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To: MrGreenJeans who wrote (1547)	10/10/1998 7:23:00 PM
From: Boca_PETE	Read Replies (2) \| Respond to of 15132

To clarify the GATT Treaty impact on pension plan lump sum payments that a caller asked about, THERE ARE TWO IMPACTS as follows: THE ADVERVE IMPACT from using the higher interest rate for the 30-Year Treasuries (average PLUS 1.5% over the last 10 years ended 1998) which reduces the lump sum payment (present value of pension payments due over the employee's estimated remaining lifetime). THE POSITIVE IMPACT from switching to the "1983 Group Annuity Mortality Table" (which reflects longer estimated remaining lives than the currently used "1971 Group Annuity Mortality Table"). - This POSTIVE IMPACT was not mentioned in response to the caller's question on today's Moneytalk program. My employer estimates DECLINING ADVERSE IMPACTS at INCREASINGLY LATER ages of retirement as follows: Retirees at Age 55 show approximate 6% reductions to their lump sums. Retirees at Age 60 show approximate 2.5% reductions Retirees at Age 65 actually show an approximate 1.4%INCREASED lump sum. Of course the actual impact will depend upon the spread between the PBGC Rate (which will no longer be published after Year 2000) and the interest rate for 30-year Treasuries at the time retirement is elected. Moreover, the above formula is A MINIMUM REQUIREMENT of GATT for computing the lump sum payment. Companies may elect an interest rate that results in more generous lump sums to their employees. Hope this helps those who are concerned about this impending change in the law. These requirements were probably attached to a trade bill as a result of lobbying by large corporate interests who will now make less cash contributions to their pension plans. And so the employees get it in the neck, again - and the complexity of it all causes many to give up in disgust! P