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. Pension Benefit Guaranty Corporation ...

    A non-profit corporation that functions under the jurisdiction ...
  2. Defined-Contribution Plan

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

    A fund established by an employer to facilitate and organize ...
  4. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  5. Retirement Planning

    The process of determining retirement income goals and the actions ...
  6. Subaccount Charge

    Fees charged for the management of an investment fund.
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

    Pension Law Could Reduce Your Payout

    Discover how this act negatively affects your lump-sum withdrawals.
  4. 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.
  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. Retirement

    What type of investor should consider annuities?

    Learn about the features and benefits of annuities and when to consider one. Investors seeking to secure income for retirement benefit the most.
  9. Retirement

    What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks and advantages.
  10. Professionals

    Just Retired? No Better Time for a Second Career

    After working for decades and reaching retirement age, what's next? A second career, of course. Here's why and how.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center