Another pension plan bites the dust

[Ackmed]

Contributions of current members are required for ongoing plan viability. Otherwise, the money runs out long before the last retiree passes on.

No contributions from employees for mine... it's paid by the company (taxpayers).

 

[Jhhnn]

No.

Being "vested" means one has legally/contractually and irrevocably earned a pension benefit.

Simple defined benefit plan example:

- Salary is $50k. Retirement benefit is 100% of salary.

- An employee with 5 yrs of service is 25% vested

- An employee with 10 yrs of service is 50% vested

- An employee with 15 yrs service is 75% vested

- An employee with 20 yrs service is 100% vested.

If the employee retires/quits or is terminated after 7 yrs they will receive 25% of their salary as a pension benefit upon retirement. They were 25% vested because they worked more than 5 yrs but less than 10.

"Retirement" being age 65, as I said. Specific amounts vary by plan. My plan specifies 2.5%/yr. of the average of the best 5 years.

The rules regarding when that benefit can be paid out to the employee are generally covered under law (ERISA etc.)

Under defined contribution plans amounts in an employee's account are generally 100% vested immediately. When benefits can be withdrawn are generally listed in the (tax) code section authorizing such qualified retirement plan (e.g., IRA or 401k). Premature withdrawals generally result in a 10% penalty.

Fern

Nearly all plans have 5 year cliff vesting as current law demands-

http://money.cnn.com/retirement/guide/pensions_pensions.moneymag/index4.htm

It was 10 years at times in the past.

Many plans have provisions for retirement prior to age 65, as I mentioned, but all of them, to my knowledge, require the person to have reached a certain age & have at least 20 years in the plan.

The golden numbers in my plan are 55 years old & 20 years contribution for a 50% monthly pay out. If you have 19 years at any age you can't collect until you're 65 unless you're disabled.

 

[Jhhnn]

No contributions from employees for mine... it's paid by the company (taxpayers).

It's paid on your behalf as an individual. When the last person covered by the phase out of your plan retires then contributions will cease.

 

[IronWing]

My last job had a pension like that. It was $84 each two week check. This job does not. It is paid 100% in full by the company. I do not contribute at all to the pension. It's free to me, so I don't really understand how it can be a bad thing. If it bellies up and I get nothing, it'll suck but I didn't put any money into it.

You put your labor into it. Your pension isn't a gift, you earned it.

 

[brianmanahan]

You put your labor into it. Your pension isn't a gift, you earned it.

both the companies i have worked for with pensions try to make it sound like an amazing gift they are letting people keep

it is often used as a carrot in front of long-timers to keep them around another year with no raise

 

[Exterous]

Thing is, without even considering the details of that, I'm only wondering if it makes sense to withdraw that sum now and invest it myself or just let it ride with the assumption that those absurd returns they are estimating are accurate.

You should be able to get access to the financial reports of your pension. I know for my wife's pension its required that you can view the financials but I don't know if thats a state thing or a federal thing. If they have at least decent financials then you may want to consider hanging on to the pension as they are great hedges against running out of money. That said I would not necessarily base my retirement plans on the assumption that things will be paid out as promised

 

[KB]

You put your labor into it. Your pension isn't a gift, you earned it.

That's exactly how a pension should be treated, as an item earned and preserved for all the workers who worked for it. Sadly as the article demonstrates, too often they are not. Many are managed poorly or succumb to difficult economic environments and leave the workers with little or nothing in the end.

 

[bshole]

Once private pensions have finished going the way of the dodo and social security is allowed to fail Americans can look forward to working til they drop.

To be honest that doesn't sound that bad. I don't ever want to retire. Sitting around waiting to die sounds scary and depressing as hell. After you retire, you basically sit in a chair all day every day watching porn and playing video games. Nothing to distract you from the doom train running towards you.

 

[zinfamous]

You should be able to get access to the financial reports of your pension. I know for my wife's pension its required that you can view the financials but I don't know if thats a state thing or a federal thing. If they have at least decent financials then you may want to consider hanging on to the pension as they are great hedges against running out of money. That said I would not necessarily base my retirement plans on the assumption that things will be paid out as promised

Yeah, my plan has been to pretty much forget it exists and plan retirement elsewhere. I want to think of it as a bonus that I totally forgot about some years down the road when it randomly falls into my lap.

My only concern is that it ceases to exist at some point because, well, California. I'll see if I can get more info on the financials, but information in the portal that I have access to is rather limited. I might use the google.

that being said, those type of returns make sense with previous information in this thread: future returns are estimated from returns on investments + contributions of younger/current employees. Assuming that is true...but that is how I understand pensions.

 

[zinfamous]

To be honest that doesn't sound that bad. I don't ever want to retire. Sitting around waiting to die sounds scary and depressing as hell. After you retire, you basically sit in a chair all day every day watching porn and playing video games. Nothing to distract you from the doom train running towards you.

why would one plan to do that in retirement? that sounds awful. Working until you die sounds even worse.

Hell, even for people that truly love their jobs, they generally don't like working either. Then there are those very very rare people that managed to turn a hobby into work, which is nice.

Consider that plenty of people these days set out planning to retire super young (like, in their 30s), so that they have complete control over the best years of their lives--the freedom to actually do whatever you want. Often times this does include work and odd jobs from time to time, but with the power to not need money or a boss to give you money, you choose whatever work you want to do.

That sound great to me.

 

[Jeff7]

To be honest that doesn't sound that bad. I don't ever want to retire. Sitting around waiting to die sounds scary and depressing as hell. After you retire, you basically sit in a chair all day every day watching porn and playing video games. Nothing to distract you from the doom train running towards you.

why would one plan to do that in retirement? that sounds awful. Working until you die sounds even worse.

Hell, even for people that truly love their jobs, they generally don't like working either. Then there are those very very rare people that managed to turn a hobby into work, which is nice.

Consider that plenty of people these days set out planning to retire super young (like, in their 30s), so that they have complete control over the best years of their lives--the freedom to actually do whatever you want. Often times this does include work and odd jobs from time to time, but with the power to not need money or a boss to give you money, you choose whatever work you want to do.

That sound great to me.

My grandmother was hardly ever home after retirement.
In her 60s and 70s, it was road trips (bicycle, not car) and camping all over the country.
Maybe 10 years ago, she was traveling in India.
A few years ago, Japan.
She's 87 now.

My grandfather was always busy with hobbies like woodworking, including building a decent workshop setup in his basement, or gardening, at least while his health held up. That's been deteriorating as he pushed past 85 years. (Grandmother on the other hand....she's the sort who's probably going to die in a car crash or something sudden. I don't know what it'd take to slow her down.)

Retirement doesn't have to mean your life's effectively over.

 

[Jhhnn]

why would one plan to do that in retirement? that sounds awful. Working until you die sounds even worse.

Hell, even for people that truly love their jobs, they generally don't like working either. Then there are those very very rare people that managed to turn a hobby into work, which is nice.

Consider that plenty of people these days set out planning to retire super young (like, in their 30s), so that they have complete control over the best years of their lives--the freedom to actually do whatever you want. Often times this does include work and odd jobs from time to time, but with the power to not need money or a boss to give you money, you choose whatever work you want to do.

That sound great to me.

People who've devoted their lives to work often don't know what to do with themselves when they retire. They usually don't last long. I've seen it several times.

While lots of people plan to retire young it works out to lots of people dream of retiring young but very few ever do. Most never have the resources & those who do generally have the kind of drive that won't let them quit regardless.