Pension Reset
I’ve picked up some scuttlebutt that I’m trying to get some more information on. I don’t know if you guys would know anything, but let’s see.
Here is an article that was in Forbes Magazine http://www.forbes.com/forbes/2008/0225/048.html titled [b]”The Shrinking Lump”[/b] by Janet Novack (2/25/08) referencing a “Pension Reset” that the U.S. Govt. might be authorizing for all Pensions in the future.
With the above article in mind, I’ve heard somewhere that the “Pension Reset” may be taking place in the Fall 2008, around October/November, for all Pensions. Have you guys heard anything to that effect, any details? My reason for wanting to know is that this would affect the size of Pension Rollovers into IRAs (reducing them in size). Any information you may have at all would be helpful.
Permalink Submitted by Alan Spross on Fri, 2008-06-27 22:26
This was part of the Pension Protection Act, and plans are now beginning to phase in a change for 30 year T bond rates to corporate bond rates of a shorter term. The new rates are generally higher and that equates to lower lump sum amounts and lower pension liabilities that the companies must fund.
The new rates start to phase in this year @20% per year, so the article is correct that waiting could turn out to be costly. That said, plans can be affected differently, so you should request some lump sum quotes. However, rates can change and therefore your quote may only be good for a few weeks. With interest rates possibly rising soon to combat inflation, this could turn into a double whammy. Get as much help from your plan as you can in making the decision.