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Old 11-20-2007, 02:45 PM   #21
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How wouild you find out what the funded ratio is?
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The pension plan should be issuing annual reports. Go to your HR dept. or to the pension plan administrator and ask. Or lots of times you can access these reports on the web.

The "funded ratio" refers to how many assets does the plan have in relation to promised retirement benefits in force. A plan 90-100% funded is strong. A few plans can conceivably be at over 100%. 80 to 90% is fair to middlin. If the ratio gets down in the low 70's, the 60's, the 50's, or even further south, I'd worry how/where money would come from in the future to get plan back on an even keel.
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Old 11-20-2007, 03:07 PM   #22
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I'm looking at my Pension calculations to give some perspective (These could be different due to a QDRO 10 years ago).
Lump Sum = $380K
Single Life = $1,940 per month
100% Survivor = $1,708 per month

So compared to MegaTech your offer of $48K versus $500K is way more slanted towards taking the Annuity; whereas mine is not so much.

t.r.
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Old 11-20-2007, 03:19 PM   #23
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The pension plan should be issuing annual reports. Go to your HR dept. or to the pension plan administrator and ask.

I agree, these annual reports should be available. I'm surprised you have not received one as the pension protect act last year requires them I believe. The act also provides protection so you don't lose all your private pension in a financial melt-down.

The Pension Protection Act Of 2006
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Old 11-20-2007, 03:31 PM   #24
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Originally Posted by TeeRuh View Post
I'm looking at my Pension calculations to give some perspective (These could be different due to a QDRO 10 years ago).
Lump Sum = $380K
Single Life = $1,940 per month
100% Survivor = $1,708 per month

So compared to MegaTech your offer of $48K versus $500K is way more slanted towards taking the Annuity; whereas mine is not so much.

t.r.
My wife's one of the few at the company that's grandfathered with the option of a monthly pension due to an earlier merger. That may be why it's slanted in that reguard.
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Old 11-20-2007, 04:50 PM   #25
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I would go with the pension with survivor benefits. That is what I did with my pension. It would be a shame if your wife got hit by a car a couple of years out. With a lump sum it would all still be there. With the annuity, 50% is still a decent amount. Check to be sure they don't offer a 100% option.
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Old 11-20-2007, 05:31 PM   #26
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There is that option with a lower annual payout ~ 40k
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At the 40K payout assuming you use the pension as equivalent to 500K and 20K per year adjusted for inflation (I assume 4% long term just above the long term average for conservative sake) you will top out at 18 years at which point your savings from the remainder will be $231K (assuming a 40% tax rate and a 5.5% after tax return) The money would hold out at that rate for a total of 40 years (22 more years). At which time it would revert to only 40K per year which would be worth about 40% of the original withdrawl of 20K per year.

At a 6.5% after tax return you will never run out of money.

To be fair questions like this could really involve many strategies such as deferral of social security, minimization of income taxes, effects of inflation. Actual returns on investment. However in this case it appears the base pension with a possible insurance policy for a suitable amount of insurance on your wife for yourself would be the wisest course,

As a reasonable estimate of the value of the pension I went to Vanguard and requested how much I would need to get the pension you stated. At 715K the lump sum is only 70% of the indicated actual value.

Quote:
Primary Annuitant -- Birth date: 06/15/1948 Sex: F
Quote Expiration Date: 11/27/2007
Benefit Commencement Date: 01/15/2008
State of Residence: IN
Payments per Year: 1
Initial Payment Amount: $48,000.00
Total Premium Amount for Fixed Single Life Annuity: $715,297.28
Cancellation Option Selected: No
Qualified Assets: Yes
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