Your pension can be paid in many ways, but it is usually paid as a monthly annuity (payment).
Your employer may allow you to take your pension as a one-time, lump-sum payment. This means that all your pension is paid at once. However, it is up to your employer to offer you a lump sum. No one can force your employer to offer to pay you all at once. An employer can offer lump sums to some employees and not to others.
Your employer will use different factors to decide how much money you get. These factors may include how long you worked at your job, the position you held, how much you earned and at what age you retired. Your employer will set the early retirement age and the normal retirement age in your pension plan. Your employer must explain how they calculate pension payments in the Summary Plan Description.
Example: Dave works for Company B. Company B’s pension plan offers Dave three pension retirement options.
Option 1: Early retirement at age 55
Option 2: Early retirement at age 60
Option 3: Normal retirement at age 65
In this example, if Dave retires at 57, he would receive the same amount of money that he would get if he retired at age 55.
Unless your pension plan says so, you will not get more money if you start getting your pension after your “normal retirement age” (the age your company expects you to retire). In the example above, if you choose to retire at 68, 70 or even 80 years of age, your monthly payment will be the same as if you had retired at 65, the normal retirement age for Company B.
A benefit calculation sheet shows how your employer calculated your pension and what factors they used. You can ask for a benefit calculation at any time, including before you start receiving your pension.