Did a pension ever a sway you to a specific job?

[Greencheese]

Just out of curiosity, did a pension ever help determine what job you would take?

Currently searching for a new job and finding that there are tons of options in the finance field for someone who is 26 with the right degrees/certifications/experience. I've noticed that some companies are still offering pension/401k combo plans that do seem appealing. Most of my coworkers are still earning a pension at megacorp (new hires received additional 401k contributions instead) and they all state how great it is. I've spoken to a few people, including those who are financially savvy, and they believe going for the jobs with a pension is still the ideal situation to help build a buffer for more aggressive 401k investing. However I'm not sure how many of them are planning on retiring early which is why I'm here.

If I was looking at 2 jobs, say one with a 8% 401k match only or one with a 3% match plus a pension would either of those look more attractive to you? Either way I am planning on maxing my 401k and Roth IRA each year but this is something I've been pondering as potential job offers will likely be coming in the next couple of weeks if all goes well.

 

[Big_Hitter]

depends on the pension - for older employees, it doesn't take much for a traditional pension to be worth more than 5% of pay - it mainly depends on your age, how long you plan on being there and what the formula/benefit provides


have you thought about negotiating a nonqualified (top-hat) pension arrangement with the new employer?

 

[NoiseBoy]

I will receive a pension from megacorp, which I can start as early as 55 with a 4% penalty per year from age 62. The design of the plan pretty much requires me to also work until I am 55 (stop work age), or the pension benefit is reduced by almost half. Never the less, I feel fortunate to have made the "cut" each time megacorp has scaled back the plan because I believe that my company funded pension and 3% 401k match will amount to more retirement income than the younger workers who now have only a 401k with a higher match.

Think of it this way; I have been contributing the maximum to my 401k + catch up contributions AND I have a pension. It's simple math that I'm going to have more RE income than those workers who only have a 401k. Oh, and we get paid the same, so our ability to save outside of the 401k is identical.

I've not heard of any private pension plan that lets you start taking the benefit before age 55, so if your ER goal is to get out sooner than that, the pension option may not make the most sense. There are public plans that let you retire after 25 - 30 years with full benefits, but it sounds like you're in a field where the pay is probably much better in the private sector.

The other main issue with company funded pension plans is that they are almost never portable, so if you do go that route, you're just about making a career decision to stay with that company until you can FIRE.

Happy job hunting.

 

[RunningBum]

That was my thought, a pension could hand cuff you to a job at some point.

 

[folivier]

Here's another viewpoint. My company had a 6% 401k match and a generous pension. Until after a couple buyouts they changed the pension to a defined benefit plan. Basically after 20 years I saw my pension drop to about 1/2 of what it would have been. Thankfully I had maxed out my 401k match ++ so was still able to retire at 55.
There are NO guarantees.
Oh yeah and they did a study and told us that "we wanted a defined benefit plan". Yeah right.

 

[Big_Hitter]

I've not heard of any private pension plan that lets you start taking the benefit before age 55

there are many

for example, you can start the Shell 80-point pension at age 50 with 30 years of service

 

[utrecht]

Here's another viewpoint. My company had a 6% 401k match and a generous pension. Until after a couple buyouts they changed the pension to a defined benefit plan. Basically after 20 years I saw my pension drop to about 1/2 of what it would have been. Thankfully I had maxed out my 401k match ++ so was still able to retire at 55.
There are NO guarantees.
Oh yeah and they did a study and told us that "we wanted a defined benefit plan". Yeah right.

I think you have your terminology wrong. A "defined benefit" plan is what most people refer to as a pension. I'm guessing your pension got changed to a "defined contribution" plan', which is like a 401k.

 

[W2R]

Of course! I would never have ignored any part of the compensation package offered, when considering a job. Pensions can be a huge part of that compensation package, often more significant than the salary itself, IMO.

Of course a pension swayed me to a specific job. Retiree health care also swayed me to the same job.

 

[38Chevy454]

It depends on the pension calculation factors. Most have some sort of money (highest avg three years or similar) x years of service x age factor (which may also have a minimum age). So if you put in your expected length of service and age, along with some assumptions on salary, you are able to get an estimate of what the pension would be worth. Same for higher 401k match, you can do some estimates based on the yearly input, length of time and rate of return.


In general, think of the pension as putting partial responsibility on the employer and partially on you, and the 401k-only as responsibility solely on you.

 

[SteveNU]

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.

 

[FUEGO]

I viewed a pension as a negative at any job I looked at. I always knew I'd be able to retire pretty early (some time in my 30's), and after only 10 or so years of service, most pensions don't offer very much and usually require you to wait till you're 60 or 65 to start drawing.

Though I don't think they are bad for most people who choose more normal 30+ year career lengths. Lots of happy folks at the Department of Transportation where I worked who were closing in on 30 years of service and looking at nice fat pensions around age 48 to 50.

 

[Olbidness]

I have a traditional pension at a former employer which accrues more value at the end. I also have a cash balance pension at my current employer which gains value at constant rate. The cash balance plan account balance plan is guaranteed a minimum 5 percent return.


Sent from my iPhone using Early Retirement Forum

 

[pb4uski]

No. But my last job had a non-contributory DC plan where they contributed 8% of my earnings each year to an account and I could have the proceeds invested in the same selections that we had for our 401k plan and that DC plan got my attention.

 

[Big_Hitter]

No. But my last job had a non-contributory DC plan where they contributed 8% of my earnings each year to an account and I could have the proceeds invested in the same selections that we had for our 401k plan and that DC plan got my attention.

That's pretty stout. We have a safe harbor k and a large discretionary PS plan but the contribution has always been made.

 

[athena53]

I've got two small pensions; one from a GE sub started at age 60 (no choice) and is $933/month. The other is from a Prudential sub and would be $750/month now (I'm 62) or $1,000/month at 65, so I'm waiting to 65 on that one.


I would never join a company in reliance on the pension being there for me; those were happy surprises. I was downsized from the Pru sub in 1995 after 10 years. The GE sub was acquired after I'd been there less than 5 years; still not sure how I got the pension I did. I was over 50 at the time of the acquisition so maybe different rules applied. The acquiring company had terminated its pension plan for new employees, although they put in 6% of your salary into your 401(k) to make up for it (in addition to a 6% match). So, there are 3 examples of how you can start at a company with a generous pension plan, then lose it.

 

[Big_Hitter]

As a "seasoned" professional, if I was being heavily recruited, depending on the "stock" benefit package, I'd negotiate for a non-qualified benefit.


Those are more difficult to curtail.

 

[purplesky]

Just out of curiosity, did a pension ever help determine what job you would take?

Currently searching for a new job and finding that there are tons of options in the finance field for someone who is 26 with the right degrees/certifications/experience. I've noticed that some companies are still offering pension/401k combo plans that do seem appealing. Most of my coworkers are still earning a pension at megacorp (new hires received additional 401k contributions instead) and they all state how great it is. I've spoken to a few people, including those who are financially savvy, and they believe going for the jobs with a pension is still the ideal situation to help build a buffer for more aggressive 401k investing. However I'm not sure how many of them are planning on retiring early which is why I'm here.

If I was looking at 2 jobs, say one with a 8% 401k match only or one with a 3% match plus a pension would either of those look more attractive to you? Either way I am planning on maxing my 401k and Roth IRA each year but this is something I've been pondering as potential job offers will likely be coming in the next couple of weeks if all goes well.

If you will be able to max out your 401k and Roth starting at about age 26, a defined pension plan is really a non-issue.

Just choose a solid company and the better job for quality of personal life.

If you truly are a high income hyper saver millennial, you will create your own pension.

But all things being equal, Choose the job with a pension.

 

[growing_older]

I've had a few pensions in my career. In every case, the vesting rules were long enough or the plan was discontinued with very skewed calculations or the company itself went out of business before any significant benefit could be earned. I am NOT swayed by the promise of a pension attached to a job offer, because I do not expect to receive any significant benefit from one.

 

[ziggy29]

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.

 

[Lakewood90712]

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.

In this new age economy , the chances of both staying at a private employer , and a defined benefit pension not being frozen before retirement are near zero.

Defined contribution private pensions will still be there, but these days, not a good reason to " Marry" a company, IMO

 

[ziggy29]

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.

 

[mountaintosea]

Yes and I'm better off for it.

 

[Walt34]

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.

 

[Mulligan]

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.


Sent from my iPad using Tapatalk

 

[Midpack]

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.