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I don't think that is what the article is saying. Granted I skimmed, so someone may want to correct me. Our pension is monthly, and there is nothing from the Union that allows them to dictate whether we take monthly or a lump sum. I would be against that.
Note the word option in the article Retired In Illinois linked to:
Quote:
Now, in a Trump-era twist, the Treasury Department has backtracked with Notice 2019-18, a retraction of intent to propose regulations on the topic: “Offering a Lump-Sum Payment Option to Retirees Currently Receiving Annuity Payments under a Defined Benefit Plan.”
There's no forcing involved (hence the word option), and Retired in Illinois is simply wrong about the implications of the Treasury Department notice. Period.
To find one now it is but a vestige of what once was a proper retirement. I suspect it's very attractive for a company's accountants to freeze pensions or stop offering them to new hires.
On the employee side of the equation. Fear tactics like this are pushing millennials to steer clear of any offered option to participate in one. Sure, make them believe the 401(k) is the ultimate retirement account. It's "portable" because it's SELF-FUNDED and your company washes its hands of you when you leave.
There are no more rewards for years of service. No staying on company group healthcare after retirement. These things used to be standard of any large corporation.
Yes and they were standard in a post WWII economy where the rest of the globalized, industrial world lay smoldering in ruin and the government installed wage controls so the only way to lure a employee to your company was via the benefits. Then we entered the age of globalized industrial production and competition.
Here is a simple truth, the only defined benefit pension that is actually safe for the company and participant is a cash balance plan invested in T-bills/notes - period. Even actuarially sound traditional benefit plans are not safe. This is because there is an underlying assumption about a rate of return and a concrete asset allocation they are bound by.
What is disconcerting to amusing is those who are pro-traditional defined benefit plans generally fail to recognize the pension they are counting on is in fact dependent on the returns generated by the vey Wall Street they seem to protest and despise. They are also assuming the company they work for will stay in business long enough to deliver on their pension promises. Otherwise you are looking at the underfunded PBGA which caps its payouts…in other words you are may not see what you believed you were promised.
Last edited by GhostOfAndrewJackson; 03-21-2019 at 08:51 PM..
Why spoon feed only what's important to me rather than lay out the whole story for all to read and decide what's best for them.
Because it's proper internet ettiquette.
Not everyone wants to white-list sites or waste valuable time finding a work-around for a pay-wall.
All you had to do is quote the IRS government publication:
A number of sponsors of defined benefit plans have amended their plans to provide a limited period during which certain retirees who are currently receiving joint and survivor, single life, or other life annuity payments from those plans may elect to convert that annuity into a lump sum that is payable immediately.
Notice the operand: "may elect"
The story so far...
Some sponsors of defined plans offered the option of a lump sum payment for certain retirees, then Obama said you can't do that, and now Trump says you can.
Nothing to see here, except freedom of choice.
Not everyone needs their mommy to manage their finances, but apparently you think Big Government should be their mommies and decide for them.
Quote:
Originally Posted by MI-Roger
But a Lump Sum is clearly not a good choice for everyone.
I wouldn't disagree.
Quote:
Originally Posted by Retired in Illinois
No, that's not the point. The point is ,now that Trump has changed it, any Defined Benefits pension can be changed into either a lump sum buy out , annuity or other form of pay out to close the Defined Benefits.
IF any of this happen the pensioner would have no say in the matter.
Which part of "may elect" do you not understand?
Which part of "some" do you not understand?
Some employers, but not all, offered a choice to retirees.
Obama said no employer can ever offer a choice to retirees, and now Trump is saying employers who want to offer a choice to retirees can offer a choice to retirees.....if the employer wants to offer a choice.
No employer is being compelled to offer a choice, and no retiree is being compelled to take a lump-sum payout.
Yes and they were standard in a post WWII economy where the rest of the globalized, industrial world lay smoldering in ruin and the government installed wage controls so the only way to lure a employee to your company was via the benefits. Then we enter the age of globalized industrial production and competition.
Here is a simple truth, the only defined benefit pension that is actually safe for the company and participant is a cash balance plan invested in T-bills/notes - period. Even actuarially sound traditional benefit plans are not safe. This is because ether is an underlying assumption about a rate of return and a concrete asset allocation they are bound by.
What is disconcerting to amusing is those who are pro-traditional defined benefit plans generally fail to recognize the pension they are counting on is in fact dependent on the returns generated by the very Wall Street they seem to protest and despise. They are also assuming the company they work for will stay in business long enough to deliver on their pension promises. Otherwise you are looking at the underfunded PBGA which caps its payouts…in other words you are may not see what you believed you were promised.
Good post.
I just wanted to add that one ongoing problem is increasing lifespans. It's not dissimilar to the actuarial problems that SS/Medicare run into over time.
Also, the dislike that some pro defined pension people feel for Wall Street, combined with the dependence on it, leads you to a rather scary issue. As those pension run into cashflow problems, particularly the ones for .gov employees, there's a higher than normal political need to artificially boost the stock market. In a sense, unrealistic CalPERS projections become reality in order to avoid the collapse of state governments.
No, that's not the point. The point is ,now that Trump has changed it, any Defined Benefits pension can be changed into either a lump sum buy out , annuity or other form of pay out to close the Defined Benefits.
IF any of this happen the pensioner would have no say in the matter.
Did you even read the article you cited? The lump sum cannot be imposed on someone by the plan. The proposed reg and the article are discussing whether or not pension plans can offer (not force) a lump sum payment to someone who is already receiving pension payments. The risk is that the lump sum will not be sufficient. If that's the case, just say no. The only danger is that a retiree might make a bad decision.
Did you even read the article you cited? The lump sum cannot be imposed on someone by the plan. The proposed reg and the article are discussing whether or not pension plans can offer (not force) a lump sum payment to someone who is already receiving pension payments. The risk is that the lump sum will not be sufficient. If that's the case, just say no. The only danger is that a retiree might make a bad decision.
This whole thread is much ado about nothing.
IMO the intent of the thread was yet another excuse by the OP for Trump-bashing, but the information and insights provided by many of the respondents were valuable. I learned from those posts, and thank y'all for them.
As a retiree on a defined benefit pension, my only fear is that those employers who "offer" a lump sum to those already receiving monthly payments might some day be allowed to compel those who are getting monthly payments to accept a lump sum, or get nothing more. I see this change as a bit of creep in that direction.
Last edited by TheShadow; 03-22-2019 at 08:34 AM..
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