Tax Changes Could Be Costly to Pensions

I am absolutely amazed by the apathy and lack of interest shown by workers (particularly those 40 and older) regarding the proposed Treasury Department rule changes to tax treatment of cash-balance pension plans.

I am 62. I planned to work to 65. I can easily calculate what my pension would be at 65, and I know what it would be if I retired now. The difference amounts to approximately $320 per month. If my company changes to the cash-balance pension plan, the difference would be zero.

That is, I would not accrue any further pension benefits for the next three years. In effect, such a change would cost me $320 per month (at 65) for the rest of my life. An annuity of $320 per month for a 65-year-old today costs approximately $20,000. This is the amount I would lose at 65.

This change can cost you big bucks. If it costs me $20,000 for only three years, what is it going to cost you for 10 years or 20 years?

Do your own calculations. You will be upset too.

Bernard Johnson

Santa Paula