Pension buy outs ???

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die-tryin
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Pension buy outs ???

Post by die-tryin » Tue Apr 26, 2016 6:33 pm

Has anyone gone thru a pension buy out aka lump sum?

The company I was with for 19.5 years is freezing the pensions and going to offer a lump sum pay out. How does this work? How is it calculated?

When I left the company last fall, they gave me a paper with the calculations on what id receive at 65years old. But with the lump sum , I am trying to figure out what ti might be. Everything is still in preliminary stages, no one at Fidelity nor my HR has any idea right now.

So, just trying to brainstorm and get an idea how this works.


Thanks in advance.

Zott
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Re: Pension buy outs ???

Post by Zott » Tue Apr 26, 2016 9:48 pm

Your lump sum will be the present value of your pension over your expected lifetime, determined based upon your age, your pension benefit at age 65, a mortality table and a current interest rate. This basis will be set forth in the plan document and is regulated by federal law. So the closer you are to age 65, the larger it will be.

If you have a choice, you will have to decide whether to take the lump sum and take the responsibility of investing it and providing income for your retirement (as you participated the plan for over 19 years, I'm guessing that it will be a fairly major part of your retirement resources), or take your pension as the equivalent monthly annuity for life from the plan or an insurer if the sponsor chooses. Your overall financial situation, your psychological need for security, your health, and your confidence to manage the money will impact your decision. Low current interest rates will produce a larger lump sum than higher rates, so you have that in your favor.

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Watty
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Re: Pension buy outs ???

Post by Watty » Tue Apr 26, 2016 10:19 pm

When you left the job last fall then your pension was basically frozen at that time. If you were still working and accruing pension credits this would be a lot bigger deal. Depending on your plan you may have already had the option to take a lump sum.


There is a wiki on this that you should read.

https://www.bogleheads.org/wiki/Lump_sum_vs_pension

A few key things to consider;

1) Find out what happens with the pension money if you and a spouse are both die early. With the pension your estate may get nothing. With the lump sum your estate will inherit for sure.

2) Be sure to know as much about your health as possible. If you have not had a physical recently then you may want get one before you decide.

3) Is the pension guaranteed by the PBGC and is your pension higher than the PBGC limits? Sometimes a company will also try to replace the pension with an annuity from an insurance company which is no longer guaranteed by the PBGC.

4) People often get stuck on "giving up the pension". Try to also look at it from another angle and assume that you had the cash in an IRA and were looking at buying an annuity. This is really the same question but it looks a lot different from that point of view.

Everyone has a different situation but in my case I have a small pension that was frozen a long time ago that is about the size of a large car payment. It is not inflation adjusted so if my wife or I live to be 90+ then the pension may be worth little more than lunch money by then because of inflation. I can take a lump sum at any time up until I turn 65. So far I have not taken that because it is still growing at 5% which is pretty good rate right now. What I am planning on doing is eventually taking the lump sum and using that to live on in my mid 60s while I am delaying starting Social Security. That will give me a larger inflation adjusted social security check which will(probably) not be taxed as much as a pension check would be taxed.

If you do take the lump sum then you will have the option of keeping it invested and you could then decide to buy an annuity later on. If interest rates are higher then you would get a larger payout.

dltnfs
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Re: Pension buy outs ???

Post by dltnfs » Tue Apr 26, 2016 10:34 pm

Like Zott said, re how the lump sum is calculated. But unless your employer really likes you, or is under some kind of obligation to give you a good deal, they wouldn't make the offer if they didn't hope that you'd take it. So unless you're in a special circumstance that makes a lump sum better than an annuity (e.g., you have big debts at high interest rates, and you somehow can't pay them off or declare bankruptcy; or your life expectancy is shorter than they think; or you think they might go bankrupt and the PBGC won't guarantee the full amount; or ...), their offer is probably a losing trade.

A quick way to evaluate the buyout is to get a quote for an annuity that would provide you with the same income on the open market. Even for a "fair" offer, the lump sum will probably be lower, since it's normal to lose money when you sell something and then buy it right back; but the ratio of those tells you roughly how much you're gaining or losing in an actuarial sense, with no need to do the math yourself.

I notice that the OP said elsewhere that he intended "to die dead ass broke". If that's the goal, then an annuity (like the pension) is ideal, and a lump sum is tricky to manage.

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Wed Apr 27, 2016 2:17 pm

Heh..Its been awhile since ive posted, but yea, I dont have spouse or kids, so to die with a pile of money doesnt make sense, my "arrangements" when I go to the big campground in the sky is already in place.

Im in mid-40s if that matters.


Back on topic. Right now my pension is set to pay me $991 @ 65year old. We dont know what the lumpsum will be and Im having hard time trying to figure it out. I know there is some crazy formula out there. Ive looked at SS life expectancy (82.2) but not sure how Fidelity will calculate it all (that is who is handling the lumpsums when the time comes).

So, not sure if this is correct, but can I assume $991 x 12 months x 17 years (82-65=17) = $202164 lump ? Im just using simple math but im sure nothing is simple.

Thanks for the replies

EXH
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Re: Pension buy outs ???

Post by EXH » Wed Apr 27, 2016 6:10 pm

Doubt it. They will probably assume 7% or some other number of investment gains at the very least. I have the option of taking my pension as a lump sum and it's a lot less than your estimate. More like 10x yearly amount. No idea where the numbers come from though.

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Watty
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Re: Pension buy outs ???

Post by Watty » Wed Apr 27, 2016 6:53 pm

With 20 years until the pension starts there is a lot of inflation risk.

Until you get the details there isn't much you can do other than get an ulcer trying to figure this out without all the pieces of the jigsaw puzzle.

I would try to put it aside until you get the details and then post the details.

ParkersPaPa
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Re: Pension buy outs ???

Post by ParkersPaPa » Wed Apr 27, 2016 7:21 pm

die-tryin wrote:...Right now my pension is set to pay me $991 @ 65year old. We dont know what the lumpsum will be and Im having hard time trying to figure it out. I know there is some crazy formula out there. Ive looked at SS life expectancy (82.2) but not sure how Fidelity will calculate it all (that is who is handling the lumpsums when the time comes)...
Fidelity will not be calculating anything. The employer will, and their calculations will be very complex. You really have to see the offer to make a decision.

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jharkin
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Re: Pension buy outs ???

Post by jharkin » Wed Apr 27, 2016 9:29 pm

die-tryin wrote:Heh..Its been awhile since ive posted, but yea, I dont have spouse or kids, so to die with a pile of money doesnt make sense, my "arrangements" when I go to the big campground in the sky is already in place.

Im in mid-40s if that matters.


Back on topic. Right now my pension is set to pay me $991 @ 65year old. We dont know what the lumpsum will be and Im having hard time trying to figure it out. I know there is some crazy formula out there. Ive looked at SS life expectancy (82.2) but not sure how Fidelity will calculate it all (that is who is handling the lumpsums when the time comes).

So, not sure if this is correct, but can I assume $991 x 12 months x 17 years (82-65=17) = $202164 lump ? Im just using simple math but im sure nothing is simple.

Thanks for the replies

Not even close. As mentioned above, the lump will be the present value today that would grow to that amount over the next 25 years invested in the market.

My wife just got a buyout offer of a small pension left over from a hospital she worked for years ago. The value @65 was $250 a month. Offer in 2016 dollars was $12k. We are 40.
Last edited by jharkin on Thu Apr 28, 2016 11:03 am, edited 1 time in total.

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Thu Apr 28, 2016 8:06 am

Ok, im trying to understand this.

Based on what you said about your wife. She would obviously be better off taking the monthly amounts. $250 x 12months x 20yrs (assuming live to atleast 85) = $60,000. a far cry above the 12k they offer as lump.

Im hoping they offer a decent amount of lump sum that make it worth while for me to take. My pension is frozen, so for the next 20yrs its not going to earn me anything more then what im "guaranteed" to get. With a lump sum, I have every option available to me to make it grow or do whatever I want , Vegas anyone ? . lol.

Da5id
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Re: Pension buy outs ???

Post by Da5id » Thu Apr 28, 2016 8:16 am

die-tryin wrote:Ok, im trying to understand this.

Based on what you said about your wife. She would obviously be better off taking the monthly amounts. $250 x 12months x 20yrs (assuming live to atleast 85) = $60,000. a far cry above the 12k they offer as lump.
Don't confuse present value with future income... The 12k, if invested, could be 50K in 20 years -- say it is in stock market and earns 7% return without any inflation adjustments. That is just a guess, but say it is right. Lump sum looks like a fair enough deal. Lots of unknowns, but it isn't outrageous.

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jharkin
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Re: Pension buy outs ???

Post by jharkin » Thu Apr 28, 2016 8:17 am

die-tryin wrote:Ok, im trying to understand this.

Based on what you said about your wife. She would obviously be better off taking the monthly amounts. $250 x 12months x 20yrs (assuming live to atleast 85) = $60,000. a far cry above the 12k they offer as lump.
They figure a 7% IRR in their calculation. If I take the 12k buyout and stick it into something earning 7% in 25 years it would be $61,000 at the start of annuity payouts. If I get a more realistic market return of say 5% it would be about $38,000 at the start of payouts.

All that is to say, yes the pension is a better answer right now as they are still using an unrealistically high return. However you cannot just compare the lump sum (in 2014 dollars) to a simple arithmetic add up of the payouts in 2040 dollars. Its a basic future value calculation.

I think the part you might be confused on is that the future, hypothetical, 60k payout from the pension doesn't actually exist sitting in a savings account today. They have a smaller - much smaller - amount that is invested in the market on your behalf, and is expected to grow to cover that 60k in the future after earning 25 years of investment returns. (and when it doesnt in theory the PBGC insurance would make up the difference)

psystal
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Re: Pension buy outs ???

Post by psystal » Thu Apr 28, 2016 8:37 am

die-tryin wrote:Ok, im trying to understand this.

Based on what you said about your wife. She would obviously be better off taking the monthly amounts. $250 x 12months x 20yrs (assuming live to atleast 85) = $60,000. a far cry above the 12k they offer as lump.

Im hoping they offer a decent amount of lump sum that make it worth while for me to take. My pension is frozen, so for the next 20yrs its not going to earn me anything more then what im "guaranteed" to get. With a lump sum, I have every option available to me to make it grow or do whatever I want , Vegas anyone ? . lol.
You're looking at it a bit too simplistically. Let's keep using the $12k at age 40 for an example.

1. At age 40, you receive the $12k and invest it, earning average annual returns of 6%.
2. At age 65, your $12k has grown to approximately $53,000.
3. At age 65, you start taking withdrawals of $250 per month ($3,000 annually) to mirror the pension payment you would have received.
4. According to FireCalc, you'll have an 83.3% chance of maintaining a positive balance after 20 years. In many scenarios, you will still have a substantial amount of money left over.

I'd say the $12k was a pretty good deal in this case.

One other important consideration for which there is no easy calculation, but nonetheless will be included in your calculus: How likely is it that this company and its pension fund will survive until your 65th birthday? Your 90th birthday? Some Bogleheads will view this sort of projection as a sort of stock-picking, and discourage it. In this day and age, however, I view private pensions as an over-weighting of your portfolio with a single company stock.

Of course, psychology and discipline play equally large rolls. If your management of the money is riskier than banking on the future of the company, then take the pension.

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LiveSimple
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Re: Pension buy outs ???

Post by LiveSimple » Thu Apr 28, 2016 8:41 am

Couple of years ago, when my former company offered pension buyout, opted to get the lump sum and rolled into IRA.
Now that amount is part of the portfolio, part of the asset allocation, etc, easy to manage.

Earlier, used to carry all the mails, from that pension plan, not sure if my estate would have tracked it down.

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jharkin
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Re: Pension buy outs ???

Post by jharkin » Thu Apr 28, 2016 11:01 am

Lets be careful not to confuse my wifes offer (which I just gave as an example of the calculation and never mentioned if we took it or not ;) ) and focus on the OP situation.

He needs to see the actual offer and then consider:

How likely is he to live beyond 80?
How likely can he beat the assumed rate of return in the annuity investing the lump?
How secure is the pension admin?
Is the pension guaranteed by PBGC?
Will his heirs get any continuation of it if he departs the earth early? Does he care?
and so on...

ubermax
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Re: Pension buy outs ???

Post by ubermax » Thu Apr 28, 2016 1:24 pm

Die-tryin , based on a current age of 45 , the $991 being a life annuity , the pension plan being a traditional defined benefit plan rather than cash balance , the March 2016 segment rates ( see the link below ) and 2016 mortality , the lump sum will be close to $60,500 .

The interest rates and mortality table used for lump sums is mandated by federal regulation - the interest rates , i.e. 3 segment rates are developed using a yield curve model with the segment 1 rate applying to payments in the first 5 years , segment 2 during the next 15 , and segment 3 for payments on and after 20 years , all measured from current age ; you'll note that S1<S2<S3 in familiar yield curve fashion .

At age 45 you're talking about a 20 year deferred annuity ; this would make the calculation easy for you since you would discount those life annuity payments of $991 back to age 45 using one rate , segment 3 ; the only other thing you would need is the mortality table which is also available on the web by searching for "2016 417(e) mortality table" ; with the table you could easily develop your probability of surviving to all ages 65 and after; and so the present value factor for that age 65 payment of $991 would be interest discount for 20 years times the probability of living 20 years and so on for all years after age 65.

If things are still preliminary , the actual rates used may not be known for awhile since they change monthly ; also if you're 44 the lump sum will be smaller and vice versa if you're 46 , i.e. longer or shorter discount period .

If it's a Cash Balance plan your lump sum could be your account balance as of the payout date .

https://www.irs.gov/Retirement-Plans/Mi ... ment-Rates

Good Luck !!!

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Thu Apr 28, 2016 2:07 pm

Thanks everyone...Between here and talking to someone that went thru something similar, im apparently WAYYYYYYYYYY off with my simple math. I know nothing about this stuff and trying to learn all I can. I know its a wait and see right now.

The pensions are getting frozen in May of this year and then they are talking Sept/Aug for lump sums, so dunno when ill get anymore info. Im not with the company , so, im kinda last to know, luckily ive still got ppl working there that have been forwarding emails to me.

I am 45yr. and based on family history, we dont have longevity, basically any day past the age of 75 should be celebrated, so that is what im basing life figures on. Not saying ill be broke at age 75 and then screwed, just planning for the worst and hoping for the best. So, I need to do a calculation of 10years 65 to 75 and then go from there. If I get anything under 100k, ill just put it with my IRAs and look into investing (currently moved 401k from work over to IRA to sit there til I find something that will earn interests).

supernova72
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Re: Pension buy outs ???

Post by supernova72 » Thu Apr 28, 2016 4:19 pm

I asked a similar question and got some very insightful replies on the actual calculation. My situation is a bit different but you can see this post towards the end explaining the calculation for me. I had no idea there are three "tiers" used on the interest rate(s).

viewtopic.php?f=2&t=183805&p=2799968#p2799968

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Wed May 04, 2016 4:03 pm

Ok thanks..

I just got a paper from the company, no lump sum info, but its the Annual Funding Notice. There is a chart that says Funding Target Attainment Percentage. Now, it has 2014 and 2015 numbers. And in one space it has Net Plan Assets XXXX amount and then Plan Liabilities (this number larger). My question is this. Are these numbers the TOTAL Pensions worth ? also at the bottom it says 91.72% funded

Valuethinker
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Re: Pension buy outs ???

Post by Valuethinker » Thu May 05, 2016 5:52 am

die-tryin wrote:Ok thanks..

I just got a paper from the company, no lump sum info, but its the Annual Funding Notice. There is a chart that says Funding Target Attainment Percentage. Now, it has 2014 and 2015 numbers. And in one space it has Net Plan Assets XXXX amount and then Plan Liabilities (this number larger). My question is this. Are these numbers the TOTAL Pensions worth ? also at the bottom it says 91.72% funded
That's simply a calculation, As Far as I Know, as to the total value of assets in the pension plan, and total value of liabilities.

Whilst over 100% funded is best, 91.7% is pretty good.

If you have a short life expectancy (an "impaired life" annuity in the jargon) then lump sum is probably a better answer than the pension.

That said, when you do retire, you must be very careful not to spend it all out by 75, say, and then live to be 90 (it has happened). We talk a lot about "Safe Withdrawal Rate" here, but it's a good rule of thumb you shouldn't withdraw more than 3% of your capital in any given year of retirement (note the old rule of thumb was 4%, but with interest rates so low, that's not likely to be realistic, now).

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Fri Sep 09, 2016 9:39 am

been awhile....'

havent got offer yet but found out the plan is now 100% funded, found some good calculators etc and believe to have good idea but we shall see

rgs92
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Re: Pension buy outs ???

Post by rgs92 » Fri Sep 09, 2016 10:32 am

Take the pension. I've seen a lot of these cases and it's always better.

Dottie57
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Re: Pension buy outs ???

Post by Dottie57 » Fri Sep 09, 2016 12:32 pm

jharkin wrote:
die-tryin wrote:Heh..Its been awhile since ive posted, but yea, I dont have spouse or kids, so to die with a pile of money doesnt make sense, my "arrangements" when I go to the big campground in the sky is already in place.

Im in mid-40s if that matters.


Back on topic. Right now my pension is set to pay me $991 @ 65year old. We dont know what the lumpsum will be and Im having hard time trying to figure it out. I know there is some crazy formula out there. Ive looked at SS life expectancy (82.2) but not sure how Fidelity will calculate it all (that is who is handling the lumpsums when the time comes).

So, not sure if this is correct, but can I assume $991 x 12 months x 17 years (82-65=17) = $202164 lump ? Im just using simple math but im sure nothing is simple.

Thanks for the replies

Not even close. As mentioned above, the lump will be the present value today that would grow to that amount over the next 25 years invested in the market.

My wife just got a buyout offer of a small pension left over from a hospital she worked for years ago. The value @65 was $250 a month. Offer in 2016 dollars was $12k. We are 40.
That is only 4 years of retirement. Terrible offer.

CajunDan
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Re: Pension buy outs ???

Post by CajunDan » Fri Sep 09, 2016 12:35 pm

die-tryin wrote:Has anyone gone thru a pension buy out aka lump sum?

The company I was with for 19.5 years is freezing the pensions and going to offer a lump sum pay out. How does this work? How is it calculated?

When I left the company last fall, they gave me a paper with the calculations on what id receive at 65years old. But with the lump sum , I am trying to figure out what ti might be. Everything is still in preliminary stages, no one at Fidelity nor my HR has any idea right now.

So, just trying to brainstorm and get an idea how this works.


Thanks in advance.
I'd take the lump sum, I just don't trust a company to be around in 20+ years to pay the pension. I know ERISA pensions like yours are "guaranteed" by the federal government, but things still could get very messy.

Jack FFR1846
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Re: Pension buy outs ???

Post by Jack FFR1846 » Fri Sep 09, 2016 12:53 pm

Until you know what the lump sum number is, you have nothing to take action on yet.

I worked for a company back in the 80's and 90's and vested for a pension. It's now managed by Fidelity which means that it shows up on my Fidelity site. I can see in there what the lump sum would be and what the pension per month would be based on any age I put in. The company recently made an offer of lump sum (my company was bought by another and that by another) to all former employees. I looked at the number (slightly better than the number I could get anyways) and looked for what it would buy me in a SPIA then compared that with my pension number. I stuck with the pension because the SPIA payout per month for the same conditions was smaller. There's the comparison YOU want to make.

What SPIA monthly number can you get with the lump sum?
Is that bigger than the traditional pension monthly number?
Which ever number is bigger, that's the one you want.
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yourguide
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Re: Pension buy outs ???

Post by yourguide » Fri Sep 09, 2016 1:31 pm

I think a big part of whether or not you take the lump sum depends on your age as well.

The younger you are the more likely it is you can invest it yourself and have a good outcome by retirement age.

I'm 46 and I'm staring down that decision now. By February of next year I think I am going to collect the lump sum of just shy of $100K. It's either that or $1340 per month starting at age 65.

However, I'm working off the assumption that this money is going to be generating money so assuming a dividend based portfolio averaging a conservative 4% return and a 5% increase in dividend yield per year (compounded quarterly), by 65 (if everything goes as planned) I'll be sitting on a lump sum of $300K generating about $24,500 per year which is $9000 more per year than letting it sit in the pension.

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Thu Sep 29, 2016 9:45 am

got offer

52k lump now (gross amount)


$243. now for life

$996 @ 65yr

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Sheepdog
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Re: Pension buy outs ???

Post by Sheepdog » Thu Sep 29, 2016 10:43 am

die-tryin wrote:got offer

52k lump now (gross amount)


$243. now for life

$996 @ 65yr
You said you were in your mid 40s. What is it precisely?
I'm assuming that the quotes are not adjusted for inflation. Correct?
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Thu Sep 29, 2016 1:53 pm

im 45.5 yr. those numbers are what they are, i have to take one of those options at that face valve

Tal-
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Re: Pension buy outs ???

Post by Tal- » Thu Sep 29, 2016 2:31 pm

die-tryin wrote:got offer

52k lump now (gross amount)


$243. now for life

$996 @ 65yr
The math is close.

Assuming that an investment will grow ~7%, and double every 10 years, you would end with ~ 200K at age 65. At that time, you could, in theory purchase an annuity, that would pay you $970 (based on today's rates). Granted, you could also draw 4%/$8K a year from that portfolio, increasing it each year. Over a lifetime, taking the 52K, investing it, and drawing 4% ($8K) is likely to be, mathematically, the correct option. But it's close.

The question then becomes one of values and temperament. You would have more flexibility with an IRA, but you would also take the investment risks of an IRA. If you can sleep well at night giving up the security, and stomaching market volatility without making bad decisions, I would suggest you take the lump sum. This is the simpler, more flexible, better inheritances, etc. option. However, if this route gives you gray hair, or if you're unsure whether you can manage a portfolio long-term, I would not object to you leaving things as-is, drawing at age 65.

If you take the lump sum, be sure to roll it into an IRA.

Interested to hear where you land.
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ubermax
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Re: Pension buy outs ???

Post by ubermax » Thu Sep 29, 2016 3:06 pm

die-tryin wrote:im 45.5 yr. those numbers are what they are, i have to take one of those options at that face valve
I understand you have to take one of the options but wouldn't you want to know if that 52 grand was somewhat accurate ? just ask HR or Fidelity (1) what month was used for the lump sum interest rates and (2) what date in 2016 was used as the determination date ( it's also called the annuity start date ) ----also provide your date of birth --- I have a spreadsheet that can calculate the correct lump sum -- if you prefer , send me a PM with the information.

And don't be shy , this information is something you're entitled to know .

die-tryin
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Re: Pension buy outs ???

Post by die-tryin » Thu Sep 29, 2016 3:39 pm

I'm having fidelity send me detailed report on how they came up with offer, should be here 5 days.

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Ricola
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Re: Pension buy outs ???

Post by Ricola » Fri Sep 30, 2016 12:24 pm

Call me skeptical, but when these buyouts are offered I find it hard to believe that they are in my best interests and not the offeror's.

eldinerocheapo
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Re: Pension buy outs ???

Post by eldinerocheapo » Fri Sep 30, 2016 12:27 pm

I'm 59 and just accepted the buyout from a former employer for the following reasons....................

Pension was to begin at 65 and expire when I die leaving nothing to heirs

Pension is fixed with no COLA's, ever. Inflation and buying power will be a real problem down the road

Former parent company treated their subsidiaries like absolute dirt, and if they could declare bankruptcy or bail on their pension obligations, they would do so in an instant. The former CEO walked with a golden parachute while leaving his subordinates with a "golden shower"! I want no further contact with them, and you know the story about "a bird In the hand beating two in the bush"

Both my wife and I qualify for maximum SS benefits and this should provide a solid foundation of meeting fixed expenses monthly. We did not want three fixed annuities floating around, plus, we have no options with SS other than timing when to commence benefits.

The lump sum benefits will transfer directly to my VG traditional IRA where I've tended to the balance for the last 35 years. The dividends should be comparable to what the value of the pension was only with the option of when to take distributions and reallocating balances.

The only downside to this would be as follows...............

The RMD at 70.5 years of age could be more than I would prefer to take, without penalty.

The market crashes and stays low for the years when I could've received a guaranteed payout.

Luckily, since this amount is less than 15% of my overall retirement portfolio, I'm confident we can withstand the expected gyrations comparable to those we've endured since the mid 1980's.

Good luck with your decision.

randomguy
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Joined: Wed Sep 17, 2014 9:00 am

Re: Pension buy outs ???

Post by randomguy » Fri Sep 30, 2016 12:53 pm

Ricola wrote:Call me skeptical, but when these buyouts are offered I find it hard to believe that they are in my best interests and not the offeror's.

It is possible to be win-win. They unload a liability (payments to you) and you derisk (don't have to worry about the old company going broke and you getting a cram down). In general it becomes a risk shifting game. You can make more by investing but you are taking on risk. Up to you if it is worth it or not. The odds favor investing but there are no guarantees.

Now if you plan on buying an annuity, pensions tend to be a better deal. The pension population is nowhere near as healthy as the annuity buying population.

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