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Understanding the Rise in Interest Rates: What It Means for Nordson Employees and Their Retirement Plans

Interest rates are a key driver of most financial assets. While most often referenced in relation to the bond market, rates are also a key input in traditional equity valuation models, which incorporate market interest rates to determine the appropriate rate to discount future cash flows. Interest rates are an essential element in bond pricing and the yield that investors require to own a particular fixed-income security. Since hitting an all-time low in 2020, interest rates increased in 2021 and have continued that climb higher thus far in 2022. This has put pressure on fixed incomes and certain areas of the equity market, which has led to stress in certain areas of the stock market, such as growth stocks, which can be sensitive to interest rate shocks. With that in mind, let’s examine why rates have been moving up, and whether this should be a cause for concern for Nordson employees.

MORE AGGRESSIVE FEDERAL RESERVE
The Federal Reserve (Fed) has already raised interest rates by 75 basis points this year. A 25 basis point hike in March followed by a 50 basis point hike in May. The Fed is currently expected to hike rates by 50 basis points in both the June and July meetings and will continue to hike through the better part of 2022. With inflation running hot and the job market showing strength, the fact that the Fed is finally moving away from zero shows confidence in the health of the job market. But the speed with which interest rates are expected to go up underscores its concern about the soaring cost of living. Americans living in areas like California or New York will experience this policy shift through higher borrowing costs: No longer will it be insanely cheap to take out mortgages or car loans and this along with higher inflation may lead to less investment in the market and more spending on needs, which is a main reason for market volatility, and important for Nordson employees and retirees to keep in mind.

INFLATION CONCERNS
Inflation is also a primary determinant of long-term interest rates. Rising inflation has the potential to eat away at fixed-income returns, so naturally, inflation expectations are a component of the yield that investors require to own fixed income. Put simply, inflation is a result of too much money chasing too few goods, and there are concerns that the increase in the level of money in circulation may lead to this. The extraordinary level of fiscal and monetary stimulus put in place to combat the economic damage of Coronavirus caused a significant increase in the M2 money supply. As a result, we are currently seeing this increase in the level of money in circulation translate to a pickup in consumer spending, but also elevated inflation.

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RISKS OF A RECESSION
Now that the pandemic has started to recede, the Fed has once again started to raise short-
term interest rates. This policy change has caused market volatility to spike for the three
major reasons to the right.

Today as the Fed begins to aggressively hike interest rates, market participants worry we may endure a period of high inflation alongside weakening economic growth — otherwise known as stagflation.

This environment is another example of why we believe in and suggest to our clients from Nordson that staying diversified is the best way to insulate portfolios from being too exposed to one risk factor.

Economic Definitions
M2 Money Supply: The M2 Money Supply, also referred to as “M2” or “Money Stock,” measures the amount of currency in circulation. M2 includes M1 (physical cash and checkable deposits) as well as less liquid money, such as saving bank accounts.

How does the Nordson Corporation Salaried Employees Pension Plan calculate an employee's Accrued Benefit, and what factors need to be considered to ensure accurate pension benefits at retirement? Understanding the components that contribute to the calculation is crucial for employees planning their retirement through Nordson Corporation.

Accrued Benefit Calculation: Nordson Corporation calculates an employee’s Accrued Benefit based on the Final Average Monthly Pay, the number of Years of Benefit Service, and an estimate of the employee’s Social Security benefit. The formula used includes a reduction if an employee has less than 30 Years of Benefit Service(Nordson Corporation_Feb…).

What are the eligibility criteria for joining the Nordson Corporation Salaried Employees Pension Plan, and how can employees determine their vesting status as they approach retirement? It is essential for employees to be aware of the timelines and requirements necessary to fully benefit from the retirement plan offered by Nordson Corporation.

Eligibility Criteria: Employees become eligible for the Nordson Corporation Salaried Employees Pension Plan after completing a Year of Eligibility Service, which requires at least 1,000 hours of work annually. Vesting occurs after completing 5 Years of Vesting Service, ensuring full entitlement to benefits(Nordson Corporation_Feb…).

In what ways can employees at Nordson Corporation access information about their pension plan benefits, and what steps should they follow if they believe their claims for benefits were denied? Knowing the appropriate channels for receiving information can help employees navigate any discrepancies with their pension benefits.

Accessing Pension Information and Claiming: Employees can access their pension plan details through John Hancock’s website or phone service. If a benefit claim is denied, employees can follow the claims procedure outlined by Nordson, which includes submitting a written request and appealing decisions(Nordson Corporation_Feb…).

What options does Nordson Corporation provide for early retirement, and how can employees assess whether an early retirement is financially feasible for them? Understanding the implications of early retirement can significantly impact an employee's long-term financial security.

Early Retirement Options: Nordson Corporation offers early retirement options starting at age 55, with at least 5 years of vesting service. Benefits are reduced by 6% per year for each year that early retirement is taken before the Normal Retirement Date(Nordson Corporation_Feb…).

How does Nordson Corporation's pension plan ensure that employees receive monthly benefits post-retirement, and what are the different forms of payment available to retirees? Grasping the payment structures may help employees make informed decisions regarding their retirement income.

Monthly Benefit Payments: Employees retiring from Nordson Corporation can choose various payment methods, including a Life Annuity or a 50% Joint & Survivor Annuity for married participants. Payments start after the Normal Retirement Date or early retirement, depending on the selected option(Nordson Corporation_Feb…).

What rights do participants have under the Employee Retirement Income Security Act (ERISA) concerning their Nordson Corporation pension plan, and what should they do to enforce these rights effectively? Employees should be aware of their rights to protect themselves during the benefit claiming process.

ERISA Rights: Under ERISA, participants have the right to receive information about their benefits, file claims, and sue if benefits are denied. Plan fiduciaries must act in the best interest of employees, and participants are protected from retaliation for asserting their rights(Nordson Corporation_Feb…).

How does the termination or amendment of the Nordson Corporation Salaried Employees Pension Plan affect employees' accrued benefits, and what protections are in place? Awareness of these scenarios can help employees better plan their financial futures in relation to their pensions.

Plan Termination or Amendment: If the plan is terminated or amended, accrued benefits cannot be reduced, and employees’ benefits become 100% vested. This ensures that employees retain the benefits they have earned up to the point of the change(Nordson Corporation_Feb…).

In what situations might employees at Nordson Corporation lose their pension benefits, and what preventative actions can they take to ensure they remain eligible for these benefits? Understanding the risks involved in pension plans can aid employees in maintaining their retirement security.

Loss of Pension Benefits: Employees may lose pension benefits if they leave Nordson Corporation before vesting or fail to select appropriate survivor options. Keeping the Plan Administrator informed of current contact information is crucial to avoid losing benefits(Nordson Corporation_Feb…).

How can employees at Nordson Corporation address questions or concerns related to their retirement planning, and what resources are available for personalized assistance? Access to proper resources is vital for employees needing guidance throughout their retirement journey.

Retirement Planning Resources: Employees can contact the Plan Administrator or use John Hancock’s automated services to address questions about retirement planning. Personalized assistance is available for any specific pension-related inquiries(Nordson Corporation_Feb…).

What steps should employees take to contact Nordson Corporation or the Plan Administrator to get detailed information about their pension plan, and what should they include in their inquiries to ensure a comprehensive response? Effective communication techniques can significantly enhance employees' understanding of their benefits. These questions have been designed to help employees of Nordson Corporation navigate their pension plan and retirement effectively.

Contacting the Plan Administrator: Employees can contact Nordson Corporation or the Plan Administrator by calling the number listed in the Summary Plan Description. It’s advisable to provide detailed questions regarding benefit amounts, vesting status, or payment options to receive a thorough response(Nordson Corporation_Feb…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Pension Plan Name: Nordson Corporation Retirement Plan Qualification Criteria: Years of Service: Generally requires a minimum of 5 years. Age Qualification: Typically eligible at age 65. Pension Formula: Formula is based on a percentage of final average salary and years of service. 401(k) Plan Name: Nordson Corporation 401(k) Savings Plan Qualification Criteria: Employees are eligible to participate after completing 30 days of service. Company Contribution: Nordson matches employee contributions up to a certain percentage.

News: In early 2024, Nordson Corporation announced a significant restructuring plan, including a reduction of approximately 5% of its global workforce. This move was part of a broader strategy to streamline operations and improve overall efficiency. The company also updated its employee benefits package, including modifications to its pension and 401k plans. Specific changes included adjusting the company’s matching contributions and modifying pension benefit accrual rates.

Nordson Corporation (NDSN) provides stock options and RSUs to employees as part of their compensation packages. Stock options at Nordson Corporation (NDSN) are generally granted to senior executives and key employees based on performance and tenure. RSUs are also awarded to employees as a form of long-term incentive, typically vesting over a period of time.

Benefits Overview: Nordson's official site provides information on various health benefits including medical, dental, and vision insurance plans. Employees have access to comprehensive health coverage, which typically includes options for health savings accounts (HSAs) and flexible spending accounts (FSAs). Recent Updates: The company has updated its benefits plans over the years. Specific changes for 2022, 2023, and 2024 can be found in their annual benefits summaries or employee communications.