Pension Option

AAA

DEFINITION of 'Pension Option'

A set of options that a pensioner has in regard to the handling of his or her pension. Pensioners must make choices that determine how the funds will be distributed, and they must weigh the advantages and disadvantages of each option to determine which will work best for their financial and family situation.

INVESTOPEDIA EXPLAINS 'Pension Option'

Some of the pension options from which pensioners must choose will determine if a spouse will continue to have benefits in the event of the pensioner's death, or if benefits will be paid only during the life of the pensioner.


Options that must be examined include lump-sum distributions, single life and joint and survivor pension payout options. For instance, if a pensioner opts for a single life annuity, he or she can expect larger monthly benefit payments, but a spouse will not be eligible to continue receiving benefits if widowed.

RELATED TERMS
  1. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  2. Pension Fund

    A fund established by an employer to facilitate and organize ...
  3. Pension Benefit Guaranty Corporation ...

    A non-profit corporation that functions under the jurisdiction ...
  4. Retirement Planning

    The process of determining retirement income goals and the actions ...
  5. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  6. Living and Death Benefit Riders

    Living and death benefit riders are a descriptive class of contractual ...
Related Articles
  1. Retirement

    An Overview Of The Pension Benefit Guaranty Corporation (PBGC)

    Find out how this "retirement lifeguard" can save drowning plans, and why it's unlikely to be a long-term solution to the pension problem.
  2. Retirement

    Keeping Track Of Retirement Plan Assets

    Maintain records of your pension benefits or risk losing them.
  3. Retirement

    The Pension Bill: A Wolf In Sheep's Clothing

    Find out why the 2006 act may not be all it's cracked up to be.
  4. Retirement

    Pension Law Could Reduce Your Payout

    Discover how this act negatively affects your lump-sum withdrawals.
  5. Options & Futures

    Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.
  6. Retirement

    Lump Sum Versus Regular Pension Payments

    If you're about to retire, you may be facing this dilemma soon. Find out what your options are.
  7. Investing

    How To Evaluate Pension Risk By Analyzing Annual Costs

    Learn how to assess whether a company's pension plan is posing more risks than what the footnotes indicate.
  8. Economics

    Understanding Perpetuity

    Perpetuity means without end. In finance, a perpetuity is a flow of money that will be received on a regular basis without a specified ending date.
  9. Taxes

    How To Use Your IRA As A Last-Minute Tax Deduction

    While some people are stressing over their taxes, there is a big advantage to delaying the process: You can maximize your 2014 contributions to your IRA.
  10. Retirement

    Best IRA Accounts For Beginners

    Opening your first IRA should be just an early step in your ongoing financial education, for the more help you need, the higher fees you're likely to pay.

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center