Job with pension versus job without - how heavily should it weigh in your decision?

[Anonymous]

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

wow 7%! hard to believe it is worse than the feds. What is the payout?

[Anonymous]

Anonymous wrote:At OP's age, and if working for the state, the pension may not be a substantial benefit, as it takes so many years to see much benefit from a pension.

Anecdote: My DH worked for the federal government from age 27 to 49. He then moved to the private sector. Upon retirement in the future, my understanding is that he'll get $30,000 per year for his pension. (His highest salary as a federal employee was $170,000 as a GS-15.) If DH dies before me, I get some portion of the pension until I die. Then there is nothing left. So if we live long lives, it may be worth it. But if we live short lives, it's not like we can pass it on to our kids.

By contrast, a private sector pension can be pretty sweet. I know someone who's had a career in sales for Hormel Foods. He's a pretty senior leader there now. After 30 years (at age 52), he'll get his full salary as a pension.

I doubt that most private sector companies offer a pension like that anymore.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

+1 the MD pension was actually a deterrent to taking a state job for me. Who tf makes employees wait 10 years to vest into any retirement benefits while keeping 7% of your salary locked away?

Um, a pension system that desperately wants people to NOT choose the pension. In fact, the state will GIVE you an additional 7.25% into a 403B as long as you do not elect the pension on starting. There is no additional matching, BUT you can participate in multiple plans so that you can sock away up to $45,000/yr for retirement if you choose.

Anyway, when I worked for UMD, I knew I wouldn't stay in for 10 years, so I took the bribe.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

+1 the MD pension was actually a deterrent to taking a state job for me. Who tf makes employees wait 10 years to vest into any retirement benefits while keeping 7% of your salary locked away?

Um, a pension system that desperately wants people to NOT choose the pension. In fact, the state will GIVE you an additional 7.25% into a 403B as long as you do not elect the pension on starting. There is no additional matching, BUT you can participate in multiple plans so that you can sock away up to $45,000/yr for retirement if you choose.

Anyway, when I worked for UMD, I knew I wouldn't stay in for 10 years, so I took the bribe.

+1. I'm actually so thankful that they had the alternate retirement system, since I knew I wouldn't stay there 10 years. Easy choice. I thought that the additional 7% was a pretty good deal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

+1 the MD pension was actually a deterrent to taking a state job for me. Who tf makes employees wait 10 years to vest into any retirement benefits while keeping 7% of your salary locked away?

Um, a pension system that desperately wants people to NOT choose the pension. In fact, the state will GIVE you an additional 7.25% into a 403B as long as you do not elect the pension on starting. There is no additional matching, BUT you can participate in multiple plans so that you can sock away up to $45,000/yr for retirement if you choose.

Anyway, when I worked for UMD, I knew I wouldn't stay in for 10 years, so I took the bribe.

+1. I'm actually so thankful that they had the alternate retirement system, since I knew I wouldn't stay there 10 years. Easy choice. I thought that the additional 7% was a pretty good deal.

That's great that they offer that now. When I applied in 2013, the benefits information they provided expressly stated that it was required to enroll in the pension system, and that while the state might elect to provide contributions to 401k/457 plans, there was no guarantee. It was not the only reason I turned down the offer, but was a big part of it. My guess is they were trying to use new employees to fund current retirees, and it wasn't working out for them in terms of recruitment.

[Anonymous]

Virginia COunties have pensions, some through VERS and some just for the specific county.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

+1 the MD pension was actually a deterrent to taking a state job for me. Who tf makes employees wait 10 years to vest into any retirement benefits while keeping 7% of your salary locked away?

Um, a pension system that desperately wants people to NOT choose the pension. In fact, the state will GIVE you an additional 7.25% into a 403B as long as you do not elect the pension on starting. There is no additional matching, BUT you can participate in multiple plans so that you can sock away up to $45,000/yr for retirement if you choose.

Anyway, when I worked for UMD, I knew I wouldn't stay in for 10 years, so I took the bribe.

+1. I'm actually so thankful that they had the alternate retirement system, since I knew I wouldn't stay there 10 years. Easy choice. I thought that the additional 7% was a pretty good deal.

That's great that they offer that now. When I applied in 2013, the benefits information they provided expressly stated that it was required to enroll in the pension system, and that while the state might elect to provide contributions to 401k/457 plans, there was no guarantee. It was not the only reason I turned down the offer, but was a big part of it. My guess is they were trying to use new employees to fund current retirees, and it wasn't working out for them in terms of recruitment.

If you specifically were applying to UMCP, I think you were just confused by the paperwork. I was hired in 2010.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How long does it take for the pension to vest? DH works for the state of MD, and it takes 10 years. And it requires a mandatory 7% contribution. If you leave before year 10, instead of a pension you are paid out your contributions plus a set amount of interest that in no way attempts to keep up with market rate interest had the money been invested in a traditional retirement account. At your age in the MD system, I would deem the pension to be worth very little. Pensions for a full career in the system aren’t worth that much, so the 15 or 20 years you’d get will be an even less significant pension payout.

+1 the MD pension was actually a deterrent to taking a state job for me. Who tf makes employees wait 10 years to vest into any retirement benefits while keeping 7% of your salary locked away?

Um, a pension system that desperately wants people to NOT choose the pension. In fact, the state will GIVE you an additional 7.25% into a 403B as long as you do not elect the pension on starting. There is no additional matching, BUT you can participate in multiple plans so that you can sock away up to $45,000/yr for retirement if you choose.

Anyway, when I worked for UMD, I knew I wouldn't stay in for 10 years, so I took the bribe.

+1. I'm actually so thankful that they had the alternate retirement system, since I knew I wouldn't stay there 10 years. Easy choice. I thought that the additional 7% was a pretty good deal.

That's great that they offer that now. When I applied in 2013, the benefits information they provided expressly stated that it was required to enroll in the pension system, and that while the state might elect to provide contributions to 401k/457 plans, there was no guarantee. It was not the only reason I turned down the offer, but was a big part of it. My guess is they were trying to use new employees to fund current retirees, and it wasn't working out for them in terms of recruitment.

If you specifically were applying to UMCP, I think you were just confused by the paperwork. I was hired in 2010.

It wasn't UMCP, it was state government, and I still have the benefits brochure that states, "Employees must enroll in the Maryland State Pension System." 403Bs were not even mentioned, which tells me that wasn't/isn't available for that job.

[Anonymous]

I have a 6-figure federal Civil Service pension, fully indexed to inflation and guaranteed by Uncle Sam (which these days admittedly may not mean what it used to), which is a different ball of wax from a pension offered by private sector employers who can change or discontinue their plans at any time, whose future business longevity is unpredictable, etc.

general, I'd prefer higher current compensation in the private sector which I can invest for my own retirement over lesser compensation and a promise of a future pension. The latter carries with it more risk than may be immediately obvious.

[Anonymous]

Anonymous wrote:I have a 6-figure federal Civil Service pension, fully indexed to inflation and guaranteed by Uncle Sam (which these days admittedly may not mean what it used to), which is a different ball of wax from a pension offered by private sector employers who can change or discontinue their plans at any time, whose future business longevity is unpredictable, etc.

general, I'd prefer higher current compensation in the private sector which I can invest for my own retirement over lesser compensation and a promise of a future pension. The latter carries with it more risk than may be immediately obvious.

The best part of a federal pension is the COLA. Most people don’t understand how much inflation will erode their buying power over a 20- or 30-year retirement.

[Anonymous]

I view my federal pension as having only a few thousand in annual value because although I’m under FERS and vested, I will quit 20 years before I can collect, it is not inflation adjusted those 20 years, and most people in my family don’t live super long lives. If I was going to work until 57, I’d value it at double that.

My husband is considering a federal job, he would be under FERS-FRAE, and would similarly quit 20 years before MRA. We view his pension as having a few hundred a year in negative value and would withdraw his mandatory contributions when he quits.

[Anonymous]

Anonymous wrote:I have a 6-figure federal Civil Service pension, fully indexed to inflation and guaranteed by Uncle Sam (which these days admittedly may not mean what it used to), which is a different ball of wax from a pension offered by private sector employers who can change or discontinue their plans at any time, whose future business longevity is unpredictable, etc.

general, I'd prefer higher current compensation in the private sector which I can invest for my own retirement over lesser compensation and a promise of a future pension. The latter carries with it more risk than may be immediately obvious.

You must have been under the old pension system. No one gets 6 figures from FERS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have a 6-figure federal Civil Service pension, fully indexed to inflation and guaranteed by Uncle Sam (which these days admittedly may not mean what it used to), which is a different ball of wax from a pension offered by private sector employers who can change or discontinue their plans at any time, whose future business longevity is unpredictable, etc.

general, I'd prefer higher current compensation in the private sector which I can invest for my own retirement over lesser compensation and a promise of a future pension. The latter carries with it more risk than may be immediately obvious.

You must have been under the old pension system. No one gets 6 figures from FERS.

Yes, CSRS, SES level. And while it's true that FERS provides a less generous pension, it does have the TSP government match and Social Security components which need to be taken into account all together when evaluating retirement benefits, not to mention FEHB benefits for life. My SS will be significantly reduced by the Windfall Elimination Provision, unless it is repealed before I begin to draw benefits at age 70.

[Anonymous]

Anonymous wrote:I view my federal pension as having only a few thousand in annual value because although I’m under FERS and vested, I will quit 20 years before I can collect, it is not inflation adjusted those 20 years, and most people in my family don’t live super long lives. If I was going to work until 57, I’d value it at double that.

My husband is considering a federal job, he would be under FERS-FRAE, and would similarly quit 20 years before MRA. We view his pension as having a few hundred a year in negative value and would withdraw his mandatory contributions when he quits.

well, you both could always try to go back for three years right before retirement ...

[Anonymous]

Do the math on how much you would get if you stayed for amount of time you plan to stay (rest of your career? 5 years). How long it takes to vest is obviously important but you also need to calculate what you would get even once you’re vested.
If I stay 30 years at my job, I will get 75% of my highest salary. I’m half way there so I think I’m going to stay.