Vanguard chief executive Mortimer “Tim” Buckley issued an apology by email and video late Friday night to current and retired employees, saying the mutual fund giant got it “dead wrong” cutting a key medical benefit.
“I sincerely apologize for the anxiety and stress this decision has caused. We know we missed the mark. I can assure our retirees they can continue to count on their RMA benefit going forward,” he said, according to a transcript of the video.
“We aim to share the specifics in the coming weeks” regarding any changes to the retiree medical accounts, which are funded by Vanguard.
“Thank you for your patience as we correct our mistake,” Buckley said.
The message was sent to current and former employees, known among themselves as Vanguard Crew, regarding a long-standing retirement benefit that funded medical accounts $5,500 a year starting after age 40. Vanguard’s pay is considered lower than most in the financial industry, but with generous benefits. The retiree medical accounts were a substantial perk that made up for the lower salaries, current and former workers said.
Some Vanguard retirees with decades of service stood to lose out on hundreds of thousands of dollars they needed to pay for health-care premiums and medical costs.
The Vanguard email went out around 8:45 p.m. Philadelphia time and was titled: “A Message from Tim Buckley to Vanguard Crew and Retirees regarding retirement benefits.”
The email read:
“As you are aware, we recently announced several changes to our retirement benefits program, including the discontinuation of the Retiree Medical Account or `RMA.’ We apologize for the abrupt timing of this week’s announcement and any anxiety or stress this announcement may have caused. We appreciate your sincere, direct, and honest feedback.
“The RMA benefit will remain in place until the end of 2022. The life insurance benefit and COBRA subsidy for retirees will remain in place until the end of 2022, as well. In the meantime, our HR benefits team is developing an alternate approach for crew and retirees. As our HR team consults with internal and external experts to determine a path forward, please share your feedback directly with Crew Central by emailing email@example.com.”
According to copies of the benefit contracts, Vanguard can end the RMA program at will. But many current and former employees said they never expected the company to cut RMAs completely and so suddenly.
“I worked at Vanguard 35 years, and as a result of that, I accrued about $150,000 in nontaxable” funds that Vanguard put into the account, Greg Wynn, 59, of Spring City, Chester County, said last week, before Vanguard’s Buckley issued the video apology. “That money was available to pay for health care until I was Medicare eligible.”
Buckley didn’t give a specific time frame for the decision on RMAs in the Friday video.
Current and former Vanguard employees expressed hope but cautious skepticism on social media, saying other than the one-year extension through 2022, it’s unclear what will happen next.
“Let’s appreciate that Vanguard at least heard us and made corrections, whether it was out of concern for us or for the negative publicity,” wrote one. “Now we await the announcement of their plan for post-2022. I am hopeful until I have reason not to be.”