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Author: bhirs Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76891  
Subject: Re: pension plan ? Date: 10/23/2000 11:43 AM
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I wrote (before my reply was accidentally submitted):

The monthly amounts are based on a life annuity, so life expectancy is built in. TheBadger pretty much sums it up, that they are assuming roughly a 6% interest rate to make the two equivalent.

That 6% only makes the benefits at 65 equivalent. The point is that there is likely no longevity risk because the payments are until death. Therefore, if you think you can beat the 6% over the next 10 years, you should take the money. If not, let the trustees of the plan hold on to it.

Of course, continuing employment will not only increase your benefit for interest and mortality, you will also enjoy large increases due to service and salary increases. (Assuming that your plans formula is a % of pay times service)

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