Today we talk money. My $30,000 in pension funds with [my old union at] the telephone company. Something does not add up. [Author’s note: it was straightened up in my favor a few years later.] I contacted them for two values, the current surrender value and my monthly payment at age 65, which is supposed to be $1,220. (Over 90% of the amount I would get if I worked there another twenty-five years.) This payment is really an annuity, and based on 20 years to 2039, I could not find a reasonable interest rate that supported that payment. I had to be sure it was not an error.I vested my money on May 23, 1996. Whether the $30,000 was the value at that date or has grown to that value in the 7 years I participated is unknown (the plan is defined benefit, not defined contribution) but neither total supports an annuity of the amount stated. I ran every quarter percentage between a low of 6% and a high of 9%.
Here is my logic. Choose the traditional rate of 8%. Both to build up my principle and to keep that rate during the term of the annuity, the following is required: $145,927.96. I need that much to take out $1220.61 for 240 months.
If the $30,000 earned 8% since 1996, it comes close, but not close enough. The union says it will be from December 2, 2003, in which case I would have only $95,165.00 by normal retirement age. There is one variable I can’t disallow and that is this pension fund is very well run and has produced 12% before. My old union owns VLC, the Vancouver Land Corporation. Worth billions.
So, I am going to peel this onion until I get the facts. This could be a challenge since the “pension assistant” who wrote the letter must be functionally illiterate [about] time values. A powerless cog in the machine. (Ann Tamboline is her name.) I really hope I don’t have to explain to them it is my money and I’m only letting them use if for a while. I had to go over this with Bank of America recently.
