I'm potentially terminating employment and leaving with a defined pension benefit. I have the option to take a partial lump sum. I will be doing that, as I am departing from a dying industry. I have little reason to believe the pension fund will still be solvent down the line (and PBGC benefits are s#*t).
I've been in the weeds regarding benefit calculations. My plan states that the interest rates from October in the year prior to the year the benefit commences are used to calculate the present value of the lump sum. If I terminate before Dec of this year, the interest rates from Oct. 2016 will be used. Those are lower than the rates from the last several months. If I terminate Dec 2017 or later, interest rates from Oct. 2017 will be used. Presumably those will be higher, resulting in a lower present value.
On the other hand, as best I can tell, the new mortality tables kick in for 2018 present valuations. Those add about two years life. I could also probably add another 2-4 months to my accrued benefit.
So am I better off terminating before or after Dec? From what I can tell, the present value calculation is highly sensitive to interest rates, so I'm thinking before. On the other hand, I'm going on what I've been able to teach myself the last month--which is not nearly enough.
I'm also interested in any referrals to an actuary who can double check the estimates from my pension office. I've already identified multiple errors. That has led to revisions in the estimate that have increased my monthly benefit by about 10% and the lump sum payment by 8 -10%.
Thanks!
No coasting in running and no crying in baseball
I've been in the weeds regarding benefit calculations. My plan states that the interest rates from October in the year prior to the year the benefit commences are used to calculate the present value of the lump sum. If I terminate before Dec of this year, the interest rates from Oct. 2016 will be used. Those are lower than the rates from the last several months. If I terminate Dec 2017 or later, interest rates from Oct. 2017 will be used. Presumably those will be higher, resulting in a lower present value.
On the other hand, as best I can tell, the new mortality tables kick in for 2018 present valuations. Those add about two years life. I could also probably add another 2-4 months to my accrued benefit.
So am I better off terminating before or after Dec? From what I can tell, the present value calculation is highly sensitive to interest rates, so I'm thinking before. On the other hand, I'm going on what I've been able to teach myself the last month--which is not nearly enough.
I'm also interested in any referrals to an actuary who can double check the estimates from my pension office. I've already identified multiple errors. That has led to revisions in the estimate that have increased my monthly benefit by about 10% and the lump sum payment by 8 -10%.
Thanks!
No coasting in running and no crying in baseball