I wanted to make a comment about KPMG’s new 401(k) rules. As a recent US hire, the changes annoyed me in some ways. Here’s why:
What the article (“Changes to KPMG’s 401(k) Contribution Policy Seem to Be Getting Positive Reviews”) didn’t mention or what your source material may have left out is that in addition to fortifying the 401(k) plan, reducing healthcare costs, and adding sick leave, the firm will be dropping the pension plan for all new hires hence forth (the plan will remain in place for those currently participating, except the annual credit is no longer given). Effectively those hired after June/July of this current year won’t be eligible.
That plan was worth an initial $7,000 credit after one year of service, in addition you would receive an annual credit worth 2.5% of base pay (pre-COVID anyway), and the total account was guaranteed a minimum annual return of 5%. Participation required no employee contribution and vested in full after three years of service.
All told based on my salary, I am missing out on no less then $2,000 of annual benefit just from the pension piece, even when factoring in the more robust 401(k) contribution. (I came up with $2,000 by amortizing the $7,000 initial credit over three years, adding in my 2.5% annual credit and adding the result of multiplying $7,000 by 5% for “market appreciation”). Anyway that number only goes up as my salary increases and the credit balance compounds. All told, over three years, I’m missing out on more than $6,000 of value.
Lastly, even though the new match is 6-8%, the only people eligible for anything more than 6% are those who are tenured for more then 10 years at the firm. So really the 8% is a disregarded value for a large majority of the firm and as long as it remains the norm to job hop. All told, looking at the metrics of what KPMG put out, everyone across the board is losing the equivalent of 2-4% of their base salaries in retirement benefits annually.
My only hope is that this means the lost value is reflected in base salaries. Because if I am not mistaken, KPMG has generally been slightly behind the other Big 4 in base pay on average.
Anonymous KPMG employee
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Related article:
Changes to KPMG’s 401(k) Contribution Policy Seem to Be Getting Positive Reviews
Do you think KPMG will pay anything out on the pension when you reach retirement? I was with the firm for over 10 years (with about 15 years to go until retirement), and I think my chances of getting anything out of the firm is approaching zero.
what makes you think KPMG pension fund is going insolvent in 15 years?
It will be solvent, they just won’t pay me anything. They’ll have some excuse like I never responded to some notice that they never sent me ten years earlier and that I forfeited all rights. I don’t believe anything the firm has to say.
Spent 9 years there. They reduced the pension contribution from a means tested age rated plan after I was there 4 years or so and their contribution diminished for my last 5 years there. I had 100K in the plan when I left due to a RIF in 2012. I was 57 when I was Riff’d. You must take the pension payout at age 60 or roll it over when you leave. I opted to leave it in at a guaranteed 5% interest compounded YOY which amounted to a mandated payout of 115k. They sent me the papers and I received a check a month later, rolled it into a qualified plan that is now worth 220k. I believe the plan is solvent and protected by law. In 2009 they reduced the 401k contribution/match from 75 cents on the dollar to 25 cents and then back up after the economy recovered
I left in 2015 and didn’t receive any paperwork or notice about anything. This is what I mean. I haven’t been offered anything and haven’t received a single mailing from KPMG since I left. I’m complete gone in their minds.
“In 2009 they reduced the 401k contribution/match from 75 cents on the dollar to 25 cents and then back up after the economy recovered.”
I was standing in the elevator bank in Atlanta when David Leiter literally laughed about this. I wanted to put my fist through his chest. He and Sam Mcgarr covered up so much misconduct until Leiter left for Chicago. Both of them knew about Trent Marek having sex with a subordinate.
18 year employee and the OP is spot on. The freeze on the pension is a significant reduction in my retirement planning. Not exactly a surprise though.
This guy is too smart to be working at KPMG. He needs to move to Accenture or an investment bank.