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Do you have a pension?

January 16, 2009

I do, sort of. I haven’t been here long enough to have any benefit, but the company has a system. In a recent meeting, my manager informed us that our company was committed to funding their pension plans, even in poor business times such as this. Personally, I wasn’t comforted.

To a young person like me, I wonder why they don’t cut pensions for new employees, as many in the industry are. Not much can be done for legacy costs, but as someone in my 20’s, I couldn’t care less about my pension benefit. It hasn’t started accruing yet and I’m not sure how long it takes to vest. I’m not counting on it for anything at this point. In phasing out their pension system, my former employer contributed X% of your salary to your 401k, with the X depending both on age and years of service to the company (in addition to a 401k match). This seems sensible because you can see and control your costs right off the bat, and young people liked it because it vested immediately.

I feel like we are clinging to the past. It is nice that they are so committed to their employees, but if we can’t compete in the business world, what good will that do? Would the older generation be extremely upset if pensions were frozen? How about the rest of us in the up and coming work generation?

ETA:  Effective this year, I think new hires are no longer offered pension benefits.  I squeaked in just in time!

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7 Comments leave one →
  1. January 16, 2009 12:21 pm

    i’m really disappointed in my current employer for not offering any form of pension/rrsp contribution plan. My previous company matched up to 3% of your annual pay into an RRSP account (held by their benefits company) that you could then transfer over to your RRSP account held by you immediately. Both were in my name obviously.

    Any type of matching plan is essentially a pay raise, it’s wonderful. For a company of 200 that is thriving, it’s pretty disappointing here to say the least.

  2. January 16, 2009 2:14 pm

    I think pensions are dying partly because we are more mobile, no one works for the same company their whole life anymore. The main place they survive is government, which is known for “lifers” the people just doing time till they can collect their pension. I left an unvested 401k behind at my last job, it took 3 years to vest and I left after 2.5 years. My current company has a 401k and this weird employee ownership plan, it’s not quite a pension. You automatically vest in the 401k but the stock plan takes 7 years till the money is yours.

  3. BayouJosh permalink
    January 16, 2009 6:01 pm

    Yeah, we have a pension (sort-of). It’s more of a Profit Sharing plan where the company invests for you into their accounts. You’re given a percentage of yearly earnings based on how long you’ve been there and your level in the company. It vests 100% after seven years. I’ve been there four years and am 40% vested. It’s not a bad sum either. I’m floating around $8K+ after only a few years.

    Since I don’t plan on going anywhere for awhile, I’m really expecting this to grow quite large. Plus, since it’s company managed, I don’t think they’re taking too many risks with our money (although, I’ve heard that one before).

  4. El Cheapo permalink
    January 17, 2009 10:10 pm

    I work in the public sector, so I do pay into a pension. Not sure that I’d qualify myself yet as a ‘lifer’ though!! I’m still a few years from being vested in my pension, so we’ll see what happens.

  5. January 18, 2009 12:59 am

    Vesting period was just shortened from 5 years to 3. It’s not impressive; I think I’ve accrued a $300/month payout, but that’s $300 I won’t have to get from my investments.

    Before it was bought out by the Large Company, the company offered what is affectionately called the “Golden Handcuffs.” Employees put in 3% and can retire at 55 with a very generous pension.

    I’m with you though, I’d much rather get a larger 401K match. At least that money is mine and I can control what happens to it.

  6. January 20, 2009 5:02 pm

    In theory, I have a pension through the state teachers’ retirement system. In actuality, I’m pretty sure I’ll be heading to grad school before five years are up and I become vested in the matching contributions.

    I’ll probably end up cashing out and taking my contributions and whatever pittance of interest they’re paying and either investing in a non-tax advantaged account or sticking the money in the bank as a tiny start to the downpayment fund.

  7. January 20, 2009 5:18 pm

    Pension? what’s that? haha…nah, unfortunately start ups don’t like them too much. BUT we got mad 401k hook ups, so that’s good 😉 well, at least for now…if this economy gets any worse i’m afraid our 100% matching will go away too….fingers crossed though!

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