We are seeing a renewed interest in derisking of defined benefit pension plans by implementing a “lump sum window,” and wanted to share with you the employee communication below. For purposes of this article, a “lump sum window” is a limited period of time during which participants in a defined benefit pension plan can elect to receive their pension plan benefit in the form of an immediate lump sum or as an immediate annuity. Participant disclosures associated with such lump sum windows are receiving increased scrutiny because legislators (and others) are concerned that defined benefit pension plan participants do not understand the consequences of electing an immediate lump sum.1

The employee communication below is designed to help participants who have separated from employment, but who have not yet begun to receive their pension2 make an informed decision when presented with the opportunity, during a lump sum window (referred to in the communication as a “Special Election”), to receive an immediate lump sum payment or to commence immediate annuity payments. Such an employee communication would supplement (not replace) legally required communications distributed as part of the normal benefit election process.

Click here to view the table.