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Old 01-14-2016, 10:36 AM   #41
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did you see the link to the online calculator in that thread?
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Old 01-14-2016, 10:54 AM   #42
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Originally Posted by Big_Hitter View Post
did you see the link to the online calculator in that thread?
I missed it the first time so thanks! For some reason it says I can't have access to the server however.

Unless you mean the immediate annuity link?
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Old 01-14-2016, 10:57 AM   #43
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I missed it the first time so thanks! For some reason it says I can't have access to the server however.

Unless you mean the immediate annuity link?
no it looked like a PPA lump sum calculator but I can't vouch for it
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Old 01-14-2016, 11:21 AM   #44
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Originally Posted by Slow But Steady View Post
I assume the pension is non-COLA?

If you're really relying on the pension, you sure need to look seriously at taking the monthly check. At least I would.
My pension is non-COLA as well, as was my wife's. For hers, we took the lump sum, even though the annuitized amount would have been quite a bit more than a 4% withdrawal rate will give.

For mine, they penalize us for taking a lump sum, so I'll probably take the annuity.

By the way, my wife's mega-corp used the PBGC interest rates to calculate the lump sum. They calculated the lump same based on the average of the PBGC rates for three months to five months prior to the date you take the money.

I carefully watched the rates go down after she retired, and took the money when they began to edge up. I guess it might have increased the lump sum amount by two or three percent, but as you say, better than a poke in the eye with a sharp stick.

FYI, Here's a link for the PBGC monthly rate update: Monthly Interest Rate Statement
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Follow-up to pension buyout offer
Old 02-04-2016, 10:38 AM   #45
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Follow-up to pension buyout offer

Quote:
Originally Posted by supernova72 View Post
Full disclosure I did search for quite a while before posting but came up short on my question. Apologize in advance if this subject has been covered in another posting.

My Megacorp is offering a pension lump sum to those who retire on April 1st 2016 or later. Our pension will "freeze" at the end of 2015. This is the first time a buyout has been offered to current workforce employees.

A year ago it was offered to those salaried folks who had left the company and not yet drawn on their pension. See post below:

Pension Payout Opinions? -- BOEING

A month ago it was offered to former hourly production workforce (represented by the machinists union in WA state).

So...my question is this: Is there a set formula/calculation companies use when offering a pension lump sum payout? Meaning do that have some flexibility to sweeten the pot so to speak to entice more folks to take it? Initally I thought it all based on discounting the lump sum based on gender, actuarial tables, etc, etc.

A bit about me:

31 yrs at the company
55 yrs old and vested and eligible to retire (just turned 55)
Plan to work 2 more yrs if possible (several reductions in force within our IT organization).

Based on previous buyouts it appears there is a 30% haircut when these are offered. I backed into what it would cost me to purchase a lifetime annuity to create the same income stream is my pension at my current age (~ $630K to create $3077 a month).
I was surprised to read that historically 58% of the folks "take it". Lol.

Cheers.
OP here. The new lump sum option is available for employees to see today and there is a "haircut" of sorts yes.

My pension would be $3,077 based on an April 1st retirement date (non-COLA). The pension lump sum option is $472,207. Based on a lifetime annuity value of $630,000 this looks to be a 25% haircut. So even though they need to use IRS actuarial tables and IRS "417E" pension buyout interest rate it appears the Megacorp can then discount it even further. Interesting...
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