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

[Amethyst]

Under the "old" Civil Service Retirement System, I have always paid 7 % of pre-tax salary (except for a while when it was 7.5%) toward a defined benefit pension. I have never paid toward Social Security, so wouldn't qualify for SS, unless I work at something else for 10 years after retiring.

Without comparing pension benefits, how much (percentage of pre-tax pay--no need to reveal the actual amount unless you want) do folks in other pension plans actually pay toward your pension? Does anyone get a pension for "free"? (i.e. you serve for 20 or 30 years, your employer gives you an annuity in thanks for your service)

Amethyst

 

[ziggy29]

When I had creditable service toward a pension (this from 1987 to 1998), we didn't pay anything toward the pension. And the employer also matched 60 cents on the dollar for the first 8% of your 401K. Was a hell of a sweet deal until they froze the pension on us.

So ultimately, I'll get a puny pension in a couple decades which might buy a loaf of bread or a gallon of gas by then. But I didn't pay into it, so I guess I should be grateful...

 

[Alan]

With my first 3 employers we paid 6 or 7% pre-tax money.

My current employer provides a pension at the same level as first 2 but no employee contribution. They also match 50% of first 6% of 401(k) contributions.

Final pension is non-COLA and is calculated on the average of your last 5 years salary. It is 1/60th for every year worked.

For me next year I will get 25/60th's of the average of my last 5 years salary.

Also they still allow employees to retire when their years service + age = 80 AND they are at least 55 yrs old. They also provide health bennies to age 70 (Medicare becomes primary at age 65).

 

[youbet]

I also benefitted from a "back in the day" type dbp pension where my employer provided all funding. Like Zig's, for the folks still there, it has been frozen and contributions are no longer being made. Recently, 401k matching has also been suspended.

 

[utrecht]

I pay 8.5%. I dont pay into SS. Employer doesnt match 401k contributions.

 

[Dog]

I was fortunate and worked for a company that offered a pension based on age/yrs of service. I didn't have to contribute. We also had an ESOP plan until the company switched to 401k (matching up to 6%) in the early 80s. Our salary and wages were a bit lower then the industry average, so the company reminded us that the pension and 401k were part of our overall package and needed to be considered. So, I always figured I was giving up some of my pay today for a retirement benefit later.

However, the company froze the pension plan about 4 years ago for management (I had already taken an early out and moved on) and said they would offer more matching $ to the 401k plan based on the performance. I understand most employees realized a 1% greater match on their 401k.

 

[bbbamI]

In my w*rking daze at MegaCorp, they provided all funding for pension and matched my 401k with 80% up to 6% of my contribution.

The same MegaCorp provided DH with a fully funded pension until about 5 years ago...then it was frozen. They still provide 80% 401k match up to 6% of contribution.

I have no idea what new hires get now....

 

[ziggy29]

I have no idea what new hires get now....

Screwed?

 

[bbbamI]

Screwed?

Trying to set me up on that one are you?.....

God bless

 

[pasadenaDC]

29/yo and pay 6.5% into government DB plan. Don't currently pay into SS.

 

[Rustic23]

Army, Air Force, Navy, Coast Guard, Marines, 'Free Pension' after 20 years. Just ask them. It's free. Well you don't always pay in cash.

 

[OAG]

Army, Air Force, Navy, Coast Guard, Marines, 'Free Pension' after 20 years. Just ask them. It's free. Well you don't always pay in cash.

They used to tell us that we actually received pay beyond the paycheck (I think, at times, they actually quoted some %). Of course not many of us believed that. However, we also did not believe for a minute it was "free" just that it was a benefit IF we could survive the 20 years required to "vest".

 

[mickeyd]

I have not contributed at all to either of my two pensions. My COLA military pension is by far the better of the two, but my non-COLA civilian pension, which I have yet to begin, is solid but will be eaten up by inflation as time goes on which makes me appreciate my COLA pension even more. By not being required to contribute to these plans, I was able to establish by own investments on the side which are more aggressive because of the guarantees that the pension plans establish.

 

[Koolau]

My pension was funded by megacorp employer. It was set up on a "points" system similar to others mentioned. Early out for me happened to be 29 years of w*ork but nearly twice as much pension on a sliding scale to 34 years. I stayed to 36 years when the thing topped out (actually topped at 35 yrs). Payout was about 40% of FAE (final average earnings) - but not COLA'd.

Now, they've added significant penalties for the early out option. Now, must stay to 65 to get the full pension. Glad I left when I did!! They often quoted us figures about how our benefits added 50% to their costs. I actually think they were telling the truth, based on current benefits (including relatively low cost health coverage). But most of the benefits for active and retired employees are at their discretion. They are slowly paring back these benefits for both categories. Guess that would be the one good thing about "contributing" to your pension. I would think that would give you some sort of "contractual" arrangement for retiree benefits that couldn't be changed just because the company got into financial difficulty (i.e., couldn't make "plan" for the quarter!) But, YMMV

 

[Leonidas]

9% if hired before Oct 2004, and 10.25% if hired after Oct 2004.

 

[ziggy29]

Also they still allow employees to retire when their years service + age = 80 AND they are at least 55 yrs old. They also provide health bennies to age 70 (Medicare becomes primary at age 65).

When I started with my first Megacorp (the one with the frozen pension), they had an 85-point retirement plan (i.e. years of service plus age = 85 means retirement), at least once you hit 55. Which sucked for me, since I started there when I was 21 and would have had 85 points at 53. If you had 85 points, they wouldn't reduce your pension for early retirement.

But they took away the 85-point retirement two years before they froze the pension. Too bad -- otherwise I might still be there, just telling myself I'd be in fat city if I could make it 11+ more years....

 

[friar1610]

Under the "old" Civil Service Retirement System, I have always paid 7 % of pre-tax salary (except for a while when it was 7.5%) toward a defined benefit pension. I have never paid toward Social Security, so wouldn't qualify for SS, unless I work at something else for 10 years after retiring.

Without comparing pension benefits, how much (percentage of pre-tax pay--no need to reveal the actual amount unless you want) do folks in other pension plans actually pay toward your pension? Does anyone get a pension for "free"? (i.e. you serve for 20 or 30 years, your employer gives you an annuity in thanks for your service)

Amethyst

Another poster gave you the answer on military pensions - they're non-contributory.

I had several tours as a military person at a Federal agency that was about 75% civilian and 25% military. The ongoing discussion between the military and civilian folks was always who had the better deal. Each, of course, saw the grass greener on the other side, but very few civilians were willing to quit and join the military. Similarly, until they were retired, few military folks wanted to work there as civilians.

I finally decided it was a wash benefit-wise and a waste of time arguing about who had the better deal. A good friend of mine (retired civilian GS-15) and I (retired military O-6) are substantially equally well off in retirement.

As a footnote, there are a few states (MA is one) where contributory
Federal pensions are state-tax free. But non-contributory (i.e., military) pensions are not.

 

[Texarkandy]

Under the "old" Civil Service Retirement System, I have always paid 7 % of pre-tax salary (except for a while when it was 7.5%) toward a defined benefit pension. I have never paid toward Social Security, so wouldn't qualify for SS, unless I work at something else for 10 years after retiring.

Without comparing pension benefits, how much (percentage of pre-tax pay--no need to reveal the actual amount unless you want) do folks in other pension plans actually pay toward your pension? Does anyone get a pension for "free"? (i.e. you serve for 20 or 30 years, your employer gives you an annuity in thanks for your service)

Amethyst

Well, I missed being CSRS 6c by 4 months. So I pay into the FERS 12d plan. I pay in 1.7% pre-tax + SS.

Formula is 1.7% of hi-3 salary for first 20 years & 1% of hi-3 for each additional year. (i.e. 42% for 30 years)

Eligible to retire (unreduced) with 20 years at age 50 or 25 years at any age. Mandatory at age 57.

Pension is eligible for a (diet) COLA after the first year of retirement. Formula for the diet COLA is CPI minus 1%.

Also will receive a pension "supplement" till age 62 which for me will be approx 60% of what age 62 SS benefit would be. (supplement will be means-tested & subject to reduction after age 55)

 

[Alan]

When I started with my first Megacorp (the one with the frozen pension), they had an 85-point retirement plan (i.e. years of service plus age = 85 means retirement), at least once you hit 55. Which sucked for me, since I started there when I was 21 and would have had 85 points at 53. If you had 85 points, they wouldn't reduce your pension for early retirement.

But they took away the 85-point retirement two years before they froze the pension. Too bad -- otherwise I might still be there, just telling myself I'd be in fat city if I could make it 11+ more years....

This will happen at my company as well - just a matter of when. 18 months ago we were bought by another megacorp pending approval by the authorities in USA and Europe. We all know that one of the very first things will be to freeze pensions and bring all bennies in line with their crappy system. A year later when the authorities gave their approval they sued us to get out of the deal 'cos the joint company would be insolvent. For the following 6 months we counter-sued them plus a separate lawsuit against their owners, then they sued their bankers and we sued their bankers and our share holders sued our senior execs....

Consequently, in December the deal was off and my company got $1B and all but 2 of the lawsuits have been settled. Consequently my megacorp is viable for another 12 - 18 months, at least, while looking for another buyer.

I feel more comfortable that I will now get my retirement in 13 months and at least will have PBGC insurance on it even though the health insurance can always be lost.

 

[Bikerdude]

I did not pay for my pension (no longer offered at Megacorp) but when I interviewed for the position they explained it was part of my overall compensation. It paid a maximum of 60% of your average last 5 yrs. pay at age 60 with 30 yrs of service. The pension is cut by a percentage of your age 62 SS whether you take it at 62 or not. Still a pretty good deal although it does not have a cola.

 

[pasadenaDC]

I did not pay for my pension (no longer offered at Megacorp) but when I interviewed for the position they explained it was part of my overall compensation. It paid a maximum of 60% of your average last 5 yrs. pay at age 60 with 30 yrs of service. The pension is cut by a percentage of your age 62 SS whether you take it at 62 or not. Still a pretty good deal although it does not have a cola.

Biker, this sounds a bit like my government pension. It has a multiplier of 2, so basically 30 years of service nets you 60% ... though of your highest annual salary (instead of a 3-year or 5-year average). It likewise will not allow you to double dip into SS and has a CPI adjusted COLA that generally rises but can actually go negative in a deflationary environment.

 

[Goonie]

When I was still working, I paid in 4.5% of my earnings to a gov't DB COLA'd pension plan. It was 3.75% for my pension and 0.75% toward the "spousal pension". And being single, when I ER'd, I got back that 0.75% "spousal pension" plus 7.5% annual interest on it...lump sum! It came out to almost $17K...I rolled $10K back to the pension to fund my purchase of 5 additional years of service credit (the max allowed). The rest I put into a rollover IRA.

My employer also contributed to the pension, but I don't recall the amount.

Another thing that our pension fund offers...though I didn't take advantage of it (like an idiot)....is that the employee can contribute up to an additional 10% per year of their earnings to a Voluntary Additional Contribution (VAC) program. The VAC pays 7.5% annual interest on your contributions, and when you retire you can either get that back lump sum, or as a monthly payment separate from your monthly pension payment.

Since I didn't pay federal tax on my contributions, I owe it on my pension payments. I paid no IL state tax on the contributions either, but they also don't tax the pension payments!!

Besides paying into the pension, I also paid into SS for all those years too, and qualify for SS when I hit 62 or after. Pension will not be reduced due to SS, nor will SS be reduced due to pension.

If I had any regrets whatsoever...which I certainly don't....it would be that I didn't sock away the 10% additional into the VAC program @7.5% interest.

 

[MGYog]

2.4% pre-tax matched by the county government. No SS payment. Between 1991 and 2005 there was an option to buy an additional 1% per year to your years of service for an increased annuity, which I did. Separate pre-tax 407 available with no match from the county. Pension is fixed COLA of 3% per year. Pension is calculated based on average of last 4 years of highest earnings.

 

[pasadenaDC]

When I was still working, I paid in 4.5% of my earnings to a gov't DB COLA'd pension plan. It was 3.75% for my pension and 0.75% toward the "spousal pension". And being single, when I ER'd, I got back that 0.75% "spousal pension" plus 7.5% annual interest on it...lump sum! It came out to almost $17K...I rolled $10K back to the pension to fund my purchase of 5 additional years of service credit (the max allowed). The rest I put into a rollover IRA.

My employer also contributed to the pension, but I don't recall the amount.

Another thing that our pension fund offers...though I didn't take advantage of it (like an idiot)....is that the employee can contribute up to an additional 10% per year of their earnings to a Voluntary Additional Contribution (VAC) program. The VAC pays 7.5% annual interest on your contributions, and when you retire you can either get that back lump sum, or as a monthly payment separate from your monthly pension payment.

Since I didn't pay federal tax on my contributions, I owe it on my pension payments. I paid no IL state tax on the contributions either, but they also don't tax the pension payments!!

Besides paying into the pension, I also paid into SS for all those years too, and qualify for SS when I hit 62 or after. Pension will not be reduced due to SS, nor will SS be reduced due to pension.

If I had any regrets whatsoever...which I certainly don't....it would be that I didn't sock away the 10% additional into the VAC program @7.5% interest.

Wow. Talk about the golden goose, does the State of Illinois still offer these generous DB plans? Let's see... ARC buyback, VAC, double-dipping into SS, no tax on pension payments/distributions? Did I just read this correctly? Is the pension plan above 80% funded considering its liabilities and only a flat 3% IL state tax?

I think I'm going to update that resume and move back to Illinois?!

 

[Koolau]

As a footnote, there are a few states (MA is one) where contributory
Federal pensions are state-tax free. But non-contributory (i.e., military) pensions are not.

Oddly, I think it's the reverse in Hawaii. Go figure!