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Old 05-06-2015, 01:15 PM
 
Location: Eastern Washington
14,261 posts, read 44,946,726 times
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Quote:
Originally Posted by BayAreaHillbilly View Post
You are talking public sector. Back when many private sector firms still had them, pay was not notably lowered to factor in the pension. In places like that, one had to stay with the firm typically 5 years to vest or start vesting. The pension was a differed reward for years of service / loyalty, above and beyond the pay. Of course this is academic, since most private sector places of employment that had them either dumped pensions years ago, or themselves have ceased to exist.
Well, yeah and no. A job that has a pension is going to pay you less than a theoretically available identical job with no pension. What a business looks at is the total cost to hire you - including pension or not, paying the "employer" "half" of Social Security, all the benefits, plus the salary. You have to look at it that way if you want to stay in business making money!

I'm working at a place that still has a defined benefit pension even for new hires, although new hires don't get as good a deal as us old dudes. We also have a 401K, I often wonder what % of employees use it - to me it's nuts to not put in at least enough to get the maximum company match. But whatever.

You are right though, most firms go with the 401K, gets the monkey off their back and puts it on the employee's back - which is where, one could argue, it belongs.

If one funds a 401K to the max, gets an employer match, and makes reasonable investment choices, it can work quite well. A mid-level professional who works a 30 year career should have over $1M in the 401K when they are ready to retire.

A defined benefit pension is just one benefit that an employer can put out there to attract talent. It has gone out of fashion lately, but that just makes it a more valuable perk for the ones who offer it.

Some trade unions have a pension, my Dad had one from Operating Engineers Union. In this case the union, not the employer, runs the pension, and typically you have to sign up and have some pay deducted to get the pension, sort of a mutualized 401K - the workers who want it pay in a proportional percentage of their pay, then draw a specific defined benefit for life - the ones who live longer get more.
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Old 05-06-2015, 05:02 PM
 
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Invest as much as you can afford in both the pension, assuming it is not a traditional defined pension, wherein the company accrues money for you based on salary and years of service. Also contribute as much as allowable in the 401K. After the kids were grown, we contributed every raise and max that we could to the 401K. We retired at 62 and haven't had to use any of the considerable monies in our 401Ks.
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