As ConocoPhillips announces plans to trim its workforce worldwide by 20 -25%, there is uncertainty within its Alaska workforce, despite the expansion of its North Slope operations with the Willow project. As of this writing, it’s unknown how, or if, the layoffs will affect Conoco’s Alaskan workforce, but if/when they do, it will disrupt the lives of those affected.
As we’ve worked through client layoffs in the past, there are a number of topics that arise- both emotional and financial- and the transition is never an easy one. Even for dual-income families, the shift from two incomes to one, even if brief, can have an impact on the day-to-day lives of the families involved. Here are some things to think about if you feel you may be affected by a layoff:
Financial Preparedness Assessment:
- Conduct a comprehensive review of your current finances, evaluating income, expenses, savings, and debt.
- What would it take to sustain your core monthly needs and/or current lifestyle expenses? Where would you make (temporary) reductions, if needed?
- If you’re offered a severance package, how long will that last before alternate funding methods are needed (usually a reactionary question)?
- What are your cash reserve levels, or what assets/accounts can be used to fund any gaps in monthly need while you make a transition to new employment?
- Identify short-term financial needs and long-term goals, and how the loss of an income could impact them.
- Do you have basic needs met during any transition (i.e., health care coverage gaps, etc.)?
- Will you need funds for a job search, move, or re-education program for your next position?
Ideally, these assessments are done on a semi-regular basis, and you’d update your data and thinking ahead of the layoff. In practice, this is often not the case, and families are forced into reactive changes or are scrambling to figure this out. Having an updated cash flow plan that takes into consideration various contingency plans can impact how one reacts emotionally to being affected by a layoff. Working with a financial planner can add an objective voice to these processes.
At some point after the layoff, clients must make a decision about what to do with their (now former) benefits, and a conversation with a financial planner and/or tax professional can be an important part of many of these decisions.
Some of the benefit-related questions you’ll face include:
Health Insurance
Should I (or can I) take advantage of COBRA for my health insurance needs? For many, this is an available option, particularly in the short term. It allows for continuation of your current coverage, albeit at much higher premium costs (you pay full freight- employee and employer portions of the premium- for up to 18 months in many cases). Or am I better off buying private coverage (or using Alaska Care) until I’m re-employed with new benefits? There are numerous factors to consider, including overall cost, continuation of specialized or needed care or providers, and how quickly one may find their next job (or retire). Historically, ConocoPhillips has required eligible participants to enroll in COBRA coverage within 65 days of the coverage ending (or 65 days of the date of the COBRA enrollment notice).
Other Insurance/employee benefits
Did you lose valuable life insurance coverage with the job change, and how does that impact your overall planning? Did you lose disability coverage in the layoff, and is that an impactful change for you? Did you contribute to a Flexible Spending plan, and how will you access those dollars before year-end, when they could be lost? What other benefits within your package may change or be eliminated, if only for a short period of time?
For longer-term Conoco employees
Do you have a balance in the Phillips66 Retirement Plan, or Phillips Retirement Income Plan, and what are your options for accessing those funds? (Note- this plan was closed to new entrants in January 2002, so newer employees would have an alternate plan.) Some employees originally in this plan may have moved their balance to the newer Cash Balance Account. You can consult your “P66 SPD” document for more details or consult with a financial professional.
For all eligible Conoco employees
- Do you have a balance in the Phillips66 Cash Balance Account- Title II? What are your options for receiving benefits through this plan? You can consult your “P66 SPD Cash Balance” document for more details or consult with a financial professional.
- Do you have a balance in the Phillips66 Savings Plan, effectively the ConocoPhillips 401k account? What are your options for receiving benefits through this plan? Typically, you would have a number of options, with potentially varying tax impacts and planning impacts for you, so be sure to consult your “P66 SPD Cash Balance” document for more details and/or consult with a financial professional.
Executive Compensation
Some eligible Conoco employees may have received executive compensation as part of their overall comp packages, which would include RSUs/Options and other executive savings vehicles (some companies offer deferred comp or executive savings plan options). Each of these plan types may have varying rules for how vesting or expiration dates are handled in case of a termination or layoff, so be sure to review plan documents and/or speak to a financial professional to understand the full suite of options available to you!
- It’s worth noting that historically, ConocoPhillips has included a section of its Health and Well Being Handbook that details “Severance” details and eligibility requirements for its severance program. It’s worth providing an updated copy of this handbook, and any updated information or release forms provided by Conoco, to your financial planner and/or tax professional before signing the release.
Just the news of proposed layoffs can affect a workforce and getting the news that you’re personally affected adds emotional and financial complexity to one’s life. Having an objective, trusted professional by your side to help you weigh the many options and impacts can help to ease some of the stress and make the transition more palatable. Feel free to reach out to us if you want to begin preparations or deal with the fallout of this (potential) major life change!
