Providing Good Advice
Friendly, knowledgeable,
and supremely patient, Patty Pendarvis has just the right qualities for
someone with 15,000 demanding customers.
As CGC's resident pension
expert, Patty knows the plan inside out, and has had more than 20 years
experience answering pension-related questions. More than anyone, she
makes the plan work for thousands of ContiGroup employees and retirees.
One of the most crucial
parts of Patty's job involves helping people to make better choices
about their benefits. This can be particularly important when someone
sees the pension as a windfall, and thinks about spending it on a house
or car or vacation. "I don't tell people what to do," says Patty, "but
I will say 'remember, this is your pension,' and try to steer them
toward a better decision."
 |
| Patty
Pendarvis has answered pension questions both large and small in her
20+ years with CGC. She gets 15 to 20 calls a week on pension-related
matters. |
At times, these conversations can also be very emotional, especially when family relationships are involved. One recent call, she notes, came
from a retiree who had first selected a "life-income" option (an
annuity with a high monthly payment but no benefit to a surviving
spouse) and then changed his mind. Fortunately, Patty still had time to
intervene and make the change.
"He called up very
concerned and said 'you know, my wife asked me to take this [option]
because of the higher payments ... but we're partners and I don't think
it's right.' And I said 'well, I just hope she knows how much of a
sweetheart you are!' That's one guy who really went up in my book!"
Other calls are less
pleasant--for example, when people are disappointed by their level of
pension benefits. Patty understands when people get angry and will take
it "for a hot second." Then she'll walk them through the process and
try to defuse the anger.
"I want people to think well
of us," she says, "and I'm aware that many retirees see me as
representing the company." In fact, Patty is often the only person
retirees know in New York--a distinction that prompted dozens of calls
and e-mails after September 11th. "People just wanted to know whether
everyone here was OK, and I think that said a lot. It was the same when
Mr. Fribourg passed away--there were lots of calls from former
employees who didn't know him personally but wanted to send a card or
express their sympathy."
Typically, Patty gets 15 to
20 pension-related calls a week, some about individual benefits and
others involving general features of the plan. Many of these callers
have just started to think about their pensions and often miss
important details. Some people, for example, overlook the fact that
their medical premiums decrease in well-defined steps, for each five
years of service, rather than gradually over time. As a result, they
may take early retirement at, say, 14 years 11 months (that is, just
short of the third five-year period), when an additional month could
significantly reduce their premiums.
Perhaps the most important
decision is whether to take a lump-sum payment or a lifetime annuity.
This decision, Patty notes, depends on a range of factors including
health, marital status, and income from other sources, as well as on
the prevailing interest rate at the time of retirement. When interest
rates are low, as they are today, the value of the annuity in today's
dollars increases and the lump sum becomes a more attractive option. By
contrast, when interest rates rise, the present value of the annuity
falls and the lump sum becomes relatively less attractive.
Another consideration is
one's personal approach to financial matters. "If you're the gambling
type or don't feel that you can manage the lump sum, you may be better
off taking the annuity," says Patty. "However, you should also remember
that the basic 'life-income' option cannot be passed on to someone
else, and that it's often better to take some form of
joint-and-survivor option."
Of course, even if you
choose a lump sum, you must still plan to use the money for a period of
20 or 30 years. For some people, this will mean developing a
comprehensive plan, perhaps with the help of a professional financial
adviser, that will minimize taxes and ensure adequate income over time.
While such a plan may include some higher risk investments, it should
keep these to a reasonable level and not place the entire lump sum at
risk. For other people, it may be more appropriate to convert the
lump-sum into an annuity with a bank or other financial institution. If
you take this approach, you need to be sure that such an annuity is in
fact better--in terms of security and income stream--than an annuity
offered by the pension plan itself.
"The key is to be careful
and not simply accept the first advice you hear, even from a bank,"
says Patty, who notes that financial institutions may be eager to get
that lump sum, but may not necessarily give you the best deal. You
should also talk to a range of friends and colleagues and see how well
they've actually managed their pensions.
In short, do your homework,
make sure you understand the choices, and be ready to ask an expert if
necessary. Making the wrong decision could have a significant impact on
the overall value of your pension.
People moving directly from
active service into retirement have 60 days to make their decisions in
order to maintain their full retirement benefits. Most people also
receive all necessary materials well in advance. "We try to get the
forms and other information out within 90 days of someone's planned
retirement date," says Patty, adding that CGC also provides employees
with yearly pension statements. These statements give people a good
approximation of the pension benefits they will receive in retirement
based on current and projected service.
When forms are not
returned, Patty will follow-up with phone calls or additional letters,
and in some cases will also contact the retiree's spouse or children.
"I will get more involved when I have to," says Patty, who notes that
she has a fiduciary responsibility to look out for employees and to
serve as their advocate.
This is a significant
obligation and can make the job difficult at times. On the other hand,
Patty enjoys the challenge, the variety, and the contact with people.
"I know this is very important business for most employees and
retirees, and I try to keep this in mind--even when I'm in a hurry or
having a bad day," she says. "I like to think that I'm providing people
with good advice and helping them through a major transition in their
lives."