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Old 07-30-2011, 07:19 PM   #21
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Do you have some support for your statement that employees with DB pensions "do not normally pay into" their pension plan? I know I do, i.e. there is a deduction from my paycheck that goes into the pension fund. I can see from GregLee's post that he did too. I do remember from one of the numerous threads about underfunded pensions that there was at least one plan that the employees did not pay into, but I would be very surprised if that plan was the rule, rather than the exception.
That's right, my paycheck did show a 7% retirement deduction. But it's complicated -- Hawaii state changed from a contributory retirement system after I was hired to a non-contributory system, so that more recently hired state employees get paychecks without that retirement deduction shown. I don't see that it really matters. If there is no retirement deduction shown on the paycheck, then the base pay offered by the state for a given position of course has to be lower, correspondingly, because the state has to take into account the pension liability they will assume for a new hire. It's just a formal administrative detail.
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Old 07-30-2011, 08:12 PM   #22
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These results don't bother me:
Quote:
... revealed that 31% of those surveyed said they don’t know their plan’s vesting schedule, 40% don’t know what their payment options will be upon retirement or when leaving their company and 27% don’t know at what age they can begin to receive payments.
There's no point in worrying about payment options or earliest benefit age until you're getting close to retirement. And vesting doesn't matter unless you're planning to quit.

But the 61% for "never asked" for a retirement benefit is amazing. I'd like to see the question and interview these people. My employer sent everyone an annual report with an estimated pension, then they went to a website where you could get numbers anytime you wanted. Maybe most people "never asked" because they already had the information.

I'd also like to see the breakdown by age. When I changed employers at 34, I never expected to work at that company till 59, so the pension was strictly an afterthought.

Edit to add a factoid: " The average employment tenure was 14 years. "
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Old 07-30-2011, 08:22 PM   #23
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I'm 17 months away from my DB retirement commencement. But...I guarantee I've been reading and studying everything I could find about how it works for years, how much I can expect to receive, making estimates about the things that will be coming out before I get the net ie. med ins, life ins, survivor's benefit, fed taxes (not planning to pay any state income taxes) etc. While I don't know the exact bottom line just yet, I have a pretty good idea. I also know exactly how it all works. That's just my personality...no way I could just leave it all to chance. But then...I don't have the huge nest eggs many on this forum have either. I'm heavily depending on that CSRS pension for my (our) primary retirement income, along with a few other lesser sources.
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Old 07-30-2011, 08:23 PM   #24
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Originally Posted by kyounge1956 View Post
Do you have some support for your statement that employees with DB pensions "do not normally pay into" their pension plan? I know I do,
That's a good Q kyounge. Nothing to support my statement.

It is my experience that corporate and military pensions are not usually contributory, but non-profits and state/local/school districts government plans are often contributory. (That's why I wrote "normally")
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Old 07-30-2011, 09:08 PM   #25
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A thread from 2+ years ago addresses this:

Those w/Pensions: How much do you pay in?

Amethyst
I missed out on that thread at the time. January 09 may be before bad news started coming out about the pension plan I'm a member of. Probably at the time I was still living in blissful ignorance.

I must confess I was surprised by the number of non-contributory plans mentioned in the thread, including the military. Maybe just the fact that military pensions fall into the "non-contributory" category validates the statement I questioned. The linked article says over 42 million Americans "currently have pensions" and it seems pretty clear (through the questions about vesting, payment options on retirement, etc) they are talking about people still employed who are covered by a DB plan through their j*b, not people who are already retired. I wonder how many of those are current and former military?
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Old 07-30-2011, 09:15 PM   #26
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My federal govt. CSRS pension (36 yrs) will be/is/has been contributory (7%) and my military (33 yrs) (mostly reserves) was not.
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Old 07-30-2011, 09:26 PM   #27
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Sadly, most Americans are in the dark on just about anything financially-related. If I had a nickel for every time I talked to someone spending $500-1000/mo on health insurance that had no clue what they were spending or what the policy covered, I'd ER tomorrow.
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Old 07-30-2011, 10:03 PM   #28
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Sadly, most Americans are in the dark on just about anything financially-related. If I had a nickel for every time I talked to someone spending $500-1000/mo on health insurance that had no clue what they were spending or what the policy covered, I'd ER tomorrow.
Not looking to take this thread off it's target (as this did), but it's not only the people buying health insurance that don't "completely" understand what they purchased - the health insurance companies don't always get it right either. It's only when you need them that the "Big Book of Rules" comes out. Several times in the past - I had to point out that the claim they denied (out of network), should have been covered under my corporate policy (and they paid them). Now that we are ER'd and on our own individual policies - can't even get BCBS to send us a paper copy of the expensive poor coverage policies we've purchased - only available in PDF on line...
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Old 07-30-2011, 10:13 PM   #29
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Not looking to take this thread off it's target (as this did), but it's not only the people buying health insurance that don't "completely" understand what they purchased - the health insurance companies don't always get it right either. It's only when you need them that the "Big Book of Rules" comes out. Several times in the past - I had to point out that the claim they denied (out of network), should have been covered under my corporate policy (and they paid them). Now that we are ER'd and on our own individual policies - can't even get BCBS to send us a paper copy of the expensive poor coverage policies we've purchased - only available in PDF on line...
I was more referring to the fact that people have no clue how deductibles, copayments, coinsurance, and OOP maximums work, along with not even knowing how much they pay for the insurance in the first place.
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Old 07-30-2011, 10:30 PM   #30
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I was more referring to the fact that people have no clue how deductibles, copayments, coinsurance, and OOP maximums work, along with not even knowing how much they pay for the insurance in the first place.
There is no clear standardization between health insurance companies - let alone their own policies (find this somewhat deliberate). Don't envy you selling them, and really don't fault people for not completely understanding them.

I would say the same is true for pensions - one megacorp company I was with was sold (after I left), and the changes allowed me to cash out of the poor excuse of an pension income stream they quoted me annually - wasn't an option with the original parent company. Since doing that - I have managed to more than double it's original cash value and originally quoted income stream. Guess you could say that you can't always depend on what you're given as your retirement pension policy rules if the companies are at liberty to change those rules
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Old 07-30-2011, 10:35 PM   #31
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There is no clear standardization between health insurance companies - let alone their own policies (find this somewhat deliberate). Don't envy you selling them, and really don't fault people for not completely understanding them.
Standardization or not, the concepts still work the same way. Even if they didn't, I guarantee if I was spending $5-10k/year on something, you can be damn sure I'd understand every single facet of how it worked.

In regards to pensions, I wouldn't trust anyone to set aside money better than I can. Give me the money now and let me figure out how to spend/save it...there are no guarantees a pension will exist in the future, but money in my pocket today is real and tangible. Same thing applies to SS, but I don't want to derail the thread. Back on topic....
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Old 07-30-2011, 11:00 PM   #32
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Originally Posted by martyb
I'm 17 months away from my DB retirement commencement. But...I guarantee I've been reading and studying everything I could find about how it works for years, how much I can expect to receive, making estimates about the things that will be coming out before I get the net ie. med ins, life ins, survivor's benefit, fed taxes (not planning to pay any state income taxes) etc. While I don't know the exact bottom line just yet, I have a pretty good idea. I also know exactly how it all works. That's just my personality...no way I could just leave it all to chance. But then...I don't have the huge nest eggs many on this forum have either. I'm heavily depending on that CSRS pension for my (our) primary retirement income, along with a few other lesser sources.
I bet 80% easily of the people I knew, only had a vague idea of what their pension was. Most did not know about the retirement website and cared even less to use the calculator which all you basically would do is punch in your 3 highest years and total years worked and it would do it for you. Most would respond, I will just call them and have them send me what I'm getting.
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Old 07-31-2011, 12:44 AM   #33
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It has been many years since I had a staff job with defined benefits. The advantage is that having separated, they told me long ago exactly what my DBs would be at age 65. The combined DBs from the two companies that I was vested in is a whopping $400/mo. Although we both have IRAs, most of our retirement income will be from SS.
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Old 07-31-2011, 06:59 AM   #34
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Yes they are in the dark... and many of them willfully.


I have been in discussions with people in their 30s and 40s about retirement and the comment more often than not was that retirement was so far off that they were not going to bother with it now (i.e., planning)... as if, it was a last minute exercise?
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Old 07-31-2011, 11:40 AM   #35
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My company's pension got frozen in 2002 so the amount I qould receive every year has not changed in a long time. Before I ERed from there in2008, they ahd a series of meetings to further explain the pension and its options although none of them would apply to me because (a) I knew I would not be working there when I turned 55 and could start receiving it early (i.e. before age 65) if I retired at 55, and (b) I am single and plan to stay that way so any kind of spousal benefit was not relevant.

Not to derail the thread, but I also have a small, accumulated cash-balance amount which is supposed to rise over time even though I do not work there any more. But it is so small (low 5-figures) and if taken as an annuity it would be much less than $100 per month so I don't pay much attention to it.
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Old 07-31-2011, 02:02 PM   #36
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Back in the day my Megacorp furnished annual benefit statements that included projected retirement income. The projected retirement income estimate included pension, 401K, and SS. Now that I'm retired I've had time to look at the benefit statements. Some of them date back almost 30 years. The statements are remarkably accurate.
Magacorp, like many other experts, failed to predict the 2008 recession.
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Old 08-01-2011, 12:32 PM   #37
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I had the same thing: a forecast of what my annual DB pension would be if I continued to work until 65. I knew enough to know that I should retire early if given the chance (and fund other income). At age 49, a golden handshake was presented. Then I found out much about DB pensions and cash payout alternatives to make the "best" decision.

So I am not surprised at the results either. Spend time discovering things you can influence. Rather than second-guessing megacorp.
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Old 08-01-2011, 12:56 PM   #38
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Just a nit about the thread title -- I think it should say "Most American Pensioners in the Dark about their Pensions" because most Americans don't have pensions.

Having said that, I know what my pension (long-ago frozen, from a previous employer) will be. Not adjusted for inflation at all, will be about $630 a month in 2030 at age 65 with 100% survivor option. That may buy a loaf of bread or a gallon of gas in 2030.

I have the option of taking it as early as 2020 (at 55) -- but that would only be about $270 a month so it's probably better to wait.
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Old 08-01-2011, 01:37 PM   #39
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Most Americans do not have pensions, and in addition, if the check comes every month, (retired)the pensioner doesn't really care about all that other stuff.........
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Old 08-01-2011, 02:13 PM   #40
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I'm not understanding how those who did (or will get) a pension didn't see the point in calculating the payout until close to retirement.

While my pension will be relatively small at age 55 (about $1300/month + COLA) I calculate it yearly and plug the number into FireCalc. I want to know the full financial picture when determining how large our investments have to be to retire with a 95% success rate.

But then I'm a planner...always have been, always will be.
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