LANL transition affecting many's financial future

LANL transition affecting many's financial future

SPECIAL TO THE MONITOR (Sunday 4/2)

As LANL moves toward a new regime, many changes face current and retired employees. Some of those topic are:

Defined benefit or defined contribution? It's more than a financial choice. In the transition to LANS, you have two options. If you choose to stay employed and transfer, you keep your defined benefit plan, Option A. If you retire and hope to be re-hired, your pension option will now be a defined contribution plan, Option B. Option A specifies that you will receive a set monthly amount-a defined benefit-until your death, with no cost-of-living adjustments. The employer is responsible for the investment risk. Option B specifies that a contribution will be made to your retirement plan account but makes no promises to a future monthly retirement income. The employee is responsible for the investment risk. At first blush, Option A sounds like real peace of mind, but it should be balanced against other factors and conditions. You surrender your lump sum to the plan-and with it your chance at capital preservation. Income-wise, you lose your spending power as inflation erodes your fixed income. And, once you go with Option A, you can't back out of it. From a purely financial view, Option B is good because you keep your lump sum and have the control to pick your own investments based on your risk tolerance and actual needs. You-or your financial advisor-can set up your own reliable income stream in an IRA and preserve the capital at the same time. And, you can protect your retirement income against inflation. If Option B is a good deal financially, why should I consider Option A?

[...]

Full Story