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:
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
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.
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.