and
    feel confident that a very serious challenge would be successful.
    There are interesting consequences if such a challenge is upheld.
    
    Cheers!
    Dave Eklund