Employers looking to derisk by offering workers lump-sum buyouts could be depriving those employees of potentially greater benefits if they'd just stuck with the pensions they'd been earning in the first place. (Photo: Shutterstock)
It's not a hard and fast rule, but employees could be getting the short end of the stick if they take an employer-offered buyout instead of sticking with a pension.
A Forbes report points out that employers looking to derisk by offering workers lump-sum buyouts could be depriving those employees of potentially greater benefits if they'd just stuck with the pensions they'd been earning in the first place.
Regarding buyout offers, it says, "financial experts have warned repeatedly that this can be a poor decision for participants because the value of a pension goes beyond the dollar amount of the payments made over time. That's because the actuarially fair calculation the company is required to perform is not the same as what it costs to buy an annuity that protects you against outliving your assets."
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
