I work for a Fortune 100 company and in addition to retirement savings, I am eligible for a pension when I retire. I have not contributed anything to the pension.
I confess that I don't know much about pensions. I can go to the Company website, and I can see how much my monthly benefit will be, and the fact that the payout options are listed as Annuities. I can select a few different type of annuities to be paid......payout to just me, me and my spouse, etc.
My question is this - Is this retirement income 100%? Can something happen where I'd lose it all? I remember when my dad retired back in the 1990's after he worked for a very large company. The company decided to sell the division he worked for to a Japanese company, and he got screwed out of 46 years a pension income....
TIA BBI!
When you retire two things may happen with your annuity. The risk will be transfered to an insurance company and they pay you your monthly benefit or your company will pay you your monthly directly from the plan.
Therefore to answer your question as long as the plan has no funding shortfall you will get your monthly benefit. If something happens and there is a funding shortfall (bankruptcy, financial hardship) it gets taken over the PGBC and you will most likely get a reduced benefit.
In place, I bought a term life insurance plan to cover what would be lost should I die early to make up for the fact my pension will end when I die. Our finance guy told us to do this and I confirmed this advice with others. Word was don't annuitize and annuity. Basically you are paying for insurance for your wife with your pension if you opt for her to collect your pension after you die. I calculated I make enough money (difference between full pension and reduced pension) in just 4 months by taking the full pension over the reduced pension to pay for the insurance policy.
In place, I bought a term life insurance plan to cover what would be lost should I die early to make up for the fact my pension will end when I die. Our finance guy told us to do this and I confirmed this advice with others. Word was don't annuitize and annuity. Basically you are paying for insurance for your wife with your pension if you opt for her to collect your pension after you die. I calculated I make enough money (difference between full pension and reduced pension) in just 4 months by taking the full pension over the reduced pension to pay for the insurance policy.
Does the 100% have a term certain provision like 10 or 15 years? I guess you ran the numbers, but I'd be a little nervous without that. I had to run the numbers comparing a 100% with a 15 year term certain, a joint and survivor and a joint and 50% survivor after my father had a stroke. My conclusion was the same as yours, but it was based on the term certain benefit.
PS - I also took 100% pension while buying a whole life insurance policy to cover my wife. I am sure I am paying more for the whole life than a term policy, but the difference of the monthly pension payout to the cost of the monthly insurance was still significant enough to do. Note that some other pensions are not as beneficial for taking the 100% payout and covering the difference with insurance. You have to calculate this.
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pension and opted for my pension 100%. The wife options usually reduce the payment as wives usually outlast their husbands.
In place, I bought a term life insurance plan to cover what would be lost should I die early to make up for the fact my pension will end when I die. Our finance guy told us to do this and I confirmed this advice with others. Word was don't annuitize and annuity. Basically you are paying for insurance for your wife with your pension if you opt for her to collect your pension after you die. I calculated I make enough money (difference between full pension and reduced pension) in just 4 months by taking the full pension over the reduced pension to pay for the insurance policy.
Does the 100% have a term certain provision like 10 or 15 years? I guess you ran the numbers, but I'd be a little nervous without that. I had to run the numbers comparing a 100% with a 15 year term certain, a joint and survivor and a joint and 50% survivor after my father had a stroke. My conclusion was the same as yours, but it was based on the term certain benefit.
Yes it is a 20 year term. But that gets me to 80. We will reduce the benefit as time passes to reduce cost as the total original benefit is not needed for the entire 20 yrs. I have an IRA/401k also so the pension is not the only source of income should I go.
If you're in a Fortune 100 company, they usually publish an Annual Report on the level of funding. If it's funded to 100% of their Liabilities....you will probably be safe. That pool of money is supposed to be in a separate Fund and untouchable in any Corporate Takeover.
My old MegaCorp just published their Annual Pension Report and they are funded to 130% of the money they're obligated to pay us. We just went thru one of their Lump Sum Buyout "Offers" and the Lump would cover only about 12 years of my current monthly check. Those Lump Sums are usually skewed in favor of the Company and not the Retiree.
You're lucky to have a Pension, but you shouldn't count on it being your only source of income.