31yo should I consider a VAC annuity?

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Joined: Thu May 11, 2017 12:41 pm

31yo should I consider a VAC annuity?

Post by CnC » Tue Sep 12, 2017 1:20 pm

I asked a similar question a few months ago but I didn't get very much of a reply, possibly because I didn't describe it very well.

I currently belong the the IMRF pension system. It is 90% funded currently protected by law and undergone an overhaul which greatly limits the liability for new participants. It is not related to IDOT state pensions that are very underfunded.

The IMRF offer the option to invest up to 10% of my salary into a VAC program which pays 7.5% interest per year with no chance of loss. (They state that interest rates may change but have been the same for the past 20-30 years)

It has very friendly withdrawl rules.
At any moment I can withdraw the entire amount I have invested. And I then receive all interest upon separation from my employer.

I also have the option of taking the lump sum and converting it into an annuity which pays out 8.5% of initial annuity amount per year with a 3% increase every year.

To me this seems like a very powerful tool for investing, and since it is "safe" it seems like a good place to put a portion of the bond portion of my portfolio.

Am I missing anything? I suppose there is the chance of the entire fund going bankrupt, but it clearly states that I can withdraw my investment amount at any time and I will be limited to 10% of my salary which is considerably less than will be going into my wife's and my 401k's.

https://www.imrf.org/en/members/origina ... tributions

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