7 thoughts on “Forbes post, “What You Need To Know About Pension Lump Sums”

  1. As teacher salaries are raised why are we even discussing DB plans? Would anyone argue that teachers are the smartest people in the world? Why can’t or why shouldn’t they manage their own investments? Why are teachers held to the whims of politicians? If they like politicians holding their purse strings then don’t complain when you don’t like the results. I think teachers should be paid more. But manage your own retirement program.


  2. Excellent article. I’m an actuary too. I chose monthly pension payout when most of my colleagues took lump sums thinking they were brilliant investors. I saved a bit so had some other investments I could dabble with, but there’s a stable monthly income.


  3. My father wishes he had the lump-sum option 25 years ago. He worked for a large pharmaceutical firm which for some reason allowed one of the 2 merged entities to lump-sum but not the other. This was decades before lump-sums became an issue for some plans; even today, the plan is 75% funded and the company’s backstop remains very strong.

    Despite taking a single-life annuity option (the highest), he has received the same monthly amount since 1994. Not a $1 increase. Had he been able to lump-sum, his investment advisor (me !) would have been able to invest the money and probably double or tripled the initial amount.

    Does anybody know what the lump-sum value of a $1,600/month single-life monthly annuity is for a 59-year old man (probably OK to use today’s mortality and interest rate assumptions but if you can use the mortality/rates of 1994 probably more accurate) ?

    Hopefully Dad continues to get his money’s worth from the SLA and collects for another 10 years or so.


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