No. of Recommendations: 1
That the pension is 'frozen' really doesn't matter to you, as it will pay your accrued benefit at the plan's full retirement age, usually 65.

But here is the math answer to your question:

Assuming a life expectancy to age 88 (23 years), and assuming a discount rate of 4.5% (the average annual return the plan would expect to get over your life expectancy, using an asset allocation of 85% gov or investment grade corporate bonds and 15% equities), the present value of a $380 monthly annuity over your life expectancy, beginning in the month you are 65, would be $65,512. Based on these assumptions, this is the amount the plan would have to have when you reach 65.

Now, discount this amount back to today's present value, using an expected average annual compounding rate of return of 6.5% (60% investment grade bonds and 40% equities), over 16 years, today's value would be $23,918. If the plan could average an annual compound rate of 8.04% over the next 16 years, then the present value would be about $19,000.

So if my assumptions are near correct, then you'd probably be better off waiting to age 65. Do they provide a future lump sum value on your accrued benefit at age 65?

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