• The scheme deceptively called "pension maximization" is stripping unknown thousands of widows of their future security. Its sales appeal arises from the two ways that pensions may be paid. Retirees can choose a larger monthly check that stops when they die--or they can take a smaller check that's paid for as long as the spouse lives, too.
• Here's the life-insurance angle. The husband, say, is encouraged to buy a policy at retirement or sometime before. He (hen takes the larger pension check. If he dies before his spouse, his pension is replaced by the life-insurance proceeds.
• In practice, however, this scheme rarely works, says a repentant Jerry Keating of McCook Lake, S.D., once a manager for John Hancock Mutual Life. One of the clients in his office bought into pension max, he says, with a policy meant to be paid up when the man retired. Instead, the client got socked with payments he couldn't afford and the coverage lapsed. The couple sued and John Hancock settled on terms that included a gag rule for both par-ties.
  • An angry Keating says, "The agents didn't know the risks and the company didn't tell us."
• Almost every pension-max plan I've seen has been deceptive in some way. Unless you feel sure that your spouse will die first or won't need extra money, take the pension that covers you both.

1994 0206 - Newsweek - Here They Go Again, by Jane Bryant Quinn - [link]