In a few weeks, I have a choice between two options when I hit my 1-year anniversary:
1) I will be set up with a pension that will give me 1.5% per year of service of the average of my top 5 years of pay as long as I work for the employer at least 4 years and retire at 65.
2) My employer will set aside 10% of my income into a 401k, this amount also vests in 4 year from the start date of employment. Up until the 4th year, the employer will invest it like the pension, but I will have control of investments after the vesting period.
I make 75K now and based on recent history, I assume nominal salary will increase by 4% every year and assume nominal investment returns of 10% based on the historical performance of the S&P 500.
I had originally planned to do the 10% employer contribution for the optionality to jump to another employer after the vesting period, but would there ever be a reason to choose the pension option if I planned to stick around for 25 years when I hit 65? Let me know if you need more information
More information about the two options for public employees is here:
https://www.urs.org/NewMembers/index
