You’ve been told you have the option of converting all or part of your pension plan to an immediate cash payment (a “lump sum”). What should you do?
Just as important, how do you even think about this in a sensible way?
First, let’s distinguish three circumstances under which you might have the option of taking a lump sum from your pension plan:
Although each of these situations is different, most of the thought process you should go through is the same.
Even so, there is more than one way to think about this decision.
Of course, if the lump sum amount is small, none of this matters a great deal. But if it represents more than a few paychecks to you, then it’s worth putting some serious thought into.
And that’s what our guide "Should You Accept A Lump Sum From Your Pension Plan?" is for.
For a free copy click here.
Welcome to ,CES-CREWS' new blog on the fascinating world of DB plan de-risking and termination trends.
Just who needs that you might be saying?
Well, our blog is uncommonly interested in a point-of-view which is often lacking in this area: the participants. Not that we aren’t interested in the plan sponsor – quite the opposite. But plan sponsors generally have a phalanx of advisers available to them and no shortage of analyses to read about themselves. Participants? Not so much.
By Chuck Yanikoski
We’re well aware that when plan sponsors restructure or terminate defined benefit pensions the primary reasons are financial. But we also know that finances don’t tell the whole story, and we know that if you’re the plan sponsor, you know it, too.
Still, while all the spreadsheets and legal documents are shuffling back and forth, it’s easy to temporarily lose sight of the impact on individual plan participants. One of our goals here at CREWS is to help assure that this doesn’t happen.
Participant concerns matter for three kinds of reasons: legal, business, and moral.
By Chuck Yanikoski
Sure, we know that some DB plan participants receiving lump sum offers don’t need advice at all. Sometimes the distribution is too small to matter, or the participant’s personal situation makes the right choice glaringly obvious. But these are the exceptions.
Most plan participants do need advice, and so the question is: what kind?