Lump Sum Question

Has anyone experienced any challenges or needless delays in exercising the lump sum pension pay-out?

 

They enjoy taking as much time as they can, especially when it comes to money.

 

Just seems like the the process takes entirely too long and is very cumbersome. Getting the impression that GSK wants to make it complicated in order to discourage taking the lump sum.

I'm wondering if others have had a similar experience.

 

That's the GSK way.

 

There are laws about releasing pension money and it doesn't happen overnight. Typically one has to file documents and send to holding company then funds need to be released within a certain period of time usually based on the quarter. This is not just GSK but happens across the board. Not a fan of GSK but this is not unusual.

 

Oh you don't know the full story.

 

Well, then, what is the full story?

 

This is an interesting discussion thread. I am curious to know from those who have financial advisors, what's the consensus? Are your advisors recommending taking the annuity or taking the lump sum to invest elsewhere?

 

My advisor recommended to take the Pension, there is nothing she could provide to give me a consistent year end and year out equal to a 6.5% payout on that amount. I have not yet taken this but right now I am leaning towards her advice and begin taken the Pension amount in 2018. I have enough invested in the my existing IRA's, the GSK 401 Rollover and non IRA accounts where I don't want to worry about market swings on this Cash Balance amount. The monthly amount using the 100% Joint life in the Hewitt retirement projection far exceeds any insurance annuity I have reviewed or any other option to date. It’s really a personal family preference and what fits everyone’s needs, Pro’s and Con’s for either choice. For me I am not comfortable putting this in the market or buying an outside annuity which have unclear ongoing fees. Yes once we are gone it’s gone (we are betting on living a long time!), right now GSK has been fully funding the Pension for those concerns. Google “retirement cash balance should I take the lump sum or pension” you will find lots of information online on this subject. Talk to your advisor but also talk to other outside firms to look at your options, all I have found want your lump sum and those reasons why but never gave a reason why I should take the Pension amount.

 

Thanks. I appreciate your insight.

 

Pension is good !

 

Ho about leaving it in the cash balance plan after you retire and continue earning 3% interest. Meanwhile it is still yours unlike an annuity which is gone forever? Just asking, no smart ass answers please!

 

Nothing wrong with that if that money is not needed for retirement let it continue to grow where it’s at with no fees. The rules for required minimal distribution (RMD) at 70 1/2 for a Cash Balance seem to be same as a 401K since it’s a defined benefits plan. Those RMD requirements will need to be checked with the Hewitt Benefits how that is handled and if a full distribution would be required at that time. Be interesting to know if you find this out reply back to the thread.

 

I'm confused. Are you speaking of the cash balance account as GSK no longer offers a pension. Also, where are you getting 6.5% as the interest rate on the cash balance for 2017 is 3% and has yet to be announced for 2018.

Thanks

 

Yes and no.

 

So let me understand this..........you are asking financial advice from these children ?

 

Yes you’re correct many years ago it was then called a Pension and GSK switched to a Cash Balance Plan. With the Cash Balance you can now elect to take a Lump Sum Distribution or a Monthly Annuity (Pension) payment at retirement. The 6.5% is not an interest rate; it was based on the % of distribution per year from what my equivalent lump sum currently is if taking an annuity monthly payment. Example if your lump sum is $100,000 x 6.5% $6,500 per year $541.00 per month. The Hewitt Pension projections can help you determine your lump sum, monthly amount and with a little math determine your % of distribution per year. I am using the 100% Joint and Survivor annuity form of payment. My advisor said anything over 6% is considered great, looking after our best interest our current assets she recommends we take the annuity monthly income 100% Joint and Survivor. Just sharing my own research not an expert, and this is just our situation, our current health being for now excellent please do you own and get financial advice (multiple) and what is right for your family. This could be the most difficult and irreversible financial decision either way you could ever make, but we are very fortunate GSK provided this benefit for us.