Date: Wed, 29 Jun 2005 10:45:19 CST
From: zhendsch@yahoo.com
Newsgroups: misc.invest.financial-plan
Subject: Re: lump sum pensions
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beliavsky@aol.com wrote:
> There is a WSJ article saying that 95% of employees take a pension as a
> lump sum rather than as monthly payments when offered the choice. This
> surprises me. Since most people will not manage their money as well as
> pension fund manager, and since a monthly pension reduces the risk of
> running out of money, I think employees should take the monthly pension
> unless they can prove it is inferior. If the employer is in financial
> trouble (as the airlines are, for example), taking the lump sum may be
> wise.

Isn't how well the pension fund manager performs irrelevent?  I don't
think the company increases your payout if the performance is better.
I would say always take the lump, assuming the calculated lump sum
amount is reasonable.  You have better control of the taxes, are less
dependent on the strength of your former company (since you likely will
be using them for health benefits as well) and to the extent you need
guaranteed income, you can purchase an immediate annuity.