This could be a good news/bad news story. The bad news is, your pension is getting eliminated. The good news is, you only have twelve years at that employer, so you likely have time to recover. Better to get an unpleasant surprise now rather than when you are too old or otherwise unable to come up with an alternative. Also part of the good news, as previously stated, you are vested in the plan and should be getting some sort of compensation for what you have in the plan.
And now is a good time to get that lump sum, assuming of course that there is a good time. Why? Because interest rates are very LOW right now. Your vested plan, being, I assume, a defined benefit plan says that somone with your service record and at some age will receive $nnn per month. In order to spin off that amount every month, a certain amount of money needs to be invested. When interest rates are low, it takes a larger investment to generate the needed returns. If the plan is liquidated at a time when interest rates are low, that translates into a larger payout than when returns are high. (I know, I am GROSSLY oversimplifying here, to try to to get the general idea across.)
The pension was a part of your total compensation package. If it's eliminated, your compensation will go down. I hope you are getting a raise to offset this loss, but I am not holding my breath. If you do get a "raise" and/or if you get a lump sum distribution, DO NOT spend that money. Invest it wisely and carefully to assure your future as best you can.
But be careful!
If you get a lump sum, that is considered "before tax" money and if you take personal delivery of a check it is highly likely that you will end up owing taxes on the entire amount. The employer should send the money directly to a qualified account. If you don't have one, start one. Depending on your situaton, it may make sense to roll that money over into a Roth IRA. Yes, you will owe taxes on the money now, but never again, if the Washingtonians are to be believed. This is an especially good deal if you have a good number of years ahead of you to grow the money before you take any distributions. Plus, no required minmum distributions, etc.
If you have not done so, consult not one but two or three professional and respected financial advisors NOW before you do anything. This isn't an area where it is good to take chances or make assumptions.
And finally, it is my personal opinion that no one should put ANY money into a regular IRA or 401K, UNLESS your employer has a matching contribution plan AND has a good variety of low cost investment options and an easy way to roll the funds out of that account once they are vested. And even then, invest only as much as needed to capture the company's match. If the only investment option is the company's stock, stay away! Instead, max out what you can contribute to a Roth IRA or Roth 401K instead. Ordinary IRA's and 401K's are tax traps.
And last but certainly not least, don't take as fact ANYTHING I have told you, or that anyone else here tells you. If you find something here that interests you, use our suggestions as a basis for conducting YOUR OWN research with certified or licensed investment professionals. Act on knowledge not unqualified advice or anecdotes. And get more than one assessment from more than one professional and more than one company. I have heard many stories of people doing what they thought was the right thing and going to a financial professional and getting at best very BAD advice. In the end, it doesn't matter if the guy is a crook or just ill-informed if his advice costs you your investment dollars.
good luck and be careful,
Steve
And remember, if it sounds too good to be true....