I was absolutely livid yesterday after getting off the phone with the “Pension Lump-Sum Opportunity Service Center”. They called to say that the company had made a mistake when calculating the single life annuity benefit. Instead of their original offer of $XXX, they are actually offering $x which represents a 30% reduction. Their attitude was take it or leave it.
A little bit of background. I'm age 54, an early retiree from a Mega corp. September 15th of this year I received a Pension Lump-Sum Opportunity letter. It read:
“As we announced earlier this Month. The Company is offering you a voluntary, limited-time opportunity to elect to receive your pension benefit as a single lump-sum payment or as a monthly annuity with payments beginning in December of this year.”
I crunched the numbers and after discussing with my DW we decided to accept the single life annuity. Our reasons were; 1) the lump-sum offer represented a 30% haircut over what an immediate annuity would cost, 2) the surviving spouse benefit was paltry, 3) the single life annuity benefit represented a 8.5% return on the lump-sum offer (better return and somewhat safer return than our portfolio) and 4) we would use the monthly single life annuity to offset funds which we were otherwise taking out of savings, thus reducing our safe withdrawal rate.
We completed the paperwork on-line well before the October 31st deadline. After the deadline I checked the website daily only to find that my application was still in “Review” status. Until yesterday when I got the call.
Fortunately I have hard copy screen shots of everything as well as the September 15th offer on Company letterhead. The Company will be overnighting their new offer and supposedly an explanation for their error.
Okay so Wah, I'm not getting what I originally wanted. But the reality is that we made financial decisions based on the assumption that cash-flow would include the monthly $XXX income stream. For example we moved forward with the purchase of real estate for cash, drawing down our savings. We can weather this. It's just irksome that the Company would pull something like this. Nowhere in the literature does the the Company say that the single life annuity amount “might” be different than the offer. There is however a reference that states:
“Every effort has been made to provide accurate information in this document. The material provided here is for informational purposes only; it does not constitute a contract or contractual obligation. In the event of a conflict between this document and any of the benefit plans, the terms of the plans will control. The Company reserves the right to amend or terminate the pension plan at any time and for any reason, with or without notice to participants.”
Okay so the offer is not a “contract”. I get that. But does that imply that the original offer is not binding? Thoughts? Suggestions.
A little bit of background. I'm age 54, an early retiree from a Mega corp. September 15th of this year I received a Pension Lump-Sum Opportunity letter. It read:
“As we announced earlier this Month. The Company is offering you a voluntary, limited-time opportunity to elect to receive your pension benefit as a single lump-sum payment or as a monthly annuity with payments beginning in December of this year.”
I crunched the numbers and after discussing with my DW we decided to accept the single life annuity. Our reasons were; 1) the lump-sum offer represented a 30% haircut over what an immediate annuity would cost, 2) the surviving spouse benefit was paltry, 3) the single life annuity benefit represented a 8.5% return on the lump-sum offer (better return and somewhat safer return than our portfolio) and 4) we would use the monthly single life annuity to offset funds which we were otherwise taking out of savings, thus reducing our safe withdrawal rate.
We completed the paperwork on-line well before the October 31st deadline. After the deadline I checked the website daily only to find that my application was still in “Review” status. Until yesterday when I got the call.
Fortunately I have hard copy screen shots of everything as well as the September 15th offer on Company letterhead. The Company will be overnighting their new offer and supposedly an explanation for their error.
Okay so Wah, I'm not getting what I originally wanted. But the reality is that we made financial decisions based on the assumption that cash-flow would include the monthly $XXX income stream. For example we moved forward with the purchase of real estate for cash, drawing down our savings. We can weather this. It's just irksome that the Company would pull something like this. Nowhere in the literature does the the Company say that the single life annuity amount “might” be different than the offer. There is however a reference that states:
“Every effort has been made to provide accurate information in this document. The material provided here is for informational purposes only; it does not constitute a contract or contractual obligation. In the event of a conflict between this document and any of the benefit plans, the terms of the plans will control. The Company reserves the right to amend or terminate the pension plan at any time and for any reason, with or without notice to participants.”
Okay so the offer is not a “contract”. I get that. But does that imply that the original offer is not binding? Thoughts? Suggestions.