Top Five Tips to Protect your Pension

With the economy going into turmoil every now and then, some of you are rightfully afraid of what is going to become of your pension plans. These are tough and unpredictable times for the economy. But despite that pension plans are not in any serious risk. This is particularly true of those employees that have already leveraged some of the benefits of their plans. On the other hand, you are aware that defined benefit plans are in the decline mode and these days it is more pay for performance than a lump sum amount. Public pensions are also under scrutiny. But you should also know that just because the economy is in decline, it doesn’t necessarily mean that your plan is going to be effected. However it is always a good idea to check out your plan and its returns. Keep reading to know how you can protect your pension.

1. Keep a check on the plan’s funded status. It is the ratio of assets that a plan has on hand to meet its future obligations. If this ratio is 80% or more, it is considered to be healthy, any difference till 100% then is manageable. This is assuming that these funded assets actually earn the future investment returns.

2. Get a detailed annual report, or even better get it every six months. But one thing to keep in mind is that if the report is too detailed for your knowledge then you will have to enlist the help of a financial advisor. In either case it does well to understand the finer nuances of your plan. Also get a detailed statement on the benefits that you are entitled to receive when you retire. Get this revised at set intervals, so you know what the actual figure is going to be.

3. Most of you feel that the retirement benefits should come to you in lump sum, so that you don’t have to worry about the money later on. But experts say that it makes more sense to lock your vested benefits into monthly payments. It is better for retirement security.

4. Drill down to the detail of each plan and have your financial advisor explain everything to you. Pick up the annual comprehensive financial report and look at your employer’s contribution over time. Then figure out if the plan works for you and how healthy are the expected benefits.

5. If you are worried about government shortfalls and pay offs to employees when they are asked to leave, then it is alright to invest in individual retirement accounts and public defined contribution plans. You can also find some of the online retirement benefits calculator that give you a ball park figure and it is easy for you to figure out if you are saving enough for retirement or not. While these steps will help you plan adequately for your pension and retirement funds, it is alright to give the economy a little time to catch up. Your financial advisor will be able to help you more objectively in this regard.

Resource Box(Bio):- The Retirement Group educates corporate employees that are transitioning or retiring Netbenefits.