The new U.S. Pension Protection Act (PPA) rules expected in 2012 will make it more conducive for private-sector DB plan sponsors to terminate their plans. And for organizations who choose to do so, participants in those plans will be required to choose a payout option.
Vanguard’s research shows that participants leaving a DB plan are much more likely to take a lump sum than an annuity if given an option. This often means they are handed a large sum of money that may be challenging to manage. This not only occurs when a plan is terminated, but also arises when a sponsor offers a lump-sum option to vested participants who have left the plan, as well as in other situations.
To help these participants make informed decisions about their assets, Vanguard has created Vanguard Pension Reinvestment Services. At no charge to participating plans, the service provides participants with clear, unbiased education and information over the phone with noncommissioned Vanguard Certified Financial Planner professionals.