Pensions - Got one?

[PERSonalTime]

Hey, does your organization offer any kind of pension program? If so, do you have one and what is it like? Also, do you also have any other source of retirement income?

 

[Meadbh]

No.

 

[growing_older]

Nope. Nothing like that at all. Worked for a few companies that offered one, but it was always discontinued, or company went out of business, before any benefit vested.

 

[Cassie]

Hey, does your organization offer any kind of pension program? If so, do you have one and what is it like? Also, do you also have any other source of retirement income?

Yes I have a pension, however, my organization moved from the type I have (defined benefit) back in the early 80's. What's it like? I think it's going to be wonderful getting a monthly deposit, which is more than what I brought home when I was working. I have a TSP (401k type federal contribution plan) however my pension covers my living expenses and savings.

 

[Lucantes]

Yes I have a pension.
Ours does not have a COLA so when I take ER in 2017 (50) it will be taken as a Lump Sum and rolled it into my 401K and allowed to grow untouched until 2027 (60) when it will be used to fund the rest of our retirement. We have taxable accounts to cover ER from 2017 to 2017.

 

[akck]

Pension here. Currently, the state has 4 tiers in their retirement plan of which the first 3 are defined benefit plans and the 4th is a defined contribution plan. I'm a 2nd tier member getting a pension. Like many government plans, our benefit is based on years of service and depending on your tier, your high 3 or 5 year average salary. We have what's called a Post-Retirement Pension Adjustment. For Tier II, that means I get 50% of the designated CPI increase and at 65, it becomes 75% of the CPI. Also, if we stay in Alaska, we get a 10% COLA after age 65. We also get a healthcare benefit.

State workers also get a SBS benefit in lieu of SS. The amount that would have gone to SS from employee and employer, goes to a retirement account that vest immediately and has multiple investment options. Once retired, you can buy an annuity or roll the amount over into a traditional retirement account. While many municipalities participate in PERS, many do not participate in the SBS benefit, paying SS instead. I moved from state to municipal government and transferred my SBS to a traditional IRA, which became my third leg to my pension and future SS benefit (to be reduced by WEP).

 

[FIREd]

No pension for us.

 

[Amethyst]

Supposedly, I have a pension coming....no sign of it yet, alas.

Amethyst

 

[foxfirev5]

A very small pension, frozen in 1994

 

[Idnar7]

DW and I both have non-COLA pensions after 30+ years at each of our employers. The pensions amount to ~ 35% of our ending salaries. SS will add another 24%. Will hit IRA's for large expense items (remodel, car, etc.). Eventually RMD's will provide the third leg to our stool.

 

[MichaelB]

No company pension for us.

 

[plex]

Very small pension to go along with my TSP, mostly because I will only have 8-9 years in the system before I very early RE, before 20 years, it is +1% per year of work, past that, it is 1.1% a year, of highest 3 years. It does not inflation adjust until one starts actually drawing from it, so it will be worth a bit less than half due to inflation before I can draw on it. Still, based on my calculations, it is better than SS since it requires only a 0.9% employee contribution, return-for-contribution wise, but new employees have had it jacked up to 4.4% just last year, so for them it isn't much better than SS, or perhaps slightly worse.

 

[rescueme]

Not really. They converted to a Cash balance plan - Wikipedia, the free encyclopedia in the early 80's, when our traditional pension was phased out and combined the cash balance along with a 401(k) plan.

At retirement, I had the option to take the cash balance as a lump sum, or they would purchase a lifetime annuity for me (with 50% survivor for my wife) which would end after we both passed.

I did a lot of research on SPIA's and found that I could get a higher monthly benefit with better terms (100% survivor, guaranteed payment term - with benefits paid to our estate if we both passed before the term ended) than the company offered plan. Additionally, I would assume the company received a "finder's fee" with the SPIA they offered (through a private company), thus reducing the monthly income.

One might say I did get a pension, but certainly not in the traditional sense.

 

[Act2]

Yes, I am fortunate enough to have a solid government pension. 7% of my salary goes into my account; employer matches it 2/1 at retirement. Yes, 2/1 - 200%. And it grows at a guaranteed interest rate of 7% per year during the years before it is drawn. It used to have a variable interest rate but more than two decades ago they fixed it at 7%, which creates some negative public comment in down stock market years. At retirement, the balance plus match is annuitized and I have various options (single life, provide for a survivor, etc.). Lump sum is not a real option because to take a lump sum I forfeit all the employer match.

It is non-COLA. The board that oversees it may choose annually whether or not to 'adjust' it post-retirement, but historically that has been unpredictable so I consider it non -COLA, although the board recently expressed an intent to go to an annual post-retirement adjustment of 1/2 of chained CPI.

And our plan is well-funded, not in danger of default or failure. Though the match is not 'mine' until retirement, the employer is required to fund and deposit the match each year. There is no option for the employer to fail to make annual deposits. The law is very strict.

I am very grateful, and I still enjoy my work so it's an unknown number of years to ER. I do believe my pension will be there when I retire.

I also have a Roth IRA and have a deferred comp account. And I pay into SS.

 

[Walt34]

As an attorney put it I am a "financial dinosaur". DB pension, 100% COLA, medical/prescription coverage, SS, and enough savings/investments to meet all but catastrophic events. Assuming I pass first DW gets 70% of the pension and SS when she reaches FRA. Not wealthy (rest assured it is nowhere near six figures) but comfortable by most standards. The pension plan is fully funded or very close to it at all times so no worries there. I paid 7.5% into both the pension plan and SS while I was working.

They don't make 'em like that anymore.

They stopped offering that to new hires in the early '80's but I am grandfathered in since I was hired in 1973. They put a lot of effort into persuading members of the old pension plan to switch to the new one by offering 1/2 of one's pension contributions back in a lump sum. I thought it would be foolish to do that and didn't but a lot of guys took the bait, buying cars, boats, Harleys, and such. They sure are regretting it now.

 

[utrecht]

I have a government pension that is a set up a little differently. My pension fund is a separate entity from the government agency I work for. The employee and employer both make their contributions, which are quite high. After that point, the employer has no control over the pension fund beyond having City officials make up 4 of the 12 member pension board. Any changes to pension benefits have to be voted on by the members.

I get 3% per year times my best 3 years. I will be leaving at 25 years next January with 75% pension. COLA consists of 4% the first year and then the same dollar amount every year after, so the COLA percentage dwindles slightly each year.

The benefits were changed a couple years ago for new hires. They get 2% per year and don't vest for 20 years.

 

[Midpack]

My former Megacorp eliminated further pension contributions in 1994, pension balances were frozen for all active employees, and the funds were only available at retirement age. They eliminated a retiree health care plan a few years later and replaced it with nothing (not sure what they did RE: retirees at the time).

I've seen charts showing the percentage of public sector employees with defined benefit plans are considerably higher, but couldn't find it just now.

 

[PRSC]

Yes...but not a great one. All contributions stopped back in 2003. I get what is equivalent to about 19% of what my salary was when I retired on Jan 1, 2014. It is not COLA'd. A good thing is that there is no penalty for collecting it right away when I retired at 55. It is not the greatest but certainly qualifies as one of the 3 legs!

 

[H2ODude]

Come from a long line of engineers and Dad always said you need to fund your own retirement. So I did. Along the way started working for one government that had a great DB pension but got booted after 15 years; took my contributions with me (they gave no interest). That system was designed to screw those who left even though you were vested. After some other jobs started another government job and assumed I would not be there long enough to establish significant DB payout. I was sort of right until I discovered I could buy credit for up to 10 years from a previous government if I would get no benefit there. It cost me 2-3 years worth of salary to buy those 10, but allowed me to collect at 60 rather than wait until 65, and basically got 50% of what my last few years was. So, whilst still saving along the way (maxing 457 and 401K) as well as after tax, we could likely make it on SS and the DBP. As it is, the problem will be freeing all the IRA stuff from the tax man and figuring out how to spend it. I know, big problem. Oh, and while the pension comes with "colas" it's up to the state to decide what they are, and there have been none the last few years so I assume in all calculations no cola. Any that come are gravy.

One other thought...while that first job had a sweet pension if you made it to the end, you didn't pay SS (or get any benefit). In retrospect, having gotten as many years under SS as I have I'm pretty happy that I completed all the years under SS and not at original place. Pension contributions at both governments was 7-8% of employee salary.

 

[Kaufmanrider]

Yes I have a pension, however, my organization moved from the type I have (defined benefit) back in the early 80's. What's it like? I think it's going to be wonderful getting a monthly deposit, which is more than what I brought home when I was working. I have a TSP (401k type federal contribution plan) however my pension covers my living expenses and savings.

I have the new pension Cassie mentions for Feds. We kept the defined benefit, but at a smaller rate. It is considered a three legged stool. A defined benefit (FERS pension), defined contribution (TSP-like a 401K) and a special social security supplement until I reach SS age.

Cassie's CRS retirement was the best, mine as a LEO/ATF/FF FER's is the next best and then the standard FERs is at the bottom.

I receive 1.7% of my high three (instead of the standard 1%) for the first 20 years, 1% each year there after which includes my military time. I have 32 years and am 49 years old. 46% of my high three plus about 65% a month of what I would have earned at age 62 from SS. Paid by OPM not SS. We have a mandatory retirement at age 57 (eligible with 20 years at 50 of any age with 25 years) so we receive a portion of what we would have earned from SS had we worked to age 62. COLA every year on the FERS part, not the Social Security part. Mid-size TSP which I rolled into an IRA and might take 72T in the future.

 

[Walt34]

Oh, forgot to add. The pension is based on 2.5% per year of service of your high three year's pay, normal retirement is now 20 years (law enforcement, you really don't want 60-year-olds doing that) but was 25 years at 2% per year. They also credited unused sick leave which for me was almost two years so I went out with a bit over 30 year's service credited, or a bit over 70% of the high three years.

I feel very, very lucky. How many 22-year-olds are thinking about retirement when they start a job? I sure wasn't.

 

[RockyMtn]

Actually have two. One low five figures annually at age 65, one mid five figures annually which I can start collecting on at any time although I'm probably going to wait a few more years. Both non cola'd.

Also have retiree health where I pay the same premium as employees for health. Company plan backstops Medicaid when I get to 65. No dental or vision included.

 

[ziggy29]

Yes, albeit a small, long-frozen one representing my first 11 years working in industry. It will amount to less than $700 a month at age 65 in 2030, at least at the 100% joint and survivor level. No COLA, so if inflation rages in the next 15+ years this pension will be even punier.

Still beats a sharp stick in the eye, though.

 

[travelover]

Another dinosaur here with a pension and health care, though no COLA. DW also has a pension with health care and some COLA.

I was sure that my Mega Corp would go bust, so I saved and invested to retire at 55 in any case, thus belt and suspenders, now.

Current workers at Mega just get some 401(k) matching as economic conditions warrant.

 

[HFWR]

Had one at Megaconglomocorp, frozen in 1998 when I was outsized; cashed out for $23k.

Have one coming from current j*b, will likely be in the $500-600/mo. range when I take it (62?). Non-cola.