Savings2Income™Creating Dependable, Spendable Income™

What is a Personal Pension?

A pension can be defined as a fixed amount of money paid regularly to an individual during retirement by the government, a former employer, or an insurance company. With employer sponsored pensions playing an ever decreasing role, S2I considers as part of its mission, providing investors what we call a Personal Pension.

Together with Social Security, your Personal Pension will deliver Guaranteed Income, not from your former employer, but from highly rated insurance companies. It’s “personal” because the Savings2Income planning method will reflect all of the sources of your retirement savings, your income objectives, and personal circumstances. It’s a “pension” because payments are regular, guaranteed, and made by an insurance company.

Comparing a Personal Pension to an Employer-Sponsored Pension

As the chart below indicates, there are important differences between a Personal Pension and an employer sponsored pension - the most important of which is the source of the regular payments. In an employer plan, the source is a trust set up and funded by the employer, and typically insured by a governmental agency, the Pension Benefit Guaranty Corporation. In some cases, employers actually purchase annuities from life insurance companies to reduce or eliminate their pension liability. Employer pensions typically use actuarial and other consultants to design an investment program to match their pension liabilities.

With a Personal Pension, the S2I planning method is designed to create the spendable, dependable income from your retirement savings. The source of the guaranteed payments will be one or more highly rated insurance companies.

Set out below are some the key differences between these two types of plans.

Characteristic	Employer Sponsored Pension	Personal Pension Using S2I Planning Method
Sources of Funding	Employer Contributions to Designated Trust	Rollover IRA, Roth IRA, and Personal Savings
Investment Strategies	Diversified Portfolio Designed to Match Liabilities. Terminal Funding Annuities Are Often Purchased	Diversified Portfolios, a Portion of Which Are Used to Purchase Fixed Payout Annuities (FPA) from Life Insurance Companies
Pooling of Lifetime Payment Risk	Among Plan Participants/ Active Employees	Among Annuitants of Insurance Companies
Liquidity (for Individuals)	None	Access to Portfolio and Commuted Value of FPA
Payment Protection	Pension Benefit Guarantee Fund	State Insurance Guarantee Funds
Taxation	No Tax Before Payments Start; Then Income Tax on Payments to Recipients	No Tax Before Payments Start; Then Income Tax on Payments Less an Exclusion for Your Personal Savings
Customization (by Individuals)	None	Reflects Investor’s Objectives and Personal Circumstances
Amount of Payments	Set by Formula Usually Based on Years of Service and Earnings History	Set Periodically as Part of Planning Method Based on Personal Circumstances and Market Conditions