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Wednesday, October 28, 2015

TCP1 pensions with a lump sum

What do folks think about LLNS buying out ex-employee TCP1 pensions with a lump sum? I'm on the fence about what to do.
October 28, 2015 at 8:41 AM
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Anonymous Anonymous said...
"What do folks think about LLNS buying out ex-employee TCP1 pensions with a lump sum? I'm on the fence about what to do."

Please provide a link to the reference document on this TCP1 option.
October 28, 2015 at 8:54 AM
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Anonymous Anonymous said...
I have searched and there is no online information about this. It applies only to terminated vested plan participants, which according to the annual funding notice would be 384 people.

In the mail I received a 23 page packet:

It reads:

"Lawrence Livermore National Security LLC (LLNS) recently announced a limited-time program that allows you to receive the value of your vested pension benefit right away - either as a lump sum payment or a monthly annuity payment - if you act before October 29, 2015.

During this limited opportunity your options are:

1. Elect to receive a single lump sum payment of $XXX,XXX in December 2015

2. Elect to start monthly benefit payments as early as December 2015 (the amount depends on the form of payment you elect)

3. Wait until later to begin receiving your pension (available upon request at any time after your early or normal retirement date)



LLNS has set up a phone hotline which provides some limited information, but they are not fully transparent about how they compute the lump sum. Based on my own calculations, with a single annuity, I would need a return on investment of 5.6% to break even, assuming COLA of 1.76% and I die at age 90.
October 28, 2015 at 9:54 AM
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Anonymous Anonymous said...
Would your retirement medical benefit go away like the old lump sum UC/LLNL option?
October 28, 2015 at 10:00 AM
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Anonymous Anonymous said...
I thought you are only eligible for retirement medical benefit if you retire within 30 days of last employment date. I thought when you take a job somewhere else, you walk away from that.
October 28, 2015 at 10:44 AM
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4 comments:

Anonymous said...

Not sure what either LLNS or LANS are discussing in regards to managing retirees on pensions but many corporations are deciding to offload their remaining pension liabilities by buying annuities for their pension holders from big insurance companies so they can offload future market dangers.

Anonymous said...

Take the monthly payments and do all you can to ensure that you live forever, like eat well and lower your stress/blood-pressure.

Anonymous said...

This doesn't sound right for many reasons.
1. It isnt offered to all TCP1 participants.
2. Cash outs must use ERISA discount rates, which are now the long term corporate bond rate, a historically low value, thus tge cash out value is likely to be quite large.
Are you sure the source is legitamste?
What is the implied discount rate for the expected cash flow until your death.?
Remember to adjust the yearly cash flow by the actuarily determined probability that you will collect it. It should be about 0.5% to 1% that you will die each year between age 60 and age 85.

Anonymous said...

Generally, lump sum offerings by employers are not very good. They tend to benefit the employer, not the employee. This is the reason lump sums are offered. It is human behavior to accept a smaller payment now rather than a larger payment later (or spread over a lifetime).

Lump sums can be advantageous for someone in poor health or a similar situation. They might be worthwhile if the pension payout is small and the retiree has other sources of retirement income, or if immediate liquidity is needed. Tax considerations also are important.

The UC lump sum was not very good.

Don't hesitate to speak with a fee-only financial advisor, as opposed to someone who will receive a commission by investing your lump sum payment.

To address the other person's comment ... to retain retiree medical benefits, there is a 120-day window (not 30-day) between termination and the official retirement date. The retirement date is day the first pension check arrives (always the first of the month). It has nothing to do with an individual taking a job at another organization.

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