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JLP’s QotD: Are You Covered by a Company Pension?
By JLP | June 22, 2006
My last post made start thinking about company pensions. For the most part, pensions are going to go the way of the Edsel, which will require people to take more responsibility for their financial futures. However, I would still like to know:
My wife has a pension. It’s not real big but could add up to some signficant money if she stays with the company long enough. However, we are not counting this money in our planning. Instead, we want to make sure we can make it on our own and any extra money will be considered icing on the cake. What about you?
Topics: Miscellaneous | 10 Comments »
June 22nd, 2006 at 5:02 pm
Nope. (I don’t count 401Ks as “pensions” although some tax pedants define them as such)
I figure there is money you’ve got in the bank and there’s ether. A pension is ether – it can go away with the stroke of a pen or the bang of a bankruptcy judge’s gavel…
And as people live longer and companies live shorter, there isn’t any magic legislation or whatever that is going to change the fundamentally ethereal nature of promissory pensions.
June 22nd, 2006 at 6:01 pm
Foobarista,
Good points. I think it is unwise to count on pensions.
June 22nd, 2006 at 7:24 pm
Not a pension per se’ but my company contributes 3.2% of my salary every year to a cash balance plan. There is a 5-year vesting period however and I doubt I’ll be around long enough to get the money.
We also have a 401K and the company provides a 5% dollar for dollar match. But like Foobarista I do not consider that a pension plan either.
June 23rd, 2006 at 7:46 am
There is a pension at my work that I am eligible for, but I elected not to take it since I don’t think I’ll be here long enough to see any real benefit. Instead, they simply give me the money that would have gone into the pension plan on my behalf. This for me is a much better deal since money is portable and I can take more risk than the pension plan. Even when they’re offered, generally pensions aren’t as useful for younger workers as a generous match is, because we may not work long enough at any one place to actually get much.
June 23rd, 2006 at 8:30 am
No pension, and no match on the 401(k) either. Probably no Social Security by the time I get there, either. And I don’t mind this at all, so long as other keep their hands out of my pockets.
June 23rd, 2006 at 9:32 am
It’s easy to forget that there are many public-sector employees in the nation. I’m one of them, and I too have to wonder about the future of public-sector pensions.
I have to admit, though, that right now the chances of a great deal of change in the status of public pensions seems quite low. I believe that if changes were proposed along the lines of what’s happening in the private sector, elected officials would hear it loud and clear from current employees and pensioners alike. Many of them, of course, are voters, so…
Yes, I’m covered by the pension plan and have 18 years of service. I am counting on it for sure, but that doesn’t stop me from investing in a 457(b) plan, similar to a 401(k) plan. [457 plans also get little attention in the media and elsewhere; they even got left out of the Roth 401(k) picture!]
Any other public employees out there with something to say?
June 23rd, 2006 at 1:10 pm
I have both a pension and 401K at my company. The pension is fully funded by the company and I’m literally less than 20 days away from being fully vested (5 years). While it is a little bit exciting to think that I could have this pension when I retire, I tend to be more skeptical. At least it is worth something and if they either terminate or freeze the pension it does have some value for me (well at least it does in 20 days or so).
All that being said, I’m saving as if I don’t get either a pension or social security. The only person I can truly count on for my future is me. I take the full match on my company’s 401k and then put in extra to reach the yearly maximum. I also fund a ROTH each year as another investment vehicle. Next up will be getting my daughter’s college covered in a 529 plan.
People who are not saving anything with the expectation that either magic, social security, or a pension will save them are taking a much riskier path than I would ever consider!
June 23rd, 2006 at 1:30 pm
I have a pension that is no longer being funded. I was vested under the defined benefit plan when it ceased to be funded over six years ago and is now frozen. Some day when I am in my 60s I’ll be eligible for a monthly pension of less than $200.
Imagine what $200 will pay for decades from now? I went to the Royals game yesterday and parking alone was $9! I suspect my wife and I may be able to go out on a ‘cheap date’ for that $200 when we are drawing that benefit.
At least I have it I suppose?
June 24th, 2006 at 8:06 am
I have a pension and yes I counted on it. I was very late to the game on saving. I’m getting my pension now and i’m so glad that the company is not managing it and the union is from what I have seen in the airline industry it could get ugly. After 35 years you count on something being there. I wish I had saved more so I didn’t need to count on it .
June 26th, 2006 at 4:46 pm
I have a Federal pension (27 years and counting), and yes, I am counting on it to fund part of my retirement. I’m told that I can’t count on Social Security to fund my retirement, but maybe there will be a few dollars there for me. And of course, my 401k, IRAs, and other investments will also help.
Maybe Edward Mote has the best advice:
My hope is built on nothing less
Than Jesus’ blood and righteousness.
I dare not trust the sweetest frame,
But wholly trust in Jesus’ Name.
On Christ the solid Rock I stand,
All other ground is sinking sand;
All other ground is sinking sand.
(MY HOPE IS BUILT,Edward Mote, circa 1834)