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Old 05-30-2015, 04:12 PM   #21
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For someone 26 , unless you are looking at a government pension , or the candidate is ready to "Marry" the employer , not a reason to favor a job.
Even government pensions aren't likely safe, especially at the state and local levels in states where pension liabilities are threatening to bust budgets and lead to voter/taxpayer revolts.

New Federal employees are probably somewhat safer because the feds changed their unaffordable/unsustainable CSRS plan 30 years ago, to a more sustainable pension model. But even Feds should probably not assume the deal they get at the starting gate will be the same at the finish line.
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Old 05-30-2015, 05:37 PM   #22
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Yes and I'm better off for it.
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Old 05-30-2015, 05:51 PM   #23
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At the age of 22 when I applied/started I didn't give the pension a thought. But the job was public safety, I was vaguely aware there was a pension but I didn't think about it much until I was in my 30's and then it began to dawn on me how lucky I was to have stumbled into it. I forget the numbers now, but if someone was going to resign from that job they did it within the first nine years. After that resignations dropped to a trickle because you could get a pension (with a 20% hit) after 20 years.

As ziggy29 correctly points out the rules have changed. I'm grandfathered in to the old one that was in effect in 1973 when I started but the pension plan has changed twice since then, and certainly not for the better. So I'd have to agree that even in government, especially state/local, expect the rules to change during the course of a career.
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Old 05-30-2015, 06:40 PM   #24
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I don't think the pension was something I was thinking about back in 1982 when I started working at the company that I eventually retired from in 2013. In fact I left that company for a year and a half but then came back and only lost that year and a half break in service. Thankfully I did that or else I would still be working now. It probably was only about ten years ago that I really started looking at retirement and pensions and realized how lucky I was to be where I was.

In your camp Steve and definitely one step dumber. Outside of a few moments of lucidity, not only did I not care about the pension the first 10 years, I viewed what was taking out of my check towards my pension as like a tax. I was never going to get old and pensions were for old people. Pensions were a nice invention for "live for the day" idiots like me back in the day.


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Old 05-30-2015, 06:53 PM   #25
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It probably made a lot more sense to do this 30-50 years ago than it does today. There are too many examples of pension offerings getting watered down or frozen. (Yes, the benefit you *already earned* is protected by federal law, but they can change the deal for future service.) And by that time, you have enough time invested that they may still have the "golden handcuffs" on you even if it is no longer the deal you signed up for.

No one starting a job today should take a job with the pension with the assumption that the pension will remain unchanged as long as they remain employed there -- and that is increasingly true with public employers as well as private. And no one should assume that even if the pension doesn't change, they will also have the job security to make it that far. The deal has changed. All else being relatively equal, a DB pension is better than no DB pension, but I think most folks, especially younger ones, are best served treating it as "gravy" -- any of it received is good, but maybe not something to count on being there when you do retire.
+1. Exactly what I would say to a younger person asking the question today, only Ziggy probably said it better than I would have.

Even when I was young and pensions were more generous and common, my current old self would have told my young self faced with two job opportunities (with even remotely similar starting compensation/benefits) to take the job that offered the most job satisfaction, potential advancement, location, etc. (e.g., which job will make you happier). I'd choose a great job with decent compensation/benefits over a lesser opportunity with better pay - a career is long, even for an early retiree.
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Old 05-30-2015, 08:03 PM   #26
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Oh carp - missed the fact that the OP is 26.


Look for a generous DC plan.
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Old 05-30-2015, 08:39 PM   #27
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Just out of curiosity, did a pension ever help determine what job you would take?
At age 25, I took a new job, based completely on job stability for next 2 - 5 years. After about 15 years, I started to think that achieving a pension was possible, but still a long shot. After 27 years, I made it
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Old 05-30-2015, 09:42 PM   #28
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Thanks for the replies everyone, I appreciate the insight into this! Obviously the pension is only worthwhile if one can make the 20-30 year gauntlet which is why I'm contemplating it, since I'm still young enough to make that gauntlet while still making the goal of ER. Certainly a lot to think about and probably something I can't decide on until I have some concrete numbers in front of me.

It certainly seems like this community is torn on pensions for younger individuals which is a bit of a surprise to me! I'll see what comes down the pipeline and weigh in from there.
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Old 05-30-2015, 09:57 PM   #29
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I don't think it is so much torn, Greencheese, as it is apprehensive for you that it will be there for you at the end. When many here were your age 30 years ago, the idea of having your promised pension deleted was very rare. Many of these pension freezes late in a career can be brutal. Most of the accrual benefits of a pension can occur late in the career. Freezing a pension at year 20 of a 25 year full pension can be huge haircut. Not just the simple math of thinking well I will get 4/5 of the pension anyways.
But, I think you can see through other threads the people who actually have them are very happy they do (including me). Its just can you trust it to be there when you need it most as it will be completely out of your hands.


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Old 05-31-2015, 12:49 AM   #30
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As a military officer, pension was never a recruiting tool. But it is a powerful retention tool.
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Old 05-31-2015, 03:26 AM   #31
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Thanks for the replies everyone, I appreciate the insight into this! Obviously the pension is only worthwhile if one can make the 20-30 year gauntlet which is why I'm contemplating it, since I'm still young enough to make that gauntlet while still making the goal of ER. Certainly a lot to think about and probably something I can't decide on until I have some concrete numbers in front of me.

It certainly seems like this community is torn on pensions for younger individuals which is a bit of a surprise to me! I'll see what comes down the pipeline and weigh in from there.
So please no offense. But do you live in a cave? or maybe you just don't know?

There is a nationwide movement funded by Billionaires to destroy pensions both public and private. A carefully designed attack on teachers,Pilots,cops,truck drivers,etc.

So as a millennial I wouldn't count on any pension in 30 years.

Its possible we might see a reverse trend if the middle class fights back but the millennial generation seems happier just staring at their cell phones.

Just 20 years ago public school teachers were considered underpaid heroes helping our children.

Now those same underpaid public school teachers are considered overpaid public servants ripping off the taxpayers with their pension.

Yes this did happen in our society and economy in a 20 year span and its a joke.
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Old 05-31-2015, 07:45 AM   #32
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So please no offense. But do you live in a cave? or maybe you just don't know?
Time to brush up on your Dale Carnegie?


I though Mulligan summed it up nicely.

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I don't think it is so much torn, Greencheese, as it is apprehensive for you that it will be there for you at the end. When many here were your age 30 years ago, the idea of having your promised pension deleted was very rare. Many of these pension freezes late in a career can be brutal. Most of the accrual benefits of a pension can occur late in the career. Freezing a pension at year 20 of a 25 year full pension can be huge haircut. Not just the simple math of thinking well I will get 4/5 of the pension anyways.
But, I think you can see through other threads the people who actually have them are very happy they do (including me). Its just can you trust it to be there when you need it most as it will be completely out of your hands.
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Old 05-31-2015, 08:14 AM   #33
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So please no offense. But do you live in a cave? or maybe you just don't know?

There is a nationwide movement funded by Billionaires to destroy pensions both public and private. A carefully designed attack on teachers,Pilots,cops,truck drivers,etc.
It depends on the employer.

Many non-profit healthcare institutions, some utilities, many unions, still some private companies, and many local/state gov't still offer pension plans to employees. If the OP is in one of these, then there's a chance that they will still be "fair" to employees, rather than try to finagle the rules and structure to only benefit the C-suite. However, I'd try to first find out what the funding level currently is - and be aware that there are different ways to report funding levels.

There were recent laws passed that let the pension fund use historical returns to determine funding levels in lieu of current interest rates. With current interest rates being non-existent, the funding levels are much worse off. With historical rates, the funding levels are much higher. I would probably opt to split the difference between the two to get a gauge on what the health of the pension is.

If it's currently fairly well funded (say, 88% or higher using the "split the difference method"), then I would bet that it will likely still be adequately managed and funded in the next 10-20 years, and still be a part of their retirement plan. Which, IMO, would make it worthwhile to take a chance.

From the few pensions I"ve seen, they often have a 5 year vesting schedule. if you make it at least 5 years, you vest 100% in it. If you leave after 5 years, and/or if the cash balance is small enough, you might be able to roll it over into an IRA after you leave, depending on the rules. So it could still be worth it to look into.
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Old 05-31-2015, 09:23 AM   #34
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I am vested in two different pension plans; one public and the other private. The contributions to the public plan were taken from my paycheck and therefore that plan has a lump sum payout option and a death benefit. The private plan is 100% employer funded. It does not have a lump sum or roll over option, and no death benefit. You can elect to take a reduced payout to have a spousal benefit. Both plans vested after 5 years of employment.

Since I started at megacorp, they've altered the pension plan participation rules twice, and with the second change they harshly kicked out anyone who wasn't 40 years old and set a freeze date for everyone else. It just so happens that these changes are in line with my own ER goals, so besides providing me with a little extra motivation, I made out okay. But my 39 year old co-worker, who has more years of service with the company than me, was not nearly so fortunate. From what I can tell, the lump sum that she'll receive for her "vested" pension isn't close to what it's value would've been had she been able to stay in the plan.

I agree that Mulligan has accurately described the pros and cons of defined benefit pensions. I feel fortunate to have mine, but I'd be hard pressed to believe that a current, private DB plan will go 20 - 30 years without being reduced or eliminated.
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Old 05-31-2015, 09:49 AM   #35
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It depends on the employer.

Many non-profit healthcare institutions, some utilities, many unions, still some private companies, and many local/state gov't still offer pension plans to employees.
very true
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Old 05-31-2015, 10:21 AM   #36
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Every year at my state capital there are 4-5 bills introduced trying to weaken our teachers pension system. Fortunately teachers retire fairly young and are mobile enough physically to drive in from all corners of the state to swarm and harass legislatures to beat the proposals down and get them killed. Retired teachers have plenty of time on their hands and are willing to use it to protect their pensions. Unfortunately for private pension workers they do not have that "added protection".


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Old 05-31-2015, 03:41 PM   #37
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It depends on the employer.

Many non-profit healthcare institutions, some utilities, many unions, still some private companies, and many local/state gov't still offer pension plans to employees. If the OP is in one of these, then there's a chance that they will still be "fair" to employees, rather than try to finagle the rules and structure to only benefit the C-suite. However, I'd try to first find out what the funding level currently is - and be aware that there are different ways to report funding levels.

There were recent laws passed that let the pension fund use historical returns to determine funding levels in lieu of current interest rates. With current interest rates being non-existent, the funding levels are much worse off. With historical rates, the funding levels are much higher. I would probably opt to split the difference between the two to get a gauge on what the health of the pension is.

If it's currently fairly well funded (say, 88% or higher using the "split the difference method"), then I would bet that it will likely still be adequately managed and funded in the next 10-20 years, and still be a part of their retirement plan. Which, IMO, would make it worthwhile to take a chance.

From the few pensions I"ve seen, they often have a 5 year vesting schedule. if you make it at least 5 years, you vest 100% in it. If you leave after 5 years, and/or if the cash balance is small enough, you might be able to roll it over into an IRA after you leave, depending on the rules. So it could still be worth it to look into.
I am not talking about the math of pensions. I agree they can and do work.

The OP is young and might not realize how much influence and money is being thrown around behind the curtain to eliminate pensions both public and
private.

Even military pensions are a target now.

There isn't much value placed on workers these days or really in the last couple decades. Its all about the stock price and pensions do not mix well with shareholder value.

There is constant pressure on pensions and most older workers with a pension know the feeling that the rug can be pulled or the pension reduced at any moment.
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Old 05-31-2015, 03:50 PM   #38
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I was always going to have a career as a librarian and I ended up with a public service job that I loved for 28 years. I was so green about my retirement that it wasn't until I was there 5 years that I found out that we had a pension and paid medical upon retirement. I could not believe they were going to pay me when I retired. The pension is still a benefit at the City I worked for but the retiree medical is pretty much gone. I was one of the last lucky few.

It's not a bad thing to stay at a job you love and retire from it. But, I admit, having a pension and medical certainly prevented me from going elsewhere. In my case it would have just been another City and I was comfortable at mine so I stayed. I had no ambitions other than to retire as a manager (higher salary and pension) which I did.

And I was freaking fantastic librarian!
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Old 05-31-2015, 03:52 PM   #39
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But I agree - pensions are at risk in the future...Even while in my state, with CalPERS, the average pension is about $1250 a month. You can't live on that and many of us in public service never paid into Social Security, so no joy there. But the rich folks and other pissed off people that don't get a pension have targeted those who make the bigger pensions - the minority of the CalPERS pensioners. I missed the boat on the dotcom party in my area and now those folks are begrudging me my pension.
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Old 05-31-2015, 03:57 PM   #40
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very true
Its possible pensions could make a comeback. But considering wages have now been flat for 30 years it doesn't look good.

Maybe we will see a movement in the corporate world hopefully sooner than later to reward workers instead of constantly taking away to boost shareholder value.
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