I read that changes have been made that make it easier for companies to offer pension payouts.
Do you the TR will go this route?
9 replies (most recent on top)
I doubt many people in TR would have hit the max:
“The amount of monthly income insured by the PBGC has a cap. In 2018, for a pension recipient age 65 whose company plan was covered by PBGC, and who is taking a joint life payout with 50 percent that would be paid to a survivor, the maximum amount of benefit covered by insurance is $4,878.41 a month.”
Yes the PBGC guarantees pension benefits but it's not that simple--the maximum is adjusted annually--you should check the monthly maximum based on your age.
Even if TR goes under or fails to meet its obligations, your pension is guaranteed by the PBGC. So unless the republic goes under, your benefits should be there.
I joined the company right after college, and got in on the TR pension plan two years before it was closed to new employees. Unless the current lump sum offer is drastically reduced whenever I end up leaving the company, I plan to take that option. I understand the benefit of having retirement income diversified by having both a "defined benefit" and investment savings. However, based on the company's recent and expected future actions, I have little faith that the "defined benefit" payments will be able to be delivered as promised by the time I actually retire, as I am one of the youngest employees on the plan. I can't imagine the current lump sum offer will be less than whatever is left of the pension plan assets by the time I retire.
I have discussed this before with older colleagues (some who have since been laid off) who are much more vested in the plan and nearing retirement. Most or all of them plan to take the defined benefit payments. This makes sense to me, as they would have the assurance of not outliving their retirement income that is provided by a pension, and have a much better chance of the company having the assets to make regular payments through their retirement years.
Anonymous in Post ID @Yc268dQ-3fuu wrote: "You can outlive your lump payments but not your pension."
Some employees have defined contribution pensions which means that they can easily outlive their pensions!
You can outlive your lump payments but not your pension.
If you're considering pension lump sum vs. installment payments, I recommend consulting a financial advisor. My position was eliminated last December and I first thought that installments were the best option but my advisor said that taking the lump sum and investing it could bring a higher return than the installments. Everyone's financial position is different so make sure that you ask all the questions before choosing.
Let’s not criticize them for one good thing they did. A lump sum payout option is great for those that want it. No one’s forcing anyone to take it.
Of course. They already started offering lump sums, it gets the liability of their books.