Discount Rate Change in 2012?
I'm facing a decision to remain in a company funded pension plan or take the current lump sum amount and roll it into a 401k or some other retirement plan (IRA?). If the latter choice is selected, the company will match up to 6% of my contribution. As it is, I put 8% in to our 401k, but with no contribution. If I elect to remain with the pension, things remain as is on the 401k side.
Looking at scenarios for future returns, the ultimate figures at retirement remain relatively equal, presuming a conservative 7-8% return rate. Question is, I have heard a pension's lump sum pay out is somehow calculated on the discount rate of T-bills (3%?). Further, I have heard that in 2012 that calculation will change, to then be based on the discount rate of Corporate Bonds, which I understand is considerably higher. If so, the figure the company is projecting, based on the current T-bill rate, is over estimated, perhaps considerably, if the calculation will later change to Cop Bonds.
Anyone know if this T-bill to Corp Bond discount rate change thing is true? Is it something I should be considering?
Secondly, which do you think would be better....I'm 40, so 25 years to retirement. The pension lump sum is $36,600. The company projects its value, lump sum payout at age 65, to be $937,600 (or $6,000/month in an annuity). I currently put 8% into the 401k, about $750 per month (currently a value of $65,600). Should I keep the pension and my 8% 401k contribution, or take the pension lump sum to invest on my own (IRA?) and then get the 6% match from the company on the 401k side?
FYI, I understand there are some beneficiary limitations to the pension. I die before I receive the pension, by wife gets only about 45%. If I retire, take an annuity, then die, my wife gets 0, zip, notta. Thus, for her sake, presuming she outlives me, the pension may not be a good idea?
Thank you for any thoughts or suggestions! :confused::confused::confused: