Ford has announced it will offer to buy out the pensions of thousands of salaried employees by offering a lump sum.
http://articles.latimes.com/2012/apr/28 ... n-20120428
"We believe this is the first time a program of this type and magnitude has been done in an ongoing pension plan," said Bob Shanks, Ford's chief financial officer.
If an individual elects to receive the lump-sum payment, the company's pension obligation to the individual will be settled. Ford said it was working with federal regulators on how to execute the plan. The payouts will start later this year.
I am retired from GM, with a defined-benefit pension. Interestingly enough, last week I got a call from Gallup, with a poll about finances. What it came down to, was would I accept a buyout of my pension for a lump sum of 8 times my annual pension amount? I said no. I have to believe this call was not a coincidence.
My rule of thumb is that I could buy an annuity that pays 6%. The lump sum would need to be 1/0.06 = 17 times the annual payment.
As I understand the pension laws, a company can buy an annuity to replace your pension and force you to take it. Given that, it is hard to understand how a company would offer a lump sum that is a better deal for you than the annuity they could force on you.