1,000 salaried Ford workers retire after pension warning from automaker

Phoebe Wall Howard & Susan Tompor | USA Today | Dec 8th, 2022

Ford sent out an email to retirement-eligible salaried employees in September with a warning and a bit of advice about retiring this year to maximize a lump sum pension payment.

The company confirmed Wednesday that approximately 1,000 employees elected to retire by the Dec. 1 deadline.

The Ford note — subject line “Important Information Regarding Your Pension” — specifically pointed out that anyone who is considering retiring and opting for a lump sum payment needs to look at the numbers.

Rising interest rates in 2022 will trigger a significant drop in the potential payout for those who choose the lump sum pension option next year. The lump sum for 2023, according to the Ford memo, would decrease by an estimated 20% to 25% relative to the lump sum values that Ford employees would get if they took it in 2022.

So, for example, if someone is looking at a $500,000 lump sum payout in 2022, the loss in 2023 could be in the range of $100,000 to $125,000.

Financial analyst weighs in

Sam G. Huszczo, a chartered financial analyst in Southfield, said Wednesday that his firm had a lot of discussions with Ford clients about retiring in 2022 and taking the lump sum option.

“The main group of people who decided to take the lump sum offer were planning to retire in 2023 or 2024 anyway,” he said. “And this was enough to push them over the edge to pull the trigger on retiring.”

In some cases, he said, people felt anxious that they were making a major life decision that would impact the next 30 years of their lives but had just two months to decide what to do — all while having to work at the same time.

Many times, he said, Ford clients who were within three to five years of retiring decided not to retire after all, knowing that they’d be giving up their paychecks much sooner than expected. Often, Huszczo said, those clients who decided to stay expressed more faith in Ford’s direction in the long run.