Portability and Annuity Purchases by Members

One of the choices that a pension plan offers members when they cease membership before they are eligible for early retirement is to use the value of their pension benefit credit to purchase an immediate or deferred life annuity. A pension plan may also offer this option to members who cease membership after becoming eligible for early retirement.

Terminating members should be informed that the assumptions and methods used by the insurance company offering the deferred or immediate annuity may differ from those used to calculate the member's pension benefit credit payable from the plan. As a result, the amount of their pension benefit credit from the plan may not be sufficient to purchase an annuity that would provide the same amount of annual pension that they would receive from their pension plan.