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Subject:  Re: Retirement's Second Leg: Pensions Date:  7/20/2004  12:59 PM
Author:  tmeri Number:  704 of 1845

One thing not mentioned in the article: many companies that offer db pensions are moving towards cash balance pensions. With those you can elect to take the cash balance as a lump sum ( which you can rollover to an IRA) or get a fixed amount with an annuity. So with the lump sum, you can ultimately control how the money is invested and in addition you don't have to worry about the plan going belly-up some time in the future.

The company I worked for did that for all younger employees and offered the option to older employees. To my knowledge, none of the older employees took it. That was smart. The cash amount offered was worth a whole lot less than the db pension.

The lesson here is that just because the company is offering a choice does not mean that the two are equal. It pays to run the numbers.

- tmeri
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