Understanding Severance Packages, Part 5, Understand Your Severance-Related Pension Plan Options
While workplace pension benefits are not as prevalent as they once were, people who have a company pension plan should understand what happens to it when they leave.
In years past, people would often work in one place for their entire career before heading off into the sunset with a gold watch and a lifetime of memories. These days, with widespread corporate restructuring, mergers, technological advances and shrinking budgets, it’s common to find yourself with a severance package and questions regarding your next career step.
If you’re in such a challenging situation, you’ll have plenty to think about as you evaluate potential moves to come. However, it’s also important to keep your financial house in order as you transition in your career, so you can remain on track to achieve your longer-term financial objectives. In this blog post, we look at possible implications for your pension plan when leaving your company.
Your pension benefits
A company-sponsored pension plan is a convenient and effective way to save for your retirement years. Such plans are often funded by the employer but sometimes they also allow for employee funding. In those cases, if an employee is willing and able to make additional contributions (typically up to a given percentage of their base salary), the employer will match some or all of the contributions to help the plan’s assets grow faster.
While pension benefits are becoming less common, some companies continue to offer them. In most cases, you can take your pension benefit with you when you leave the company or defer receiving pension benefits until a later date. Before you transition out of your company, it’s helpful to calculate an estimate of your benefit amount using different benefit start dates and keep them for your records.
Options to consider
In addition to choosing when to begin receiving pension benefits, you’ll need to decide on a payment option. Your options often include an annuity payable only for your lifetime—which is typically the highest payment amount—or payments based on both your life and the life of a surviving spouse or beneficiary.
Deciding what percentage of your payment a surviving spouse or beneficiary receives will impact your pension benefit amount. For example, a retiree may have a Single Life Only Annuity option that pays a monthly benefit of $2,000 for the duration of their life. Alternatively, the Qualified Joint and Survivor Annuity payment option lasts for the retiree’s life and the duration of a spouse’s life. However, the monthly benefit amount may be reduced to $1,850, for example, with a surviving spouse receiving $925 per month.
Finally, some pension plans provide the option to take a lump sum. If this is appropriate for your circumstances, you can generally roll the amount into an IRA to avoid income taxes when the lump-sum pension pays out.
Regarding when and how to receive your pension benefits, it’s important to know where your income will come from over the next several years and to understand what your cash flow needs may be. You’ll want to consider income sources, like other work earnings, Social Security and investment portfolio withdrawals, in order to identify potential gaps in your income needs and how your pension benefit may help fill them.
Your decision should also take other factors into consideration, such as your age, health, lifestyle, future work income and how soon you’ll need to start living off your investment portfolio. We build personalized projections to help clients analyze what their income and expenses could be in retirement, where they might generate additional income (if required) and how their pension income fits into their bigger retirement picture.
We’re here to help
Over the years, our team has helped many executives and professionals navigate the complicated and often overwhelming severance process. We’ll develop a personalized strategy, including investment recommendations, to help you make the most of your severance package and position your finances for long-term success.
If you’re leaving your company, you’ll likely benefit from expert support regarding how to integrate your pension plan into your overall retirement strategy and future cash flow needs. Contact a Corient Wealth Advisor today to explore your options.
ABOUT THE AUTHOR
Lisa Brown
Lisa is a Partner, Wealth Advisor in our Atlanta office. She joined legacy firm Brightworth in 2005 and became a Partner in 2010. In addition to working with clients, Lisa has published three books: Girl Talk, Money Talk. The Smart Girl’s Guide to Money After College; Girl Talk, Money Talk II. Financially Fit and Fabulous in Your 40s and 50s; and legacy firm Brightworth’s first book, Building Your Wealth Inside Corporate America. Lisa has been featured in The New York Times, The Wall Street Journal, YahooFinance, CNBC.com, and many more, and frequently speaks at seminars across the country.
CONTENT DISCLOSURE
Corient refers to the separate but affiliated entities under common control of Corient Holdings Inc. These entities include but are not limited to Corient Private Wealth LLC, Corient IA LLC, Corient Family Office LLC, Corient Tax LLC, Corient Trust Company LLC and Corient Aviation LLC. Each service may be provided under separate agreements and separate fees may be charged for family office services, wealth management services or any other service provided by a Corient affiliate and/or third party. Additional fees and charges may be applied for other services or products Corient, its affiliates or unaffiliated third-parties provide to clients. Additional fees, such as custodial fees, fund expenses and third-party investment manager fees, may also be applied to client accounts. This information is for educational purposes and is not intended to provide, and should not be relied upon for, accounting, legal, tax, insurance, or investment advice. This does not constitute an offer to provide any services, nor a solicitation to purchase securities. The contents are not intended to be advice tailored to any particular person or situation. We believe the information provided is accurate and reliable, but do not warrant it as to completeness or accuracy. This information may include opinions or forecasts, including investment strategies and economic and market conditions; however, there is no guarantee that such opinions or forecasts will prove to be correct, and they also may change without notice. We encourage you to speak with a qualified professional regarding your scenario and the then-current applicable laws and rules.
Different types of investments involve degrees of risk. The future performance of any investment or wealth management strategy, including those recommended by us, may not be profitable or suitable or prove successful. Past performance is not indicative of future results. One cannot invest directly in an index or benchmark, and those do not reflect the deduction of various fees that would diminish results. Any index or benchmark performance figures are for comparison purposes only, and client account holdings will not directly correspond to any such data.
Advisory services are offered through Corient Private Wealth LLC a registered investment adviser (“RIA”) regulated by the U.S. Securities and Exchange Commission (“SEC”). The advisory services are only offered in jurisdictions where the RIA is appropriately registered. The use of the term “registered” does not imply any particular level of skill or training and does not imply any approval by the SEC. For a complete discussion of the scope of advisory services offered, fees, and other disclosures, please review the RIA’s Disclosure Brochure (Form ADV Part 2A) and Form CRS, available upon request from the RIA and online at https://adviserinfo.sec.gov/. We also encourage you to review the RIA’s Privacy Policy and Code of Ethics, which are available upon request.
Our clients must, in writing, advise us of personal, financial, or investment objective changes and any restrictions desired on our services so that we may re-evaluate any previous recommendations and adjust our advisory services as needed. For current clients, please advise us immediately if you are not receiving monthly account statements from your custodian. We encourage you to compare your custodial statements to any information we provide to you.
5039652 – December 2025
