The independent authority on pension buyouts
Got a pension buyout offer? Know what it is really worth before you sign.
Companies offer lump sums because it saves them money. That does not automatically make your offer bad, but it means the math deserves a hard look. Start with the one number that frames the whole decision: the return your lump sum would need to earn to keep up with your checks.
$51.8B
moved to insurers in 2024
U.S. pension risk transfer, LIMRA
794
buyout contracts, a record
single-premium deals, 2024
~30M
Americans with insured pensions
PBGC, fiscal 2024
$0
cost to decline an offer
your benefit simply continues
The definitive explainer
What Is a Pension Buyout? Definition, Types, and How They Work
A pension buyout is an offer to exchange future monthly pension checks for a one-time lump sum, or a deal that moves your pension to an insurance company. Here is exactly how both kinds work.
Read the guide →- A pension buyout is an offer from an employer's pension plan to pay you a one-time lump sum in exchange for giving up your future monthly benefit.
- The term also covers pension risk transfers, in which an employer pays an insurance company to take over benefit payments entirely.
- Employers offer buyouts to shrink pension liabilities on their books; the lump sum is calculated under IRS rules, not negotiated.
Decide by these six factors, not by the size of the check
Live long, keep the pension
Your health and longevity
A monthly pension is longevity insurance. The longer you live, the more the annuity beats the lump sum. Family history of long lives leans annuity; serious health issues lean lump sum.
Run the number, not the feeling
The offer's implied value
A lump sum can look huge and still be worth far less than the stream of checks it replaces. The calculator shows the ratio and the return your lump sum would need to earn to keep up.
Who depends on this income?
Survivor needs
A single-life pension stops at your death. A lump sum rolled to an IRA passes to heirs. Joint-and-survivor elections change the math for married couples.
Who is standing behind the promise?
Employer and insurer strength
PBGC insures most private pensions up to legal limits. Once a plan is transferred to an insurance company, state guaranty associations apply instead. Different backstop, different limits.
Be honest with yourself
Your discipline with a windfall
Retirees who spend a lump sum early lose the comparison automatically. If a large rollover would get raided, the boring monthly check is a feature, not a bug.
Timing changes the check size
Interest rates at your calculation date
Lump sums are set using IRS segment rates from a lookback month. Higher rates mean smaller lump sums. The month your plan uses can move your offer by thousands of dollars.
The library
All guides →The Basics
Making the Decision
Taxes & Rollovers
Pension Safety
Data & Statistics
Company buyout histories
GM, Verizon, IBM, AT&T, GE, and dozens of other employers have run lump sum windows or moved pensions to insurers. See what happened at yours, with the filings and figures behind it.
Quick answers
What is a pension buyout?
An offer from a pension plan to pay you a one-time lump sum in exchange for giving up your future monthly pension checks, or a deal that moves your pension to an insurance company. Employers do it to reduce the pension obligations on their books.
Should I accept a pension buyout offer?
It depends on your health, longevity expectations, survivor needs, and how the offer compares with the value of the checks it replaces. Our free calculator shows the return your lump sum would need to earn to keep up, which is the right starting point.
What happens if I decline a pension buyout?
Nothing changes. Your pension continues under the plan's normal terms. Declining never forfeits your benefit.
Why did my company offer me a lump sum?
Employers offer buyouts to shrink pension liabilities, often ahead of transferring the plan to an insurance company. Paying you today usually costs the plan less than keeping the promise.
Have a buyout offer on your desk?
Talk to a fiduciary advisor on our team, free. We will run your exact numbers and give you a clear read before your deadline.
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