Traditionally, a "Severance Package" is a way for a company to release you, but not in a "bad" way, because they will probably offer you a lot of money (several thousand dollars) and a very favorable reference from them, so anyone else knows that you weren't laid off due to any kind of wrongdoing on your part. "A severance package is a bundled package of financial compensation and benefits which is offered to some employees when they leave their positions. Some people call severance packages “golden parachutes,” referring to the fact that they allow former employees to float on their severance benefits, at least for a while. Such packages may be built into employment benefits in some companies; teachers, for example, may receive retirement benefits after working a set number of years. Severance packages are also offered to employees who are laid off, and they are sometimes used to encourage high paid employees to leave to bring company costs down, in which case a severance package may be called a golden handshake." Source: http://www.wisegeek.com/what-is-a-severance-package.htm "A golden handshake is a hefty severance package which is offered to senior executives and other high ranking employees. Often, the terms of a golden handshake are included in a hiring contract, and they are viewed as insurance against sudden or involuntary job termination. A golden handshake may also be offered to an employee to encourage him or her to retire; this is common in systems like schools, where long-term employees make more money, and it can be more cost efficient to hire entry level teachers." Source: http://www.wisegeek.com/what-is-a-golden-handshake.htm I hope the above information gives you a better understanding of your situation. Basically, you are being given "early retirement," and your pension takes the form of a lump-sum payment, instead of a monthly income for the rest of your life. It would be a good idea to have your attorney read that document BEFORE you sign it, so s/he can advise you of what your options are (if any) and what s/he would recommend that you do. +5