So if you wait past age 60 to retire and you decide to take the lump sum, the calculations to turn an annuity into a lump sum will result in the value of the lump sum going down about 3% a year past age 60. The good news is that every year you are losing 3% from your lump sum in the A fund, the company is funding 12.5% into your B fund, so you still come out ahead about 9.5% for each year you delay retirement. Plus you get your salary those extra years you work as well. I hope this add some clarity and not confusion."
[
This assumes your lump sum is equal to a years pay. Some lumps are around 1 Million, a year pay maybe 200k-250k. You do not come out 9.5% ahead unless your lump is the exact same as 1 years pay. Don't forget about the rate change that is being implimented over the next few years that will base your lump on a higher rate which also will lower the payout on top of the 3% reduction. If you are getting close to retirement please consult a finacial planner and don't take the company or union's word for it.
Last edited: