How Do Pensions Pay Out?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Pension Payouts

Pensions typically pay out through an annuitized annuity. This method offers a steady income stream to retirees for life. However, there’s an alternative option that might offer more benefits: rolling over the pension lump sum into a new annuity with a Guaranteed Lifetime Withdrawal Benefit (GLWB).

Pension Lump Sum Rollover into an Annuity with GLWB

  1. More Control and Flexibility: Rolling over into an annuity with GLWB provides more personal control over the funds.
  2. Liquidity: This option often offers better liquidity, allowing access to funds if needed.
  3. Earning Interest: The annuity can earn interest, potentially increasing the value over time.
  4. Lump Sum Death Benefit: In case of the annuitant’s death, a lump sum can be available to beneficiaries, unlike traditional pensions.

Comparing The Option

FeatureTraditional Pension AnnuityRollover Annuity with GLWB
ControlLimitedHigh
LiquidityLowHigh
Interest EarningsNonePossible
Death BenefitLimited/NoneLump Sum Available

Conclusion

Choosing between a traditional pension annuity and rolling over into an annuity with GLWB depends on individual needs for control, liquidity, interest earnings, and death benefits. The latter can provide a more flexible and potentially more beneficial retirement income solution.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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