As someone who works in the investment industry, I take great exception to the statement by the president of the Newfoundland and Labrador Public Pensioners Association, Ralph Morris, warning individuals to guard against “snake oil salesman” taking public service pensioners’ pension plans.
I am no snake oil salesman and, in fact, I would suggest that the vast majority of my colleagues are caring, considered professionals who have nothing but the best intentions for their clients and potential clients.
What Mr. Morris is referring to is the option that public service workers have to take the commuted value of their pensions when they terminate their employment, instead of taking the public service pension that is available to them when they retire.
Essentially, the former employee takes his/her money, and the employer’s share, and transfers it to a major financial institution. This is a valid option that all public servants should consider; especially in light of what appears to be major changes coming to how cash-strapped governments everywhere are treating their pension obligations to their employees. Examining all options is good preparation — “good homework” some would say.
When an individual decides to take the commuted value of their pension, all the options that are available to them are clearly outlined by the Pensions Division of this province. Included in this documentation is the fact that the pensioner would no longer be eligible for medical benefits if the commuted value is taken.
What Mr. Morris fails to mention are some of the major benefits of exploring the commuted value option, such as controlling investment options yourself and removing your pension benefits from the whims of government.
Commuted value is not for everyone. The value of the investment does, indeed, vary and the value of your retirement income can change from year to year. It is, however, a valid alternative, one that should be considered by many retiring employees.
Fear-mongering, such as exhibited by Mr. Morris, does no one any
good. Informed decision-making is the answer. Of course, didn’t we all know that already?