L.L. Bean to Cut Costs by Pension Plan Terminations and Offer Voluntary Early Retirement

Published December 27, 2017
L.L. Bean is increasing their contributions to employees’ 401(k) plans as they terminate pension plans. The company is also offering early retirement incentives as a way to reduce its workforce and alleviate some of their expenses.
  • L.L. Bean is looking to freeze employee pension plans and boost its 401(k) contributions to all 5,000 workers
  • While a 401(k) is one way to accumulate assets, it fails to provide financial stability and guarantee during retirement
  • Employees can use their 401(k) savings to purchase a Personal Pension or income annuity to secure retirement income

The Freeport retailer plans in 2018 include freezing pension plans and in lieu of pensions and boosting its 401(k) savings contributions to all 5,000 workers, including 1,000 out-of-state store employees who were not previously eligible for the full pension, officials told the Associated Press. Employees will keep all company contributions to the pension plan earned before the 2018 changeover, but L.L. Bean would also offer voluntary buyouts.

In addition, a noteworthy fact is that the privately held company expects to reduce its workforce by about 500 workers through early retirement incentives, said CEO Steve Smith. This is a 10% reduction. L.L. Bean will achieve this by offering a “voluntary early retirement program”  to eligible employees in early 2018, offering those who take the buyout “enhancements” to their pension benefit and a stipend to offset medical premium costs for up to two years.

Pension plan terminations through pension freezes and buyouts are no big surprise in a challenging retail environment. L.L. Bean’s sales were flat in 2015, and growth for the five years before that was slow. Nationwide, the private sector has been eliminating pensions. In 2015, about one-fifth of Fortune 500 companies offered a traditional or hybrid defined benefit plan to new hires, down from 60 percent in 1998, according to business consulting firm Willis Towers.

L.L. Bean 401(k): A Poor Replacement After L.L. Bean’s Pension Plan Termination

While pensions as structured by L.L. Bean and other corporates stopped being the appropriate retirement solution from the employer perspective, their replacement was never meant to be the 401(k). 401(k)s were created for senior executives, who already had maxed out their pensions, to accumulate more wealth to support their retirement lifestyles. And that’s what the 401(k) — and IRA — should be: a source of supplemental income once your fundamental living expenses have been covered. Since they don’t offer any guarantees or protection from the market or your own longevity, 401(k)s just cannot provide financial stability in retirement.

Terminating L.L. Bean Pension Plans and Employee Call to Action

Terminating pension plans including pension freezes, voluntary buyouts and voluntary early retirements means all L.L. Bean employees need to act quickly as their company continues to cut costs. It’s clear that companies increasingly want to focus on their core business and don’t want to manage pension plans. Private pension plan options are becoming increasingly popular, and we at Blueprint Income would suggest 2 alternatives for L.L. Bean employees to mitigate the pension gap resulting from the termination of pensions and to increase guaranteed lifetime income.

L.L. Bean’s Pension Plan Termination Alternative 1 – The Personal Pension

We believe this to be the best option for all L.L. Bean employees. The Personal Pension is the next best thing to an employer pension and is a way to generate pension-like income in retirement without your employer. Instead of being provided by employers, it’s backed by insurers, like an annuity. But, unlike the average annuity, you can purchase it in small amounts over time. Blueprint Income offers a Personal Pension account with the lowest minimum, $5,000. After opening an account, you can make subsequent contributions of as little as $100, each of which will increase your pension check.

Here you can see what contributing to a Personal Pension will guarantee you in annuity retirement income. After just a few years in retirement, you’ll have recouped your initial investment, and the rest will be profit. 

From there, you can fill out the information to have one of our specialists follow up with you, or continue with the enrollment process on your own. To do that, start with the Personal Pension Builder, where you’ll be able to set a goal for how to grow your pension over time. Note that all future contributions are optional, but it’s always great to have a goal.

L.L. Bean’s Pension Plan Termination Alternative 2 – Buy an Income Annuity

An alternative is to buy an income annuity. Income annuities generally come in two types — longevity annuities and immediate annuities. Immediate annuities (as the name implies) have income starting within the next 12 months, whereas longevity annuities start income (at a predetermined level two year or more into the future). Both of these types of income annuities provide the financial security that you get from a guaranteed lifetime income stream that comes each month for as long as you’re alive. They’re ways to increase your pension check.

At Blueprint Income, we offer annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes, where you can compare options offered from different insurers on an apples-to-apples basis.

pacific life annuities

From there, you’ll get access to our annuity guides, team of specialists to help you analyze your retirement finances and walk you through the application process.

In short, if you’re looking to mitigate L.L. Bean’s pension plan terminations and get more guaranteed lifetime income, you have two alternatives for how to get it. (Please note that these options are available to all Americans, not just L.L. Bean employees.)

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Lauren Minches

Lauren Minches

Financial Planning Professional

Lauren is an actuary by training with expertise in retirement, finance, and risk. She writes about annuities to make them easier to understand and evaluate. Her goal is to help people create retirements with more time for living and less time thinking about money.