Conference 7.286::digital

    I have worked for companies that offered early-retirement packages. 
    The formula involved age, years of service, some magic number that
    these two figures had to add up to, and a number of weeks or years of
    pay.  
    
    Those who were eligible for the program argued over every nuance of the
    terms like Talmudic scholars.  Every adjustment from offer to offer was
    scrutinized.  It's a sophisticated game between Personnel and those who
    may be eligible to take it.

    Since my sum is 82, it is of more than passing interest to me.
    Sure would like to know whether it is true.
    
    
    

    Your assumption on the 5-5 part is correct.  The "2" would stand for
    two months pay in addition.  The industry norm is closer to 5-5-6.
    Leave it to DEC to cheap out.
    
    Well managed companies normally do this first....DEC (if they do it)
    apparently chose to ruin thousands of lives and careers first, then
    do the obvious.
    
    If they offer it, they'd better be prepared for a real shocker.  HP
    out here is still reeling from the number of people who accepted the
    voluntary package.

>    Well managed companies normally do this first....DEC (if they do it)
>    apparently chose to ruin thousands of lives and careers first, then
>    do the obvious.
>    
>    If they offer it, they'd better be prepared for a real shocker.  HP
>    out here is still reeling from the number of people who accepted the
>    voluntary package.

    RE: .4 The second paragraph seems to contradict the first. After all
    why would a well managed company want to lose great numbers of
    experienced and trained people? Especially if they'd lose more
    people then they would by downsizing ala Digital.

    			Alfred

    The difference is that the process we have used up to now has also
    caused us to lose great numbers of experienced and highly trained
    people........but, they did not want to go!!
    
    Granted, you lose some top-notch people in the 5-5-x process too, but
    mostly they are in their fifties, and WANT to go.  These people
    probably also make top bucks, and replacements can be hired for less.

    Re: .-1
    
    Speak for yourself, Mr. Lennard.

    Seems to me that the '5-5' and '80' just confuse the issue.
    
    Without them, one could say "age + years of service = 70, then ...".
    
    So, I ask, "Is the addition of these digits to the formula just
    arbitrary?"
    
    ed

    <is the additiion of these digits to the formula just arbitrary?>
    
    I thought not. I assumed that the 5-5 would augment the actual years in
    service and the 'age' for purposes of retirement.
    So that -as an example- somebody aged 50 with 20 years of service,
    could retire and would receive retirement benefits as if she were 55
    with 25 years of service. May be in inaccurate assumption on my part.
    
    
    				herb

    re -1 ..... your assumption is EXACTLY correct.  Remember, this is
    not a severance package in any way, shape or form.  It is a way of
    sweetening the retirement option to encourage people to retire.
    
    Clearly, under the first "5", some people who are only 50 would be
    tempted to sign on, as they would have to wait until age 55 to
    retire normally.
    
    ...Eggers, I don't understand your comment...or do you just read all
    my entries and try to give me a hard time?

    re: .11
    
    I think Tom Eggers was referring to the statement in .7 that the top
    people are mostly in their fifties, want to go, make top bucks, and
    replacements can be hired for less.  I don't know how old Tom is, but
    since I'm 46 and he is senior to me I wouldn't be surprised if he is
    in his early 50s.  He is definitely a top person, so the
    characterization in .7 might be seen as referring to him.  If he
    doesn't want to go, or doesn't make top bucks, I can see how he might
    feel that .7 is putting him down.
    
    Speaking for myself, I consider myself a top-notch person and I felt
    a little demeaned by .7.  I don't have any desire to leave Digital,
    and I doubt that Digital can hire someone of my skills for less than
    what they are paying me.  People with 27 years of computer programming
    experience are not easy to find.
        John Sauter

    re .12
    
    >Speaking for myself, I consider myself a top-notch person and I felt
    >a little demeaned by .7.  I don't have any desire to leave Digital,
    >and I doubt that Digital can hire someone of my skills for less than
    >what they are paying me.  People with 27 years of computer programming
    >experience are not easy to find.
    
    I don't think anyone is suggesting that Digital can get someone of your
    caliber for much less.  But since some managers have the reputation
    that they can't tell the difference between 1 and 27 years of
    experience, I think it credible (to some) that an experienced engineer
    would be replaced by someone green, just to save money.
    
    My own personal take is as follows:
    
    I was eligible for early retirement this last July.  54+5 gives me 59
    years chronological, 15+5 gives me 20 years of seniority.  But, I'm too
    young to really retire, I'm too old to easily find another job, and I'm
    not so negative about Digital as to cut and run.  For those who are
    impressed by the $, my expenses have gone down since my kids finished
    school, and I'm fine, thank you.
    
    Dick

    When you're 55 you can get a net present value statement of your
    retirement account.  I think all companies are required to give you
    this at any age but that's not my point here.
    
    The figure you get is the NPV of the "Lump Sum/Cashout" at the time
    when you'll be 60 and 65 respectively.  It's figured at 7.5%  You don't
    have to be too swift to work back to a NPV for actual present.
    
    Using this you can get a real value of one of the "5s"  It ups the
    value of your lump sum/cash out by about 25% if I'm correct.
    
    
    Can someone tell me how to evaluate the other "5"?

    "IF" they were to offer this soon, I would be 2 months shy of the magic
     Number. How strict are they in giving it to people that close? When
     you are TFSO'd are the weeks calculated to the exact year of service,
    or are you given like 3 weeks for 9/10 of a year?

    
    Regarding my -2 reply, I made an error in calculation I like to
    correct.  Five years on your age would allow you to collect that much
    sooner and at an interest rate of 7.5% I figure that the NPV of the
    lump sum cash out would go up by a factor of 1.075 raised to the 5th
    power.  That's 1.44.
    
    The five years on you service is worth .015% of your salery per year. 
    That is your yearly pension would go up by 7.5% of your current annual
    pay.  What the net presant value of that is as a function of the NPV of
    your lump sum cash out I don't know off the top of my head but it
    shouldn't difficult to figure out. 

    re .15
    
    Legally strict, I know of nobody who has authority to grant exceptions
    in the similar program in Puerto Rico.
    
    Dick

    nit re: .16 You mean 1.5%.
    
    So that one could start collecting benefits as early as age 50
    but as though his age were 55 at 50% of benefit (from benefits book)
    and with the accumulated benefit augmented by 7.5% of current years
    salary.  Does this mean that someone who was age 60 would have
    little to gain by working 5 more years [unless he were expecting a BIG
    raise:-)]?
    
    ed

    re .13
     59 + 20 = 79
    
    Someone in an earlier note said the "magic number" was 80. Does
    anyone have a clue to what it really is and OBTW, does anyone
    know where this story started ?

    
    re .19
    
    I apologize.  I wasn't really referring to the speculation on a 5-5-2
    plan for Digital US.  I was eligible for early retirement from Digital
    in Puerto Rico based on age 50+.  For us, the 5 and 5 refer to 5 years
    of age and 5 years of seniority, for the calculation of benefits only. 
    Eligibility is 50 years of age and 5 years of service.
    
    Dick

    .15
    
    Mark,
    
    Just a small point...you have no net present value on you retirement
    until you are 55. Personnel can and will on "request only" supply you
    with a calculated NPV of your retirement account for any age you pick.
    
    
    
    							John