I put in for lump sum from pension a few days before bankruptcy. Today I got notice my request was cancelled because of Sears bankruptcy. I have to resubmit request and can only get monthly payment. This is not what I want. I want the lump sum so I have the money in my hands not Sears.
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PBGC is similar to FDIC. Go to their website and read what they have to say about the Sears pension. You will most likely get your full annuity amount. The annuity is not such a terrible thing. Some experts say that your fixed expenses should be covered by a combination of Social security and annuities so then it won't be bothered by stock market volatility (like the one we are experiencing now). The only advice I can say is to choose the survivor benefits carefully. You might be able to buy a good whole life policy to back up your pension and decline the survivor option and use the life insurance policy for your survivor. In most cases it's much cheaper than taking the Sears survivor option. That's what I did. Also, if I did take the lump sum and roll into an IRA, I would be down about 5 or 6 percent already. Speak to your financial adviser or insurance agent before making a decision.
It's not the end of the world. When you calculate the annuity monthly amount to a yearly sum, it's around 6 percent (yearly) of the amount from your lump sum. Not a bad percent, it's hard to find those kinds of payouts in a mutual fund or CD. Read Steve Vernon's "Retirement game changers" for more information and advice... it helped me make some hard decisions when the Sears BK hit the fan in the past couple of weeks. Also a reminder that if you take COBRA, it could end if they file for Chapter 7 so since the annual heath enrollment period starts Nov 1, take a look at those plans and consider enrolling so you have health insurance if COBRA stops. The final comment is that if Sears owes you severance money, go to the prime clerk website, print off the form, fill it out and use your last pay check numbers to figure out what they owe you and send it in. Sure, it might take a long while to get anything or you might get a fraction of what they owe you but I would spend the hour or two to read and fill out the form and mail it in. I read the BK code and severance IS considered a priority debt like wages and compensation despite what Sears said in the Severance agreement.
I hope this helps.
"The threshold is the cap, however, so above the limit, you will take a potentially sharp hit."
Since that cap is about $65k per year, I think anyone getting a pension even bigger than that, on top of social security, is probably quite well-off and could afford to cut back easily (take less expensive vacations or whatever), unlike lower-income people who have less optional spending that could easily be cut. That's a very generous/reasonable amount, that should have no impact on the vast majority of Sears retirees.
The PBGC itself is funded through a fee paid by employers who maintain pensions. It is not taxpayer funded. The pension, as it exists today, is funded to the tune of many billions of dollars. It is not fully funded, but it has enough assets to either pay everyone in it 80%, or pay everyone at 100% until it runs out, which will take many years. Since Sears owes everyone 100%, and can't reduce benefits paid, that's where the funding problem is.
If and when the PBGC takes over, then the rules of that organization take over. They have rules in place that allow everyone under a certain threshold to be paid at 100%. The threshold is the cap, however, so above the limit, you will take a potentially sharp hit. That will help close the funding gap, at least partially. The rest of the gap will be paid for by the sale of assets under the springing lien, and lastly, by fees charged to other companies who have pensions.
So, sbi, stop being a d--k.
Enron pensions were fine, for the same reason Sears pensions will be, the PBGC. https://www.chron.com/business/enron/article/17-000-Enron-pension-holders-to-get-paid-in-full-1512687.php
(Some articles about it misused the term 'pensions' for 401k retirement accounts, which were fine if responsibly diversified, but lost if invested heavily in Enron stock.)
The pension has already been handed over to the government agency. Enough of the conspiracy c-ap
Can you spell ENRON? Go ahead and throw insults and act superior because you did a Google search. I mock fools who believe and/or trust the government. In any case we are just throwing darts at each other. Let’s wait a few months when the pension is at zero balance. Then you can come back here and apologize that me.
hmk L, you are the id--t. Clearly you don’t know how pensions work. The government guarantees he pension upto I believe $65,000 a year.
“PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private-sector defined benefit plans”
That quote is from the federal agency itself.
https://www.pbgc.gov/about/faq/pg/general-faqs-about-pbgc
I love it when ignorant people think they know what they are talking about. How about you do a simple google search before you open your ignorant mouth.
You fools are sniffing glue if you believe the pension is secure or distributable at any reasonable percentage. In case you missed the news, this corpse is BANKRUPT. And “the government” has no business getting involved. You’re not going to steal my money to fund your incompetence.
@sbi - You are totally misinformed and spouting complete nonsense!
@hpg - The amount guaranteed by the PBGC is more like $5,000 per month.
What about the people who have already retired and receiving a monthly pension check? It is my understanding from the Pension management company that you are safe under PBGC for you and beneficiaries if not a huge monthly amount, e.g $400.00 per month.
Have no doubt the basic pension will survive paid by the govt , a-- of them have already been handed off to Met Life bought and paid for as annuities.
Lump sum option is out the door for most folks . So are any other benefits attached to retirement . Pretty basic.
Apparently the pension has already been handed off to the PBGC and they will only pay a monthly benefit and yes it may get reduced. The only way to get a lump sum is if the total value of your pension is worth 5k or less. You can read about this at the PBGC.gov website. This info was posted weeks ago. No surprise here. Mnuchin had to testify years ago, when he became Treasury secretary, about recusing himself from the government related decisions when Sears goes bankrupt and the insolvent pension. The power of the internet helps people that read stay ahead of these events. Lampert has also said, and it has been repeated many times that Sears was transitioning to an asset light company. That is what is happening, and almost all the assets are gone now.
You had to see this coming, you waited to long.
That's a load of c-ap. The option for lump sum is likely gone, meaning you have to wait until your turn 65 to get your monthly check. Otherwise, unless your benefits exceed the maximum benefit payable by the PBGC, then you will be made whole. Otherwise, your pension is limited to the max benefit.
I hate to spell it out for you, but your pension is G-O-N-E. At least as far s lump sum. And I strongly suspect the monthly payout will be drastically reduced. Probably totally insolvent within the next six months.