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Ford Pension Buyout


On Friday, April 27, 2012, Ford Motor Company announced a lump-sum buyout option for Ford salary retirees from the General Retirement Plan (GRP). As wealth advisors with extensive experience with Ford, we understand the extent of considerations necessary to make a decision.

Please see the comprehensive White Paper below that addresses all of these considerations. The paper covers the analysis of taking a lump sum versus an annuity, including calculations and case studies. In addition to these resources, we will be offering education programs and are offering individual consultations on the lump sums. This is an important decision, which requires an expert review. Contact our office to schedule an appointment with a Ford retirement expert.


Ford Lump Sum Seminar Information

Links

Ford Lump Sum Buyout White Paper - With Final Information From Ford
IRS Private Letter Ruling 201228045 - Possibly applicable to Ford




The White Paper

 



FAQs Regarding Ford Lump Sum Offer



The following frequently asked questions are questions found at @FordOnline as of June 22, 2012. While these questions serve as a good starting point for evaluating your scenario, remember to seek advice from an expert in lump sum analysis.

1. There are two Ford retirees in our household. To make the best financial decision for our household, we need to receive our GRP lump sum offers simultaneously. Has Ford considered this?



Yes, the Ford team has considered the situation of married households where both the husband and wife are eligible for the pension lump sum offering. And, the Company would like to be able to accommodate the request to coordinate the offers to married Ford retirees. However, in order to ensure that no retiree is advantaged or disadvantaged relative to others with the random approach for the lump sum opportunity, the Company will not coordinate the lump sum opportunity for married couples. Ford is firmly committed to ensuring that no individual is given a perceived advantage or disadvantage in terms of the timing of his or her election period. In order to ensure the integrity of this random process and, in turn, the equitable administration of the lump sum payment opportunity, your assigned election period cannot be changed for any reason.

Without a doubt, Ford understands the need for each eligible retiree to give full consideration to his or her financial resources and situation when making a decision about whether the lump sum pension payment or a monthly pension benefit payment is most beneficial. For this reason, Ford is providing ample time and materials to help retirees make their respective best decisions. All retirees are encouraged to review the Decision Guide (which will be mailed in advance of the Election Kits) and speak with their financial planner and/or tax advisor to discuss each unique situation as soon as the personalized Election Kits are received. In addition, to help retirees better understand the financial aspects of the lump sum payment option, Ford is making available financial and tax education resources at no cost. These resources will be offered by Deloitte Consulting, an objective, third-party organization that does not deal in investments.

2. What criterion is being used to determine the election periods that are assigned by Ford?



As communicated to eligible participants in the announcement letter, you will be assigned a specific election period based on a random process using the last two digits of your Social Security Number. Participants with the same digits are not guaranteed to be in the same election period. In some circumstances, retirees may be assigned to later election periods (for example, court orders).

3. If I am currently enrolled in, or eligible for, Ford health insurance or other benefits. Will these benefits be affected if I take the lump sum payout option?



No. Eligibility for other benefit programs like retiree health and life insurance, if applicable, are not impacted.

4. What will happen to my automatic pension deductions if I elect the lump sum?



As a retiree or beneficiary, you may have expenses paid or other deductions made from your GRP monthly pension benefit payment. If you elect the lump sum payment opportunity, the automatic deduction feature will end and expenses or deductions must be self-paid going forward.

5. For participants who have dual plans (example GRP and UAW), will they be able to elect the lump sum from the GRP?



Yes. The lump sum payment option will apply to your GRP benefit only and any monthly pension plan payments you may be receiving from a Ford-sponsored plan other than the GRP are not affected and will remain unchanged.

6. When does the 90-day election period begin?



You will receive a postcard confirming your 90-day election period approximately one month prior to it beginning.

7. How can I confirm that Ford has my correct address?



You can go online to myfordbenefits.com and click on Personal Information. You can verify your address of record on this screen. If you need to make a change, click on Update and make your changes. You may also contact the NESC at 1-800-248-4444 and speak to a Personal Benefits Representative, if online service doesn’t work for you.

8. Who is eligible for this lump sum payment option?



Retirees who are presently in payment from the GRP are eligible, along with surviving beneficiaries receiving payments from the GRP. Participants who are currently receiving a monthly payment from a merged plan (e.g., FERCO, Granite, PRIMUS, APMSI, Environ or AAI Salaried) also are included. Employees who worked at all salary levels of the Company are included in the eligibility requirements of this program.
Note: Ford-sponsored pension plans other than the GRP are not included in this offer.

9. Do I have to accept the lump sum payment option?



No. The lump sum payment option is completely voluntary. If you take no action, you will continue to receive your monthly pension benefit payments as you do now.

10. Should I talk to a financial planner or tax advisor about this option?



Once you receive your Election Kit, you are encouraged to consult with a financial planner and/or tax advisor as soon as possible so you have time to discuss your personal situation and consider your options before making your election. Both federal and state taxes may apply to your payment.

11. Why is Ford offering the lump-sum payment option?



This lump sum pension payment option offers benefits for both the eligible GRP participant and Ford. For the eligible participant, it allows the additional choice and flexibility in how they receive, invest and manage their GRP retirement funds. For Ford, it allows the company to reduce financial volatility and administrative costs related to pensions.

12. If I am in one of the later election periods, is there any risk of Ford running out of money for lump-sum payments?



Ford has carefully evaluated and planned for this opportunity to ensure there are adequate funds available for those who wish to receive a lump sum payment.

13. After paying out lump sums, will there still be enough money in the Pension Plan to provide benefits for present and future retirees?



Ford carefully monitors and manages pension plan funding. The company has carefully planned the lump sum opportunity to account for proper funding of the GRP going forward.

14. Is there anything I need to do right now?



No immediate action is required.
Once you are notified of the amount of your lump-sum in your Election Kit, you will want to consider how taking the lump sum payment option would fit with your retirement financial plan.
The materials you receive leading up to your election period will help you think through your decision. This is an important decision, and you are encouraged to consult with a financial planner and/or tax advisor. Your Election Kit will outline the details of what you need to do to make an election and will specify the amount of time you have to make a decision.

13. What if I have additional questions about the one-time, voluntary lump sum payment option ― who can I call for help?



A dedicated Pension Lump Sum Information Center will be available to answer your questions during your specific election period. Contact information will be provided in the Election Kit that will be sent to your address of record. Because of the large volume of eligible participants, access to the Pension Lump Sum Information Center cannot be provided to everyone at the same time. Pension Specialists will be available to answer your questions only during your election period. This will help ensure the highest quality service for those who are in the process of making their decision. The Pension Lump Sum Information Center will open at the time of the first election period; therefore, we cannot provide you with a phone number to call right now.

Please wait for your materials to arrive in the mail, read them carefully, and then call the Pension Lump Sum Information Center if you have questions or need additional help during your election period.

Your employee benefits are governed by the terms of the applicable official plan document or policy. Summaries of your benefits are available; however, if a conflict exists between any summary and the official plan document, the official plan document prevails. The Company reserves the right to terminate, suspend, or amend any of its employee benefit plans, programs or policies at any time in accordance with applicable plan documents and subject to applicable collective bargaining agreements. You will be notified of any change after it is approved. Until a change is officially announced, no plan fiduciary or any other Company representative is authorized to disclose to you any information about a change under consideration. You should rely exclusively on officially announced information and plan materials. No employee, beneficiary, surviving spouse or other person has any legal or other right to benefits under the Company's employee benefit plans, programs or policies, except as provided by such plans, programs and policies.

 

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