|
|
09-30-2014, 12:22 PM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,998
|
Quote:
This is an offer, they aren't converting everyone.
|
If it anything like mine from a different employer, they are converting everyone. It is probably a choice to accept the lump sum payout; to accept the same defined benefits at retirement age but now paid by and guaranteed by an insurance co; or to accept earlier (lower) monthly benefits paid by that same insurance co.
There was no choice to let things ride with the company's plan. If I took no action, it would be converted for me.
The limited time offer most likely coincides with their approved conversion timeframe.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
09-30-2014, 12:33 PM
|
#22
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,819
|
Quote:
Originally Posted by CRLLS
If it anything like mine from a different employer, they are converting everyone. It is probably a choice to accept the lump sum payout; to accept the same defined benefits at retirement age but now paid by and guaranteed by an insurance co; or to accept earlier (lower) monthly benefits paid by that same insurance co.
There was no choice to let things ride with the company's plan. If I took no action, it would be converted for me.
The limited time offer most likely coincides with their approved conversion timeframe.
|
They may be moving everyone to Prudential (I'm not sure), but the lump-sum offer is a limited-time offer, from what I understand. Retirees moved to Prudential must be provided the same pension as before, if they do not accept the lump-sum offer.
Here's my guess as to motivations:
1) No corp likes uncertainty. When someone accepts the lump-sum, it becomes certain, $X this year, no future obligation for the corp.
2) Repeating my earlier statement, even a low-ball offer will be attractive to some people. The corp will save money and gain certainty. A win for the corp, and and assumed win for the retiree (or they would have rejected the offer).
I'll further assume that this was part of the negotiations with Prudential (if they are moving everyone to Prudential) - trade some uncertainty for a below-par offer.
-ERD50
|
|
|
09-30-2014, 11:23 PM
|
#23
|
Full time employment: Posting here.
Join Date: Mar 2004
Location: No Where for Very Long
Posts: 769
|
Quote:
Originally Posted by TresBelle65
I ran the $120K lump sum offer for a female, age 65 through a few online calculators - they all came back in the low $600/month range - $605 - $640.
Since the previous employer's plan will provide $1500/month, staying with the pension seems like the better deal.
The downside risk is the declining value of the non-cola adjusted pension,
but a pension does diversify my overall portfolio.
At the end of the day, I suppose compelling arguments could be made in either direction.
Tres
|
This is from 'Income Solutions' that I accessed through Vanguard's site. I ran it two different ways, the first:
Female, age 65, $1,500 monthly income
Cost of annuity was $278,543.20- Single Life
Female, age 65 $120,000 lump sum
Monthly income was $645.91- Single Life
Looks like keeping the pension is a better deal
__________________
|
|
|
10-01-2014, 08:57 AM
|
#24
|
Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,169
|
I was comparing payout from an annuity purchased with the lump sum to the annuity option. The lump sum purchased annuity only paid 64%. Both used joint survivorship.
Sent from my Nexus S 4G using Early Retirement Forum mobile app
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
|
|
|
10-01-2014, 08:58 AM
|
#25
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,819
|
Quote:
Originally Posted by Lancelot
This is from 'Income Solutions' that I accessed through Vanguard's site. I ran it two different ways, the first:
Female, age 65, $1,500 monthly income
Cost of annuity was $278,543.20- Single Life
Female, age 65 $120,000 lump sum
Monthly income was $645.91- Single Life
Looks like keeping the pension is a better deal
|
Are survivor benefits being considered (if there is a spouse or heirs)?
Lump sum provides 100% survivor/heir benefits, pensions provide nothing to heirs, and are reduced for a beneficiary (typically ~ .75x for 100% to surviving spouse?). That might make these numbers much closer.
-ERD50
|
|
|
10-01-2014, 10:49 AM
|
#26
|
Recycles dryer sheets
Join Date: Jun 2014
Location: Syracuse
Posts: 371
|
Thank you for the additional feedback - that's what I was thinking - also maybe they'll come back with better offers down the road.
I do have heirs, but they are already more than well provided for elsewhere, so I am more concerned about my own longevity and livelihood.
I am reminded of my mother's cousin who has a dark sense of humor. She says "when I die, I am leaving my homes, vehicles and belongings to my children. If there is a dollar leftover, I miscalculated."
I'm not that dark lol.
Thanks again, Tres
|
|
|
10-03-2014, 02:26 PM
|
#27
|
Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,169
|
Update on my situation - I got the mailed package today.
It looks like this only affects my older, smaller, traditional pension. Previous to this offer you could start an annuity at age 55 or older. No lump sum offer. Now they are offering the option to
1) take a lump sum now (with caveats)
2) start annuity now (I'm 53, so it would be starting it before age 55).
3) start it sometime in the future - same as before.
It's not a huge pension or lump sum. The lump sum is worth $22015, the annuity started now would pay $115/month. Neither is life changing. (Nor did I expect them to be.)
For comparison - the lump sum would buy an annuity that pays $91/month. (80% of the one I could get through the pension program if I started it now. Comparing apples to apples - both are based on my age, my husbands age, and 100% joint survivorship)
I think I'm going to let it ride - along with my other pension from the parent corporation that acquired the original company (and it's pension). The lump sums aren't big enough to entice me to take on the risk - when I can have a small portion of my retirement stream annuitized at better rates than I can purchase.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|