Is there any truth to this rumor?
22 replies (most recent on top)
@an The NPV of the pension won't get dumped to the 401k, it stays in the pension plan until you retire and take the pension at whatever value is calculated according to law. The lump sum might go away, though.
This has been the standing rumor since 2020 but hasn’t happened yet. Speculation doesn’t help.
From Google AI.....
3M's approach follows a highly typical playbook for large corporate pension freezes, though they provided a much longer notice period than usual.
3M’s strategy aligns perfectly with common corporate patterns in several distinct ways:
- The Step-by-Step "Soft-to-Hard" Freeze
• The Typical Method: Companies rarely end a pension overnight. They usually close the plan to new hires first (a "soft freeze"), wait several years, and then implement a complete stop to future benefit accruals for everyone (a "hard freeze").
• 3M’s Timeline: 3M precisely followed this script. They closed their pension plan to new hires in 2009, and then announced the total freeze for remaining employees. - Shielding Legacy Retirees and Unions
• The Typical Method: Under federal law (ERISA), companies cannot legally take away pension benefits that employees have already earned. Furthermore, changes to union benefits must be collectively bargained, so union plans are frequently left untouched during corporate freezes.
• 3M’s Play: 3M completely insulated current retirees, former employees with vested benefits, and union workers from the 2028 freeze. - Offloading Risk via Pension Risk Transfers (PRTs)
• The Typical Method: Once a pension is frozen, companies often look to offload the massive financial liability from their balance sheets by paying a life insurance company to take over the monthly payouts.
• 3M’s Play: Shortly after announcing the freeze, 3M transferred $2.5 billion in pension obligations and 23,000 retirees to Metropolitan Tower Life Insurance Company, which is standard practice for modern corporations shedding pension risk.
Where 3M Diverged: An Unusually Long Runway
The primary anomaly in 3M's handling is the five-year advance notice. Most corporations only give employees a few months to a year of lead time before a freeze takes effect. 3M's decision to announce the freeze in early 2024 but delay enforcement until 3M's approach follows a highly typical playbook for large corporate pension freezes, though they provided a much longer notice period than usual. Over the last few decades, a massive shift has occurred away from corporate defined benefit pensions toward 401(k) plans.
3M’s strategy aligns perfectly with common corporate patterns in several distinct ways:
- The Step-by-Step "Soft-to-Hard" Freeze
The Typical Method: Companies rarely end a pension overnight. They usually close the plan to new hires first (a "soft freeze"), wait several years, and then implement a complete stop to future benefit accruals for everyone (a "hard freeze").
3M’s Timeline: 3M precisely followed this script. They closed their pension plan to new hires in 2009, and then announced the total freeze for remaining employees. - Shielding Legacy Retirees and Unions
The Typical Method: Under federal law (ERISA), companies cannot legally take away pension benefits that employees have already earned. Furthermore, changes to union benefits must be collectively bargained, so union plans are frequently left untouched during corporate freezes.
3M’s Play: 3M completely insulated current retirees, former employees with vested benefits, and union workers from the 2028 freeze. - Offloading Risk via Pension Risk Transfers (PRTs)
The Typical Method: Once a pension is frozen, companies often look to offload the massive financial liability from their balance sheets by paying a life insurance company to take over the monthly payouts.
3M’s Play: Shortly after announcing the freeze, 3M transferred $2.5 billion in pension obligations and 23,000 retirees to Metropolitan Tower Life Insurance Company, which is standard practice for modern corporations shedding pension risk.
Where 3M Diverged: An Unusually Long Runway
The primary anomaly in 3M's handling is the five-year advance notice. Most corporations only give employees a few months to a year of lead time before a freeze takes effect. 3M's decision to announce the freeze in early 2024 but delay enforcement until December 31, 2028, gave affected workers a rare, multi-year window to adjust their personal financial timelines, gave affected workers a rare, multi-year window to adjust their personal financial timelines.
With all these tech companies ( doing cutting‑edge innovation, unlike old‑school industries) XOM doesn’t want to fall behind in the stock market. So no matter how high the benefit look, the real strategy is cost reduction: cutting non‑essential businesses, offshoring jobs, pushing salaries down, and keeping annual PIP percentages high.
And honestly, we’ve seen this before. Remember COVID? They did real damage to employees just to stay in the top tier and protect their stock position. So pension removal is very realistic ....
Wish they would just bridge the gap with a severance.
@Ponzi - maybe. Maybe not. It is t that simple. I would hope they would simply stop buybacks but believe they could offer a defined contribution through additional 401k match or discounted stock purchase program and save significant opex through eliminating the pension. At some point it becomes an option. Hope you’re right, though.
@bm You cut buybacks. We didn’t use to do much of that at all. It’s just artificially pumping up the stock price without any underpinning foundation.
Totalenergies did the same this year
Every other company I worked for that abandoned their pension plan left those balances to accrue based on the underlying investments; then an automatic % of funds (6-8%) was added to your 401k contributions each year separate from and in addition to any matching contributions.
Look at balance sheet and earnings to try and answer this question. ExxonMobil is not making enough cash to do all of these things simultaneously at $65 oil: 1. pay dividend, 2. Buyback stock, 3. Pay debt/finance capital budget (e.g. pay for what is needed to achieve Horizon challenge), and 4. Pay corporate expenses such as Pension. One of these things has to go at $65 or lower oil. It’s simple corporate finance math. You decide what goes during next downturn.
3M has some huge lawsuits so it had to cut costs or it might go out of business.
Would it be a benefit grandfathered for current employees and just not offered to new hires or is it typical for a corporation to just remove such a benefit?
is our total compensation in the US truly competitive?
@ax So 3M announced its pension freeze in 2024, almost five years before it takes effect at the end of 2028 giving everyone affected plenty of lead time. If the rumor regarding Exxon is true, what is Exxon planning to do, tell us a few days before it happens, just like they handled communication around the NRE protections or that other time when they decided to cancel our 401K match?
Nothing inspires confidence in leadership quite like finding out major career-altering decisions at the eleventh hour. At some point, you have to wonder whether the people running this company understand that employees are human beings with families making long-term decisions about their lives. I guess not.
@an XOM is one of the few major companies that basically never advertises no visa sponsorship. They go above and beyond the standard H‑1B route and actively support EB categories for high‑skilled hires. (Some nationalities are restricted because of government rules), but overall they’re extremely proactive about immigration. A lot of new hires join because of that support, not just for the benefits. So if their strategy is to attract and retain talent through immigration pathways, pensions aren’t exactly a priority for those hires.
@OP In January 2024, 3M announced it will freeze its U.S. pension plans effective December 31, 2028. Pension‑eligible employees will continued to accrue benefits until that date.3M was the most recent one to remove pension and no increase in salary actually some layoffs...
I suspect it's true. Hiring managers have complained for a long time that candidates only look at salary and 401k match when comparing offers and our pension puts us at a disadvantage.
The way it will probably work is that the company will calculate the NPV of the pension and dump that amount into your 401k. The rub is what % do they use to do the calculation and what's the "value" of the pension. Plan on this working out in the companies favor. Going forward the company will probably just increase the match by a couple %. Again this is in the companies favor because years ago they used to tell us that the pension was something like 10% of our compensation.
Let’s see more record earnings. Benefits decreasing. narcissist LT buffer either because they brainwashed or keeping the house of cards team or department up right, see safety or CX for examples. Normalized layoff culture , unless you’re protected somehow. Basic services to get things done are broke. Then last but not least most people just don’t want to work any more due to the toxic culture that has been allowed to saturate the whole thing. I’m sure since 2020 or earlier they have been trying to grease the skids on law or policy for this anyways right?
At least we can still have 401K match… it was frozen back in 2020 for about 6 months or so, so even if they freeze pension - it could be a temporary deal but should boost base salary. However during COVID when they froze company match, there was zero boost to base salary, just a humble reminder.
It all depends on the type of freeze. And some types of freezes asymmetrically hurt (or free) some age groups more than others. Need more details.
In theory, it would also be replaced by something. We’re too low on the salary curve not to have something ‘given back.’
Beware of any ‘bonus’ discussion. Whatever you may think it is, it is not that.
Honestly them at would free so many of us to quit.
Would those of us in the plan stop accruing benefits?
We have all known this is coming with Dan and other outsiders in management.
Yes