Investment Services & Solutions

Pension & Severance Consulting

 

Pension and Severance Consulting

When you leave an employer or retire, you often have many options regarding your pension. How you choose to take your pension is a very big financial decision that will affect the rest of your life.

Option 1: Accept your standard pension as offered by your employers’ pension plan.

Pros: A set monthly income for life.

Cons: Monthly income cannot be changed. Monthly income will decrease for your spouse at your death. There is little or no estate value for your beneficiaries when you and your spouse die.

You may want to pick this option if:

  • You are not concerned with leaving an estate to your beneficiaries
  • You are not married
  • You will never need to adjust your monthly income
  • You plane on being red long past the normal expectancy

 

Option 2: Take the commuted value of your pension.

Pros: You can create flexible income.

You can access a lump sum if needed.

You can choose your investment options.

You can shop around for guaranteed options.

You can control how the assets transfer upon your death.

Cons: A portion of your commuted value may be taxable.

You may lose your employer funded health and dental benefits

You may want to pick this option if:

  • You have a shortened life expectancy
  • You plan on going back to work
  • You want flexible monthly income and investment choices
  • You want to create an estate

 

Option 3: Combine a set monthly income and flexibility. Commute your value and purchase an annuity and some investments

Pros: Have a guaranteed monthly income and have a flexible plan where you can access lump sum payments or increase your monthly income in the future.

Control your estate options.

You may be able to obtain a better rate on an annuity, have more estate options, and delay monthly income compared to what your pension provider is offering.

Cons: A portion of your commuted value may be taxable.

You may want to pick this option if:

  • You want flexibility and guarantees
  • You want flexible monthly income and investment choices
  • You want to create an estate 

 

GOVERNMENT LEGISLATION AND INDIVIDUAL LEGISLATION AND INDIVIDUAL PENSION PLANS MAY RESTRICT YOUR AVAILABLE OPTIONS.

TAX CONSEQUENCES OF EACH OPTION ARE SPECIFIC TO INDIVIDUAL CIRCUMSTANCES AND NEED TO BE EXPLORED AND EXPLAINED BYFORE IMPLEMENTING A SPECIFIC STRATEGY.