Last month, 90,000 former Ford workers got an offer to trade their pension benefits for a lump sum of cash. Pension lump-sums can usually be rolled into an IRA, which avoids negative tax consequences and the benefit of tax deferral during retirement. Also, pension payments end at a worker’s death. A lump-sum can leave any leftover to children and grandchildren. Healthier people might be better off keeping the pension because they’ll be able to collect longer. The same reason goes for women who statistically live longer. A change in pension law allowed companies to use calculations that have resulted in lower lump-sum payments. Rolling a lump-sum into an IRA means taxes on the distributions. These taxes can affect other finances, such as how Social Security gets taxed. Finally, taking a lump-sum puts the responsibility of investing onto the shoulders of the former worker.
The review rules will apply when the U.S. insurer has sensitive information about 1 million or more people.
The court could still take up the case after a lower court takes another crack at it.
Chuck DiVencenzo will continue to be NAFA's president.
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The “reflation trade” appears real, but risks are still elevated.
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