Pondering pension options

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About 200,000 retirees at Ford Motor and General Motors were told in spring 2012 that they could choose a lump-sum pension buyout instead of receiving typical monthly payments. In summer 2012, FedEx announced a similar buyout, and NCR offered such a plan to 23,000 former employees. Employers adopt this strategy to cap pension costs.

As more companies adopt the strategy, a variety of pension consultants and websites have emerged to help people to choose between lump sums or payments, says Nancy Hwa, who is a spokesperson for Pension Rights Center (PRC), which is a consumer watchdog group that focuses on retirement issues. 

Unfortunately, she tells Consumers Digest, consumers don’t have a simple way to determine whether a consultant’s advice is valid. One thing to ask is whether your consultant has any personal interest in the options that he/she recommends.That could mean that your best interests are taking the back seat.

PRC has an online fact sheet, pensionrights.org/publications/fact-sheet/should-you-take-your-pension-lump-sum, to help retirees to decide on which type of pension plan works best for them.