Financial Strategies Group

FINANCIAL STRATEGIES GROUP 28 CHAPTER 4 PENSION PLANNING This is not always the case and not all insurance companies or annuities are created equal. It is important to thoroughly review the financial status of the insurance company you are considering buying an annuity through and the features/guarantees of that annuity. A good financial planner can be very helpful in this process. Other Considerations Is your pension fully funded? – If your pension plan is distressed or underfunded, the security and dependability of your pension payments could be called into question. You have the right to request information about your pension plans funding from the plan administrator. Is your pension insured by the Pension Benefit Guarantee Corporation (PBGC)? - Some pension plans offered by "small personal service employers", church groups, and federal, state, and local governments are not insured. Additionally, many multi-employer plans, plans created through an agreement between two or more employers and a union (e.g. plumber/electrician union pension plans), have minimal protection through the PBGC. This can become increasingly important if your pension plan is underfunded or distressed. Are your pension benefits more than what the PBGC covers? – The PBGC only guarantees a certain amount of benefits. The monthly benefits you are entitled to could be more than what PBGC insures. This also can become increasingly important if your pension plan is underfunded or distressed. You can find these limits at http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html If you are faced with a pension lump sum option and the correct answer is not clear to you, I would encourage you to meet with a financial planner. A good financial planner will not only help you sort through all the above considerations, they will use sophisticated software to run projections and break-even analysis. "You have the right to request information about your pension plans funding from the plan administrator."

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