Who can recommend what to do with pension I earned in BNY. Is it save to take annuity? Is it possible to take lump sum and transfer it to traditional IRA to avoid huge taxes?
6 replies (most recent on top)
Does no one read the annual disclosure on the pension plan? Yes, the plan is frozen, BUT the plan is overfunded. There are more than enough sufficient assets in the plan to meet ALL future liabilities. The poster who said the plan liabilities were sold to a third party is wrong. Read the disclosures on file with the US Department of Labor.
As for lump sum vs. annuity - at current discount rates, there is no way you can find an external provider to sell you an annuity for the same monthly amount that BNYM will offer. If you want independent verification of what I'm saying, head over to immediateannuities.com, put in your stats including the amount you would theoretically invest with them. You will be amazed in the difference. The reason is simple, the middlemen (insurance companies) need to take their cut too, they aren't giving you a monthly payment for life for nothing. BNYM is not taking a cut, they already bled you to death in the form of low raises over you working lifetime.
To oai ... you sure they really 'sold' the pension assets and liabilities to another party? Could be, but I was under the impression the company simply contracted with an outside 'pension administrator' while the bank still actually 'owns' the plan assets and future obligations. I'd find it rather hard to believe any other financial institution would 'buy' the plan given the uncertainty of future payouts, unless the bank paid some huge premium ... which is the root cause of why most defined benefit plans have long since been terminated.
Yes can transfer to ira. I found the annuity a good deal though plus covers longevity risk. I looked at lots of retail annuities for myself the last 3 months. Was very glad I asked about pension one. The annuity ftom it turned out to be so much better than any I could get on my own.
I would not put all my eggs in annuity but decided I'd annuitize the small pension amount and buy another immediate annuity to supplement soc sec for core expenses and longevity.
The bank laid off their risk years ago by selling it to a third party after terminating it. That’s why it is frozen and now differs only actuarily, not by years of service.
I started the pension and went with the annuity. From what I can judge, most companies encourage the lump sum payments to get the future liability off their books ... which tells me financially you're better off in the long run (unless you or your spouse die young) with the annuity. I would judge the pension to be safe. There is a guarantee from the federal PBGC, but say what you want about this company, it would be highly doubtful that this place or any future successor would default on its pension obligations.
https://www.kiplinger.com/article/retirement/T037-C000-S004-retirees-weigh-a-pension-lump-sum-offer-carefully.html