PBGC Termination question

[Guest Doogie61]

I have a 30 life DB plan. In 2008 and in 2009, two participants who reached NRA one in each year, elected to take their benefits in the form of a life annuity pension. Now in 2010, they are going to terminate the entire plan. Does the trustee have to purchase an annuity for the two participants already receiving benefits to keep the life pension going that they selected or can he just offer them the "remaining" PVAB as a lump sum?

Thanks .... you guys are the best !

[Andy the Actuary]

You may be able to offer a lump sum settlement as an option (some attornies say yay, others nay) with spousal consent but in no event can you force cashout. Plan would have to be amended to provide election. Be prepared to purchase annuity.

[david rigby]

I've done this, just as AtA suggests. Most retirees will elect the annuity. In hindsight, the communication of this option was very difficult, not well understood, and not worth the bother.

[AndyH]

You may be able to offer a lump sum settlement as an option (some attornies say yay, others nay)

This is important. There is not universal agreement on this. Some would argue that the spousal waiver needs to occur at the time of the first election. I'm not sure I agree but some do. I'd like to hear other opinions.

[dmb]

You may be able to offer a lump sum settlement as an option (some attornies say yay, others nay)

This is important. There is not universal agreement on this. Some would argue that the spousal waiver needs to occur at the time of the first election. I'm not sure I agree but some do. I'd like to hear other opinions.

We do not offer re-elections at plan terminations. Retirees that are receiving their retirment benefit as a monthly annuity from the plan will have an annuity purchased for them.

[ScottR]

I agree with pretty much everything that's been said. It's legally permissible for the plan administrator to offer retirees a lump sum option, but it's not required, and you certainly can't force lump sums upon retirees. If a retiree elects a lump sum, spousal consent should definitely be obtained.

.. Scott