If it were me in your shoes, I'd be glad that '1. Rely on a pension from GM, backed by the PBGC. ' as an option is gone. Right now, at age 61, PBGC would only guarantee you $3015.41/month as an joint and 50% survivor pension if GM went down today. I guess I would expect that Prudential is more likely to be around rather than GM 30 years from now. Most likely if Prudential lasts but 10 to 15 years, that the annuity would drop down in value to a few hundred thousand that would be covered by I believe most states, reflecting the reduced remaining expected life span.umfundi wrote:Greg,GregLee wrote:Well, so long as it's legal, I guess it must be okay.umfundi wrote:They can legally divest themselves of pension obligations by buying equivalent annuities.
I happen to think that "Legal" does not generally equate to "OK".
In this case, the choice is:
1. Rely on a pension from GM, backed by the PBGC. This option will be gone, replaced by:
2a. Rely on an equivalent annuity from Prudential, backed by whatever your state covers.
2b. Take the lump sum. You're on your own.
As a note, if there are 3% inflation adjustments to PBGC benefits for the next four years, and GM failed at that time, PBGC would then pay $4576/month joint and survivor benefits since you would now be 65. So it looks like you could be almost made whole, but not quite completely if it failed at that time and if GM were still administering the pension at that time. So even in this case the Prudential option would have been slightly better.