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Corporate & Public Pensions
The Multi-Million Dollar Decision.
If you have a Defined Benefit pension, deciding how to extract it is the single most important financial choice of your life. Do not make a blind guess.
The Commuted Value Dilemma
If you leave an employer with a Defined Benefit (DB) pension before retirement, you face a binary choice: Take the guaranteed monthly payout for life, or take a massive lump sum upfront — The Commuted Value.
The Monthly Pension
Pros: Zero market risk, zero longevity risk. Often indexed to inflation — crucial for teachers and government workers.
Cons: Inflexible. Dies with you and your spouse — meaning $0 estate value for your children.
The Commuted Value
Pros: Total control. Flexibility to withdraw large amounts early. 100% of the remainder goes to your heirs upon death.
Cons: You take on all market risk. You can outlive the money if you invest poorly.
The Solvency Risk
If your pension is a private corporate pension (like Sears or Nortel), you must assess the solvency risk of the company. If the company goes bankrupt, your monthly pension can be slashed dramatically. In these cases, taking the Commuted Value is often a necessary defensive maneuver.
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Master The Math
Whether you take the CV or the monthly pension, you need to sequence it perfectly to avoid the OAS clawback. Use the Blueprint engine.