I'm 20 years away right now. 19 years away if I do the buy back. If you leave before you are eligible and choose not to withdraw your cash I'd have to wait until 2050 (29 years from now) to receive the payouts. Also no COLA until 2050.
But if I get another job or FIRE I can withdraw that cash and roll over to an IRA. I think the FIRE date is the more important timeline than the pension date. FIRE not set it stone but probably is at least 9 years out.
So, how does this impact your planned and actual asset allocation? This step must be considered as part of a whole, not in isolation.
4% isn't great. But 4% pretax seems to make it an attractive option to me, that gives me a $2500 tax savings over 18th months that can be put back into the market too.
This is a 13.5% bonus in the first year, so It's up to 4.54%. Good thing to consider, but incremental.
And borrowing money at 2.6% to get a guaranteed 4% seems even better if I could find a zero closing cost, breakeven from day 1 mortgage out there but i don' think that exists for cash outs.
This would be a good consideration, if you could pay off the loan with the interest you earn. But you can't, because the money is tied up in the pension. So, this is still a problem if it siphoned off money from your cash flow that you would otherwise invest in stocks.
My way of thinking about my pension is as a different sort of fixed asset, like bonds. I know it will be there when I reach retirement age, and I know the payouts. With that information, I can either derive a net present value, or I can research the equivalent fixed income investment needed to make those cash flows. Once it is equated into an investment amount, it is easy to then work into my target asset allocation. In your case, if you have enough in bonds, including the pension value, then your plan says do nothing. If not, this could be an option to increase your bond holdings.
One other risk of a pension is the asset concentration in your employer. If the plan gets into trouble, not just in the next 20 years, but the next 50 (i.e. your life expectancy, not your retirement date) then you could find the value cut, and you have no control over it. Rolling it over into an IRA is a way to minimize this risk, at least until the time you actually pull that trigger.