Thank you very much for the reply and sorry for my delay. Your points are very helpful in thinking through the issue!
Answers to your questions:
1. I would vest at the end of the year, so long before any FIRE date. In reality, I don’t see myself permanently retiring – rather I would like to do independent consulting and have the freedom to take on (or not) projects when and where I want.
2. I don’t hate my job, but I am not realizing my full potential. It’s no problem to stay until I vest, but if I stay much longer without a corresponding career boost (which would also boost the pension), I feel I am short changing myself out of other life experiences.
3. I’m pretty healthy, with grandparents in their mid-90s, so a longer-than-average life is something I am looking forward to!
4. I’m confident the organization (it’s not a company but an international governmental body) will be solvent…and there is a realistic strategy in place to assure the financial sustainability of the pension scheme. That said, there are some risks around how my starting payments will be adjusted in the 22 year deferral period (it depends on inflation and changes in the salary scales, which have not always kept up with inflation), but once payments start they would be adjusted only by inflation.
5. No
Yes, the tax issues are the most difficult part to navigate here. Using
https://www.portfoliovisualizer.com/ I calculate that to give myself a high probability of getting equivalent payments as the pension, I would need to turn the $260k into at least $850k in the next 22 years. That implies after-tax annual returns of 5.5%. This seems very doable, and it could be more, but only if I’m very tax efficient.
I’m still leaning towards vesting in the pension from a piece of mind standpoint, but given my age I have this lingering feeling I’m leaving money on the table by not taking the lump sum and investing it…
Thanks again!