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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: clarkfan1979 on April 30, 2016, 10:46:20 AM

Title: share your pension details
Post by: clarkfan1979 on April 30, 2016, 10:46:20 AM
I love my job and location, but I'm not thrilled with my pension.

My employer takes 8% of my income and claims to add 15% of my income to the pension fund.

The current payout is 1.75% for every year of service. I feel like the 1.75% is kind of low. I think 2% is kind of the norm and I've seen it as high as 2.4%.

If I put in 30 years (30 x 1.75%), I get 52.5% of my highest salary (3 year average).

One small advantage is that there is an automatic 2% COLA adjustment increase to your pension for every year once you start collecting and there is no cap. However, I think I would need to live to 90 to capitalize on this small benefit.
Title: Re: share your pension details
Post by: SmallTownDA on April 30, 2016, 01:32:22 PM
I get 1% per year, with a multiplier based on when I start to draw on it. It starts at 1 at age 52 and maxing out at 2.5 at age 67. My contribution is about 4% of my gross, but it's based on entry age and I entered a lower age than normal for my position. We have a discretionary COLA, based on investment performance. Right now, it's being offered but there's no guarantee that it will be in the future. If I'd started a year earlier, I would have gotten a lot nicer formula (1.3% per year at age 50 to 2.6% per year at age 62), but that's life.

The plan is to self-fund early retirement with my 457 and IRA and treat the pension as bonus money when I start to collect it.

Do you get the same amount regardless of when you start to take it?
Title: Re: share your pension details
Post by: Full Beard on April 30, 2016, 02:31:50 PM
It sounds like you have a pretty nice pension.  Below is what I copied from the federal government benefits website, OPM.gov

Federal Employees Retirement System (FERS) Basic Annuity Formula

Under Age 62 at Separation for Retirement, OR
Age 62 or Older With Less Than 20 Years of Service    1 percent of your high-3 average salary for each year of service
Age 62 or Older at Separation With 20 or More Years of Service    1.1 percent of your high-3 average salary for each year of service

Your benefit was computed differently, if you retired under one of the provisions below
Special Provision for Air Traffic Controllers, Firefighters, Law Enforcement Officers, Capitol Police, Supreme Court Police, or Nuclear Materials Couriers

    1.7% of your high-3 average salary multiplied by your years of service which do not exceed 20, PLUS
    1% of your high-3 average salary multiplied by your service exceeding 20 years
Title: Re: share your pension details
Post by: doggyfizzle on April 30, 2016, 02:40:34 PM
I'm on the FERS system as well.  0.8% of my salary is withheld for my pension.  My MRA is 57 (and I'll have 30 years of service at that point, so that should make for a size able monthly annuity payment should I stay that long in Federal Service.  The social security supplement payment from 57-62 is pretty sweet as well.
Title: Re: share your pension details
Post by: NV Teacher on April 30, 2016, 02:42:49 PM
For each year I work I get 2.5%.  I can retire at 30 years with a full pension that is 75% of my highest three years of salary.  I've been pretty aggressive saving and investing on my own over the last 10 years so I should be pretty well set up.

Title: Re: share your pension details
Post by: carloco on April 30, 2016, 02:46:31 PM
We receive full benefits (42% of the highest 3 salaries) after 25 years of service as long as we are older than 50 years old and a supplement of $1129 until full social security.
Title: Re: share your pension details
Post by: sol on April 30, 2016, 03:08:31 PM
As a federal employee, I also get that 1% times high-3.

There are a couple of caveats not yet mentioned, though.  While I only pay a meager 0.8% in exchange for this benefit, all feds hired after 2014 pay 4.4%  Even that sounds like it might be a good deal, until you realize how depressed federal salaries are compared to equivalent private sector jobs, in which case it suddenly looks like I'm paying closer to 25% of my salary for this benefit.

But the biggest problem with my pension, and a concern for any early retiree, is the inflation adjustments.  My pension pays out 1% of my high-3 salary starting at age 62, but the salary it is based on is the number of dollars I earned when I last worked.  If I retire at age 42 and then collect at age 62, I will have 20 years of inflation eating away at that pension.  That typically reduces it's value by at least half, which means in terms of equivalent purchasing power I'm really getting closer to half a percent per year of service.

The military pension is a much better deal, as it pays out age 62 based on the then-current pay grade of your highest rank.  As the rank's pay scale is inflated every year (by more than the civilian wage inflation, I might add) you never lose purchasing power no matter how much time elapses between leaving the military and collecting your pension.  They are equivalent if you retire at age 62, but unlike the military the federal civilian pension penalizes the early retiree.
Title: share your pension details
Post by: pbkmaine on April 30, 2016, 03:14:57 PM
My husband's (private corporation) pension is 1.1% of average annual compensation for 5 consecutive highest years in past 10 full calendar years. "Compensation" excludes bonus and overtime. Added to this is .5% of average annual compensation above the Social Security Covered Compensation amount. This is multiplied by years of service up to 35 years. No COLA. Medical at 10% of cost to age 65, then acts as secondary to Medicare for $25 per month.
Title: Re: share your pension details
Post by: mustachianteacher on April 30, 2016, 06:00:51 PM
My benefit calculation depends heavily on the age at which you start collecting benefits. The basic formula is years of service x age factor x salary = percentage of salary you'll receive in retirement. The age factor is 2% at 60. It varies from 1.1 at age 50 to a max of 2.4 at age 63. If you have more than 30 years of service, you can add 0.2% to your age factor. We have to contribute a whopping 10% for this.

In our case, we'll end up getting around 50% of our final compensation as a pension, but since we're used to living well below our means, we will barely need to supplement much to continue living as we are now.
Title: Re: share your pension details
Post by: chasesfish on April 30, 2016, 06:54:28 PM
Flat 1% of salary for each year of service if retiring at 65.

No COLA, significant reductions if drawn at 55.
Title: Re: share your pension details
Post by: Rural on April 30, 2016, 07:23:07 PM
2% for each year of service, average of the highest three. Vested at ten years, can collect at 60, no penalty but no option to collect earlier. Adjusted by the SS CoL adjustment percentage after starting to collect but not before. Also get medical, self and family, if insured at the time of retirement (not if RE, therefore). I'm grandfathered on the medical - newer hires don't get it,


I pay in 6.75% of salary, but this changes, sometimes yearly. Never seen it go down, of course, only up.
Title: Re: share your pension details
Post by: clarkfan1979 on April 30, 2016, 11:33:24 PM
2% for each year of service, average of the highest three. Vested at ten years, can collect at 60, no penalty but no option to collect earlier. Adjusted by the SS CoL adjustment percentage after starting to collect but not before. Also get medical, self and family, if insured at the time of retirement (not if RE, therefore). I'm grandfathered on the medical - newer hires don't get it,


I pay in 6.75% of salary, but this changes, sometimes yearly. Never seen it go down, of course, only up.

It seems like my pension is average. My 1.75% per year of service seems higher than the standard 1% for federal employees. However, I am contributing 8% of my income and the federal employees are contributing .8%. I guess they seem about the same.
Title: Re: share your pension details
Post by: sol on April 30, 2016, 11:45:35 PM
It seems like my pension is average. My 1.75% per year of service seems higher than the standard 1% for federal employees. However, I am contributing 8% of my income and the federal employees are contributing .8%. I guess they seem about the same.

When were you hired?  As mentioned above, all federal hires now pay 4.4% to get that 1% per year deal.
Title: Re: share your pension details
Post by: sparkytheop on May 01, 2016, 02:32:30 AM
On FERS here too.  I'd love to get the early out (I'll have 25 years in at age 46), but my position is never up for that option because of the type of work we do (can't eliminate the position for two years).

I plan to go at 57, right now I really love this job and it's not hard to come to work.  If that changes, I might change my mind, but hopefully it all works out.  My schedule is perfect for travel (I can take two weeks off every ten weeks, using only 16 hours of leave each time, less if one is a holiday), I get to work nights when almost no one else is around, etc.

The social security supplement will be nice, but the loss of COLA for five years kind of sucks.  (That is not something they tell you about in the retirement classes, I did my own digging and found that out).

I've done the math, I'd have to live a long time to have that 1.1% be worth the extra years of working, especially when you include the five years you're getting paid not to work.
Title: Re: share your pension details
Post by: clarkfan1979 on May 01, 2016, 02:39:10 AM
It seems like my pension is average. My 1.75% per year of service seems higher than the standard 1% for federal employees. However, I am contributing 8% of my income and the federal employees are contributing .8%. I guess they seem about the same.

When were you hired?  As mentioned above, all federal hires now pay 4.4% to get that 1% per year deal.

I was hired in 2015. I think people hired in 2012 and earlier get 2%, instead of 1.75% now.

Title: Re: share your pension details
Post by: Ricksun on May 01, 2016, 07:26:57 AM
As a federal employee, I also get that 1% times high-3.

There are a couple of caveats not yet mentioned, though.  While I only pay a meager 0.8% in exchange for this benefit, all feds hired after 2014 pay 4.4%  Even that sounds like it might be a good deal, until you realize how depressed federal salaries are compared to equivalent private sector jobs, in which case it suddenly looks like I'm paying closer to 25% of my salary for this benefit.

But the biggest problem with my pension, and a concern for any early retiree, is the inflation adjustments.  My pension pays out 1% of my high-3 salary starting at age 62, but the salary it is based on is the number of dollars I earned when I last worked.  If I retire at age 42 and then collect at age 62, I will have 20 years of inflation eating away at that pension.  That typically reduces it's value by at least half, which means in terms of equivalent purchasing power I'm really getting closer to half a percent per year of service.

The military pension is a much better deal, as it pays out age 62 based on the then-current pay grade of your highest rank.  As the rank's pay scale is inflated every year (by more than the civilian wage inflation, I might add) you never lose purchasing power no matter how much time elapses between leaving the military and collecting your pension.  They are equivalent if you retire at age 62, but unlike the military the federal civilian pension penalizes the early retiree.

Sol, don't forget about the TSP, while there are negatives wrt our pensions, we do have a 5% matching contribution.  Many companies offer one or the other, not both (including the military and CRS). Though I believe the military is about to change as well.  Also, there are many many pensions not tied to an inflation index.  While yours doesn't begin until 62, you'll still have 30+ years of inflation protection many people don't have.

Ricksun
Title: Re: share your pension details
Post by: doggyfizzle on May 01, 2016, 06:29:51 PM
Sol, don't forget about the TSP, while there are negatives wrt our pensions, we do have a 5% matching contribution.  Many companies offer one or the other, not both (including the military and CRS). Though I believe the military is about to change as well.  Also, there are many many pensions not tied to an inflation index.  While yours doesn't begin until 62, you'll still have 30+ years of inflation protection many people don't have.

Ricksun

Plus FERS employees get SS, which the CSRS employees do not.  I think we ended up coming out ahead with the 5% TSP match and enhanced flexibility of drawing retirement benefits.

While salaries might be higher in private industry, at this point in my life, I value the job security of a federal position much more than the higher pay in private industry.  I work in oil/gas, and while I made incredible money right out of college ten years ago, I'm not at all bummed to be sitting out this round of industry layoffs.  2009 was brutal, and while I didn't lose my job, it did require almost 300 days on a boat that year which got really, really old.
Title: Re: share your pension details
Post by: Debts_of_Despair on May 01, 2016, 07:23:13 PM
Contribute 3% of salary for first 10 years of employment. Retire at 55 with 30 yrs or 62 with 20 yrs of employment.  Get 60% of highest 3 yr average annual salary for remainder of life.  Pretty good IMO.
Title: Re: share your pension details
Post by: Physicsteacher on May 01, 2016, 07:36:31 PM
State teacher retirement: 0.0215 x years of service x mean of three highest years of salary (with some additional rule about not exceeding the next five highest years of salary by more than a certain percentage). I contribute 6% of salary and my district contributes 14%. Vesting after five years of service, which for me is this year. Eligible for full retirement benefit after 28 years of service or upon reaching age 60 or reduced benefits after 25 years of service. My contributions are refundable if I leave teaching, but not the employer contributions.
Title: Re: share your pension details
Post by: fishnfool on May 01, 2016, 08:32:09 PM
Currently contribute 9.5% of pay for 2% at age 55 pension. Tops out at 2.4% age 63 with 2% cola. No medical or other benefits after retirement. 

We also do not contribute to SS, so my 10 years of prior SS contributions will be subject to WEP which takes away roughly 2/3's of your SS benefit.

Plan to hang it up at 60 so will get aprox 2.2% x's 33 years if health is still holding up.....knock on wood!

Title: Re: share your pension details
Post by: JZinCO on May 01, 2016, 09:01:03 PM
My pension system is wonky. For simplicity, at full retirement, you earn 2.5% of hi-5 salary per credited year of service. Full retirement is 5 years of service if taken at age 65, 20 years of service if taken at age 60, 25 years of service if taken at age 55, or 30 years of service if taken at age 50. If you work past full retirement age, given your years of service, each incremental year of service adds 2.5%. The cap for a full career is 87.5% of income replacement.

If you are below full retirement the first few years of service are worth 0.5% and the last few years of service are worth up to 6.8% of income replacement.

The pension is designed as a SS replacement.
Employees put it 8% of salary annually and employers put in ~20%.
---
I was in the pension for a time but opted to a DC plan where the employer contributes 11% of salary and the employee, 8%. I honestly could not figure out how to compare the actuarial difference so I went for a flexible, portable plan.
Title: Re: share your pension details
Post by: boognish on May 01, 2016, 10:23:07 PM
Calif state pension (CalPERS). 2% at 50 Public Safety pension. Required 5 years to vest and able to buy back military time or other government employment time to add addition years to pension. 3% COLA annually BUT if inflation is low (like this year) they won't pay that so don't count on it. I paid 7% toward pension and agency matched that. Calif public employees have all kinds of different plans with varying rules depending on who you work for. Some require more years of service time to vest, older age to get benefit, different %, etc... They have recently changed pensions benefits for new hires though requiring longer working years before collecting.
CalPERS employee as well, but for a public agency. My plan is 2% at 62.

Something I thought was interesting:
If you permanently separate from your CalPERS employer, you can rollover or cash out your contributions. If you leave your contributed funds with CalPERS, the funds will earn a guaranteed 6% compounded interest, which you can withdraw at 59.5 penalty free. I don't thing I'll work long enough to take advantage of the actual pension, but 6% return on my 7% contributions is pretty sweet.
Title: Re: share your pension details
Post by: JZinCO on May 01, 2016, 11:25:39 PM
6%?! Wow. I'm earning 3% on my cash balance..
Title: Re: share your pension details
Post by: albireo13 on May 02, 2016, 06:42:15 AM
My pension is frozen, after working for a large company for 31 years.
Monthly payout for the annuity is $1859.

The other option is to take a lump sum of ~ $300K
Title: Re: share your pension details
Post by: BigRed on May 02, 2016, 12:44:49 PM
My pension is weirdly complicated.  It has 2 parts:


Roughly speaking this comes out to about 0.9% of salary (accumulated yearly) as an inflation adjusted payout, with some upside if the 50/50 pension fund outperforms inflation, and some downside if inflation is high and the fund doesn't match it (like, say the 70's and early 80's).  I don't directly contribute anything, and the company also has a 4% automatic 401(a) contribution as well.  So, not bad, I guess.
Title: Re: share your pension details
Post by: SimplyMarvie on May 02, 2016, 01:28:48 PM
I'm also a fed, but apparently we have our own retirement system (I'm Foreign Service).

I pay 1.4% of my income and get 1.7% of my high-three salary for every year of creditable service up to 20, and then 1.1% per year after that. We also have a hard mandatory retirement age of 65 -- they nearly frog-marched my former office mate out the Friday after his birthday, they are not foolin' around about that. I think the department is about to lose a law suit about that one, so it may change. I don't care all that much, since I'm not planning on working until 65 anyway!

Apparently, if we leave before we have 5 years of creditable service, we do not keep our pension benefits and get a lump sum at discharge. If we quit after 5 years and before 20 years, we only keep 1.1% per year. You have to make it to 20 full years of service to get the full 1.7%, which has a major affect on my life/job planning. We also get a FERS-style annuity supplement between retiring and social security kicking in.

An interesting piece of the puzzle is gaming that high-three, though. It includes not just base salary but differentials and danger pay, so you suddenly have this rush of nearly-retired people volunteering to work in Basrah and Bujambura and other places where their pay will be higher, just to bump their high-three.
Title: Re: share your pension details
Post by: RichMoose on May 02, 2016, 11:23:34 PM
Canadian so our system is a bit different as your pension payout is clawed back at age 65 for Canada Pension Plan (CPP) adjustment so  your total income stays the same. Once you hit 85 factor (age +years of service) they pay 2% of best 5 years ◊ years of service. We pay around 13% into our plan. Employer contributes around 14%.

For CPP we pay an additional $2500/yr matched by employer.

Yes my paycheck deductions are substantial.
Title: Re: share your pension details
Post by: Sailor Sam on May 03, 2016, 12:00:25 AM
The military pension is a much better deal, as it pays out age 62 based on the then-current pay grade of your highest rank.  As the rank's pay scale is inflated every year (by more than the civilian wage inflation, I might add) you never lose purchasing power no matter how much time elapses between leaving the military and collecting your pension.  They are equivalent if you retire at age 62, but unlike the military the federal civilian pension penalizes the early retiree.

Sol, I think this is how Reservist get their pension. Active duty get 50% of their high 3, with a 20 year vest. Then an additional 2.5% multiplier for each year past 20. Plus military pensions get periodic COL.

However, it's all changing for newbies in 2018. Adding TSP matching, and lowering the multiplier.
Title: Re: share your pension details
Post by: P4J on May 03, 2016, 12:24:05 AM
I'm also a fed, but apparently we have our own retirement system (I'm Foreign Service).

I pay 1.4% of my income and get 1.7% of my high-three salary for every year of creditable service up to 20, and then 1.1% per year after that. We also have a hard mandatory retirement age of 65 -- they nearly frog-marched my former office mate out the Friday after his birthday, they are not foolin' around about that. I think the department is about to lose a law suit about that one, so it may change. I don't care all that much, since I'm not planning on working until 65 anyway!

Apparently, if we leave before we have 5 years of creditable service, we do not keep our pension benefits and get a lump sum at discharge. If we quit after 5 years and before 20 years, we only keep 1.1% per year. You have to make it to 20 full years of service to get the full 1.7%, which has a major affect on my life/job planning. We also get a FERS-style annuity supplement between retiring and social security kicking in.

An interesting piece of the puzzle is gaming that high-three, though. It includes not just base salary but differentials and danger pay, so you suddenly have this rush of nearly-retired people volunteering to work in Basrah and Bujambura and other places where their pay will be higher, just to bump their high-three.

Thanks for pointing this out. To this point I had figured that, retiring after 11 years in FSPS with an average final-3 of $100k would net 11*0.017*100K = $18.7K, and in some retirement seminar I'd been told that the amounts were adjusted for inflation.

Now, between your comment and the one earlier up (about how inflation adjustment doesn't kick in until you actually start collecting...), it looks like the correct factor is 1.0% per year (according to RNet), reduced for inflation (say, 2% over the 30 years until 67) and the actual amount I should plan on is 11*0.01*100K / (1.02)^30 = $6K.

What a difference!
Title: Re: share your pension details
Post by: notactiveanymore on May 03, 2016, 08:22:31 AM
Local government pension with 5 year vesting. I don't contribute anything. We're also social security exempt.

Final 36-month average salary X years of service X 2% = yearly benefit
Title: Re: share your pension details
Post by: Silrossi46 on May 04, 2016, 07:49:59 AM
NJ PERS  Public employee retirement system

years of service /55 x Average of highest 3 years salary = yearly payout for life.   NO COLA .   Medical included after 25 years of service.  3 % penalty for every year under age 55.

Example = highest 3 year average = 100,000   with 25 years of service.  age 55.       25/55x 100,000 = 45,454/ year  medical included.

6% per pay (biweekly) contribution to pension.   

Title: Re: share your pension details
Post by: Silrossi46 on May 04, 2016, 07:53:33 AM
forgot to add that we pay into SS as well and have the ability to contribute to government 457B  (same limits as 401K)
Title: Re: share your pension details
Post by: PoutineLover on May 04, 2016, 07:55:10 AM
I have a defined contribution plan so I think the amount I get depends on how well the investment does and how long I contribute to it. It's a 5% equally matched contribution except for the first 50,000 they deduct the 1.8% that goes into the public plan, so really only 3.2% since I'm under that level for now. If I had been hired a few years earlier I would have had a defined benefit plan..
Title: Re: share your pension details
Post by: tjalexander on May 04, 2016, 08:07:33 AM
Total Service Credit * Graded Multiplier * Average Monthly Compensation = Monthly Benefit
2.1% (<20years) to 2.3% (30yrs of service)

So with 30 yrs of service, I will get 69% of salary.

Currently paying 11.35% of salary. Contribution rates are actuarially determined and are adjusted annually to ensure the plan remains fiscally sound and able to meet current and future obligations.
Title: Re: share your pension details
Post by: SnackDog on November 04, 2018, 04:44:35 AM
My private employer pension sucks, unlike you government fat cats.  No employee contributions, which is the only good part. It only pays about 1.8% of final salary+bonus per year of service MINUS a social security offset which drives it back toward about 1%.    I'm at 22 years so about 22% of pay if I take it now. No COLA.  If I retire now but defer taking the pension distributions until age 65 it would be about 30% of current pay. Who can live on that?  Lump sum option is currently 5X pay, so I like prefer that to the pension annuity.

Hapless employees are left with no option but to co-invest in the 401K and make personal tax-advantaged and after-tax savings.
Title: Re: share your pension details
Post by: sol on November 04, 2018, 08:54:59 AM
My private employer pension sucks, unlike you government fat cats.  No employee contributions, which is the only good part. It only pays about 1.8% of final salary+bonus per year of service MINUS a social security offset which drives it back toward about 1%.   

That is a significantly better pension than federal employees get, so don't be too sad about it.  Feds pay more for a pension that is worth less.
Title: Re: share your pension details
Post by: Rural on November 04, 2018, 07:46:47 PM
Yes, my government pension (state) now requires 7% of my salary for almost the same return as yours for no contribution, so it's 7% off the top to pensions and then save in my own retirement vehicles.
Title: Re: share your pension details
Post by: JZinCO on January 18, 2019, 12:39:44 PM
[Pension details]
The pension is designed as a SS replacement.
---
I was in the pension for a time but opted to a DC plan where the employer contributes 11% of salary and the employee, 8%. I honestly could not figure out how to compare the actuarial difference so I went for a flexible, portable plan.
The legislature keeps watering benefits down in order to keep the fund afloat (high 7 instead of high 5, the schedule of years service versus % income replacement is a lower curve).
Meanwhile the DC plan I opted for continues to increase the % employer contribution. I think I made a good decision..
Title: Re: share your pension details
Post by: FIRE@50 on January 18, 2019, 12:47:01 PM
My pension = null
Title: Re: share your pension details
Post by: mm1970 on January 18, 2019, 01:15:48 PM
My pension = null
nothing.  I get nothing.

A year or two ago, an old guy at the gym tried to convince me to go back into the Navy (as a reservist) to get my 20 by aged 65.  Pension!  (He has 2 pensions from military and I think post office and 3 different medical insurances.)

I said "I'm in my late 40's with a 4 year old and a 10 year old and a full time job.  I think I'm gonna have to pass."
Title: Re: share your pension details
Post by: Michael in ABQ on January 18, 2019, 02:33:09 PM
As a federal employee, I also get that 1% times high-3.

There are a couple of caveats not yet mentioned, though.  While I only pay a meager 0.8% in exchange for this benefit, all feds hired after 2014 pay 4.4%  Even that sounds like it might be a good deal, until you realize how depressed federal salaries are compared to equivalent private sector jobs, in which case it suddenly looks like I'm paying closer to 25% of my salary for this benefit.

But the biggest problem with my pension, and a concern for any early retiree, is the inflation adjustments.  My pension pays out 1% of my high-3 salary starting at age 62, but the salary it is based on is the number of dollars I earned when I last worked.  If I retire at age 42 and then collect at age 62, I will have 20 years of inflation eating away at that pension.  That typically reduces it's value by at least half, which means in terms of equivalent purchasing power I'm really getting closer to half a percent per year of service.

The military pension is a much better deal, as it pays out age 62 based on the then-current pay grade of your highest rank.  As the rank's pay scale is inflated every year (by more than the civilian wage inflation, I might add) you never lose purchasing power no matter how much time elapses between leaving the military and collecting your pension.  They are equivalent if you retire at age 62, but unlike the military the federal civilian pension penalizes the early retiree.

Yep. 4.4% of my pay now for the possibility of ~30% if I work until my 60s is not a good deal in my case. Whenever I leave federal service I will definitely be taking my contributions as a lump sum to reinvest elsewhere. Even though you are eligible for a pension with only 5 years worked, 5% of say $75,000 that I can't collect for 25-30 years is going to be a pittance. When adjusted for inflation it might be $200 in todays dollars per month.


My pension through the National Guard is a bit different than active duty military. For one thing I switched over to the new system which reduced my multiplier from 2.5% per year to just 2.0%. The benefit is now I get a 5% match in my Thrift Savings Plan (federal government 401k) which will grow for the next 25-30 years until I hit 60 and can start collecting my pension. Even though I will probably end up serving something like 25-30 years in the National Guard it will only be the equivalent of maybe 7-8 years of active duty so I'll get round 15% of my base pay. That base pay will be adjusted for inflation until I start collecting at 60. So if I retired at 45 and base pay for my rank is $70,000 per year, my pension will be based on the current rate for that pay grade which would probably have increased to something like $100,000 per year. Active duty pensions are very nice because they pay out immediately. You could start collecting in your late 30s if you joined at 17/18. I estimate my pension will end up being about the same as my monthly drill pay after adjusting for inflation, so averaging probably $700 - $1,000 per month in current dollars.
Title: Re: share your pension details
Post by: aceyou on January 18, 2019, 06:06:24 PM
Michigan teachers have multiple plans depending on what date teachers were hired in. 

Here's my plan:

In 2008 and then in 2012 many changes were made in Michigan and the pension is significantly worse for new hires...by a lot.  But my wife and I were fortunate to get hired a before those changes.  No new hires get a pension until 60, no one may buy years, the pension multiplier has been reduced, and there's no health insurance in retirement for new hires. 
Title: Re: share your pension details
Post by: Heinz on January 18, 2019, 06:51:39 PM
I am a federal employee, so the same as others - but I do get prior military service credited.  And if you take before 62, you basically take a 10% reduction to claim at age 60.  My wife has a private sector pension, and retiree medical, that will pay her 50% of base salary at age 58 (28 years of service).  However, the biggest benefit to federal service is that if you have federal healthcare for five years prior to retirement, you can continue that at the same rates until Medicare.  For me, with a family plan, it is $178 every two weeks for an excellent plan. 
Title: Re: share your pension details
Post by: sol on January 18, 2019, 09:19:44 PM
the biggest benefit to federal service is that if you have federal healthcare for five years prior to retirement, you can continue that at the same rates until Medicare.

Unfortunately, that doesn't apply to early retirees.  You have to reach MRA for that to be an option.

Much like the pension itself, many of the supposed benefits of federal service are wasted on the early retiree.
Title: Re: share your pension details
Post by: frugaldrummer on January 18, 2019, 11:19:27 PM
My ex, MD in a large HMO:2% of highest salary per year for 20 years then 1% a year for ten years, no further increase after 30 years. No pension until age 65 BUT the medical group would pay your pension for a few years before age 65 based on a formula of age and years of service (for my ex, he could take full early retirement at age 59 1/2. NO COL increases though, which really  reduces  its value over time if you expect longevity like I do.
Title: Re: share your pension details
Post by: wenchsenior on January 19, 2019, 08:03:32 AM
I'm curious to know if anyone here knows the details of John Deere Co.'s pension. 

I've been rather astonished that someone I know who is the same age as my husband, has just RE'd from there.  This person is good with money AFAIK, but owns two properties (home condo and vacation condo in a high-prop-tax state), at least one of which they just purchased and must still be under mortgage for many years to come.  And I know enough of their situation and history to know there isn't a hidden income stream supplementing their cash flow.  So even given a decent sized 401k, I assume the John Deere retirement benefits must be astonishingly good.
Title: Re: share your pension details
Post by: sol on January 19, 2019, 09:46:28 AM
I'm curious to know if anyone here knows the details of John Deere Co.'s pension. 

I do not, but is it possible this individual was just rich?  One of my former climbing partners used to work at John Deere as some sort of vice president of something or other.  They're a huge multinational corporation, so she was rolling in money.
Title: Re: share your pension details
Post by: wenchsenior on January 19, 2019, 12:21:53 PM
I'm curious to know if anyone here knows the details of John Deere Co.'s pension. 

I do not, but is it possible this individual was just rich?  One of my former climbing partners used to work at John Deere as some sort of vice president of something or other.  They're a huge multinational corporation, so she was rolling in money.

No, it's not. This is someone I know VERY well.  Not specific salary well, but I know how much the two houses cost, the amount of inheritance received about 4 years ago, purchasing habits, etc.  That's why I asked. I am having trouble getting the numbers to add up unless the JD pension is something really substantial. ETA: I fully plan on asking directly when I next see this person in the flesh, but we sometimes go years between visits and I'm very curious. And it seems weird to just email and ask.
Title: Re: share your pension details
Post by: doggyfizzle on January 19, 2019, 12:26:05 PM
I'm curious to know if anyone here knows the details of John Deere Co.'s pension. 

I do not, but is it possible this individual was just rich?  One of my former climbing partners used to work at John Deere as some sort of vice president of something or other.  They're a huge multinational corporation, so she was rolling in money.

It might be similar to other industrial corporations that still offer pensions (Raytheon, Cummins, etc) in that it is a ďcash balanceĒ pension with a lump-sum cash-out option.  The cash balance option gained steam in the early 2000s as a way to still keep good workers around for the long term while dramatically lowering a corporations pension liability.

No, it's not. This is someone I know VERY well.  Not specific salary well, but I know how much the two houses cost, the amount of inheritance received about 4 years ago, purchasing habits, etc.  That's why I asked. I am having trouble getting the numbers to add up unless the JD pension is something really substantial. ETA: I fully plan on asking directly when I next see this person in the flesh, but we sometimes go years between visits and I'm very curious. And it seems weird to just email and ask.
Title: Re: share your pension details
Post by: Adam Zapple on January 20, 2019, 05:46:17 AM
2.5% multiplier, vested at 15 years.  Due to contract language some can't collect until age 55, some can collect right away.  Depends how old you were when hired. Most stay beyond 55 anyway.  No cola.  Awesome cheap medical if you stay past 55.
Title: Re: share your pension details
Post by: SnackDog on January 20, 2019, 06:04:51 AM

 I am having trouble getting the numbers to add up unless the JD pension is something really substantial. ETA: I fully plan on asking directly when I next see this person in the flesh, but we sometimes go years between visits and I'm very curious. And it seems weird to just email and ask.

What seems weird to me is you trying to pry into someone else's finances.  It's none of your business, unless you are thinking of reporting him to the IRS/FBI for unreported income or possible embezzlement or illegal income.

Everyone has their own financial setup, they grow more complex over time, and no matter how well you know them, it is impossible to understand their situation short of going over every penny with them.  I remember in graduate school when we all lived on about the same stipend (something like $950/mo), I mentioned a short trip I was taking to NYC for the holidays and a friend shrieked "Where are you getting this money???".   I was getting it the same place he was, only I wasn't spending all of it every month on restaurants and alcohol.  (I stayed with friends in Hoboken and even managed to get into the Metropolitan Club but didn't spend a lot other than air ticket.)
Title: Re: share your pension details
Post by: Adam Zapple on January 20, 2019, 06:09:51 AM
2.5% multiplier.  Vested at 15 years.  No cola. 
Title: Re: share your pension details
Post by: wenchsenior on January 20, 2019, 07:53:11 AM

 I am having trouble getting the numbers to add up unless the JD pension is something really substantial. ETA: I fully plan on asking directly when I next see this person in the flesh, but we sometimes go years between visits and I'm very curious. And it seems weird to just email and ask.

What seems weird to me is you trying to pry into someone else's finances.  It's none of your business, unless you are thinking of reporting him to the IRS/FBI for unreported income or possible embezzlement or illegal income.


I can see that what I wrote kind of framed my original question wrong, so let me try to re-frame and clarify:

1) I wasn't trying to pry into their finances and normally would have no particular interest. As you say, if they aren't talking, it's not anyone's business.  And this is someone I love, admire, and am close to and we freely discuss such things when we are together.  I already know all about their finances for the most part; if I'd hung out with them recently (in the time frame of them contemplating and then retiring early), I'd no doubt hear all about the details of that, as well.  I just haven't seen them them in several years and likely won't anytime soon. 

2) My interest is not in this particular person's financial situation, it is specifically in JOHN DEERE and their retirement package.  The fact that this thread appeared co-incident with my friend's early retirement got me really questioning some assumptions I had.  I guess I had always operated under the 'prevailing assumption in the ether' that gov't pensions and benefits are the really sweet ones, whereas most private sector companies don't offer much in the way of benefits apart from (if you are lucky) a 401k with a percent or two of match and some decent investment options. 

But this thread has surprised me as to how much better some of the private (and some state gov't) pensions and benefits are than the federal ones.

Don't get me wrong, dh didn't take his federal job for the benefits, but for the love of the work; and we're pleased to be getting any pension at all.

3) However, having realized that I was somewhat wrong about how crappy the benefits at private companies are, I'm thinking that if I change jobs I should seriously consider trying to go to work for some big company. Previously, I never would have considered this b/c my social circle is mostly other feds, state employees at universities, and private contractors.

Hopefully that clarifies my original question.

Title: Re: share your pension details
Post by: bryan995 on January 21, 2019, 04:07:35 PM
I have 8 years of service with Massachusetts (long story but it was during my PhD).  Left following graduation and now work in industry.  The plan has always been to return to the state to hit the required 10 years of service.  Not so much for the pension $, but more-so for the health insurance. 

At 10 years, I will receive 15% of my 3 highest annual salaries (and I believe free/subsidized health insurance!) from age 55 on-wards.  Was making ~$80K with the state, and should be able to return at >200K, which will pay out ~30K per year from age 55-death.  My plan is to make enough to retire elsewhere (current work), then move back to MA to hit the 10 years and HOPEFULLY find an interesting job that is worth staying at for a few more years, maybe even long term.    Every year over 10 years of service, I gain 1.5% of salary back in my pension.  And it seems as if I also gain an extra ~1% of pension every year of age > 55.  At 10 years of service and age 65 I would be making 25% of annual salary (50K payout).  It also looks like as long as I do not withdraw the money I have in the system thus far, I would keep my status and be able to return at any time and continue my accruement.
Title: Re: share your pension details
Post by: Cassie on January 21, 2019, 06:17:32 PM
We have small pensions from a state that doesnít pay into SS. People with 30 years do well but we only had 15 years. Due to WEP we will be losing most of our SS.  We do get COL raises.
Title: Re: share your pension details
Post by: chasesfish on January 22, 2019, 03:35:22 PM
Random question since this thread is full of pensioners:

My pension has no COLA adjustment.

I can get 50% of the pension payout if I take it at 55, 100% if I take it at 65.   I keep doing the math and I have to live until 75 to break even under a no inflation scenario.   With inflation of taking into account the opportunity cost of drawing down investments vs. spending pension dollars, that break even probably goes up to age 76/77.

That seems like a huge gamble to wait until 65, especially if I already have FU money.  a 21-22 year breakeven seems crazy.   What do you think?
Title: Re: share your pension details
Post by: aceyou on January 22, 2019, 03:55:40 PM
Random question since this thread is full of pensioners:

My pension has no COLA adjustment.

I can get 50% of the pension payout if I take it at 55, 100% if I take it at 65.   I keep doing the math and I have to live until 75 to break even under a no inflation scenario.   With inflation of taking into account the opportunity cost of drawing down investments vs. spending pension dollars, that break even probably goes up to age 76/77.

That seems like a huge gamble to wait until 65, especially if I already have FU money.  a 21-22 year breakeven seems crazy.   What do you think?

I agree with you.

Seems like it'd take even longer to break even, if ever.  Suppose you didn't want to spend the money till 65 anyway.  You could at age 55, funnel all of the pension payments into index funds.  Then at age 65, you could draw from that account to make up for the 50% lower payouts. And in that case, if you die early, say at age 62, you have 7 years of pension payments plus any gains to pass to someone else.  I'd take it at 55 whether I planned to spend it at 55 or not.   
Title: Re: share your pension details
Post by: Cassie on January 22, 2019, 04:32:47 PM
I would take it at 55.
Title: Re: share your pension details
Post by: chasesfish on January 22, 2019, 06:04:27 PM
I appreciate it.  Megacorp is going through a ton of forced retirements, performance based "run outs" ect.  I was helping a 57 year old employee with a situation and she kept arguing about the value of taking the pension at 65, but all estimates were based on her continuing to work at the company.

She's been run out of her job and it made me dig harder at the math.  She really needs to go take a comparable job elsewhere and draw her pension.   I was able to key her into the 1000 rule, which was you get a year of service if you work 1000 hours in a calendar year, so I encouraged her to look for ways to hang on until June while putting plans together.

Fortunately the pension was only a small part of an otherwise much better conversation of me giving her encouragement and advice she asked for help with.
Title: Re: share your pension details
Post by: MrSal on January 22, 2019, 06:36:30 PM
My wifes pension seems to be pretty good then according to what I read from these comments.

Her employee discounts 7.5% of her paycheck as contribution to the account. Contributions grow at guaranteed rate of 5%/year.

Once retired, which can happen after 35 years of service without penalty or 30 years of service if above 58 years old - in my wife's case it will be at 57 years old since she was hired at 22, she will get 2.5% x years of service of the average 3 best years.

Currently making 75k, however most teachers in their upper years make around 80-85k ... at that point, thats an annual pension of 71,000 give or take + your account which at that point has grown to 300k or so.

I believe health insurance is also guaranteed by the school district to retirees as well. She was lucky to enter into the system in the last year before they made some changes - market risk and shared risk.

I on the other hand have no pension. It's all funded by myself :D IRAs and 401ks and taxable accounts.
Title: Re: share your pension details
Post by: JZinCO on January 24, 2019, 11:20:23 AM
I just looked into medical benefits at my employer.
They'll pay for my insurance premium provided 1) I was working for them the prior year to taking retirement and 2) am under 65:
-Work 20 years and am age 50
-Work 5 years and am age 60

.. so must work a full career to get 15 years of health insurance... :/
Title: Re: share your pension details
Post by: Adam Zapple on January 24, 2019, 06:56:31 PM
How many extra years would you all hang around for full medical coverage, assuming you already had the funds for a comfortable, yet lean retirement?
Title: Re: share your pension details
Post by: JZinCO on January 24, 2019, 09:48:33 PM
It would be hanging around for 10 additional years. At one employer, in the same city. Can't lock me down!
Title: Re: share your pension details
Post by: sol on January 24, 2019, 11:28:07 PM
How many extra years would you all hang around for full medical coverage, assuming you already had the funds for a comfortable, yet lean retirement?

What does full medical cost if you pay full freight? 

If you're too rich to qualify for ACA subsidies, then it might be $15k/year to buy comprehensive health insurance.  That's the value of what you're working for.

These corporate plans typically truncate when you hit medicare age anyway, so we might use age 62 as the cutoff point.  If you're currently 50 and considering retiring this year, you're looking at needing 12 years of coverage at 15k/year, or $180k in total value.  Which is worth more like $160k in today's dollars if you can invest the money at ~7% per year, because your average ROI offsets part of the premiums.  So, I'd need to earn an extra $160k to pay for 12 years of medical care, and if I were earning $80k/year then I should be willing to work up to two extra years to earn that $160k.  Of course, by then you only need 10 more years, not 12, so you'e already stayed too long.  If you work any longer than that, then you've earned more money by postponing your retirement than the value of the corporate medical coverage you would receive by staying longer.

You can replace the numbers in this example with your own situation, of course, but in general for high earners who are most likely to ER, the value of your annual income is always going to rapidly outstrip the value of the medical coverage you might someday earn by staying at work.  If your retirement budget is below the ACA limits and you can get subsidies, then this is a no-brainer because the corporate medical coverage you might earn is almost worthless to you.

My advice:  just work a little longer to pad your investments, and let go of the idea of corporate-sponsored medical care.  It's another ruse they use to keep you chained to your desk.
Title: Re: share your pension details
Post by: Cassie on January 25, 2019, 12:36:27 AM
You canít get Medicare until you are 65.
Title: Re: share your pension details
Post by: Rural on January 25, 2019, 04:18:45 AM
The question of whether to stay for the medical is one of the central questions of my life right now. It's about to become more salient after I vest in the fall.


I don't think Sol's calculations affect me much, as my take- home isn't nearly that high and the coverage on offer from my employer is family coverage. I will likely qualify for subsidies as long as subsidies exist, but I don't have any confidence in either subsidies or the ACA in its current form being around for even a few more years. That's the real reason to be tempted by the employer coverage on offer, the certainty that we could have some kind of healthcare coverage. I went too many years without any not to  have some trauma around the issue.
Title: Re: share your pension details
Post by: RichardSPBJJ on February 02, 2019, 05:08:36 PM
I just turned 30 and Iíll be eligible to retire and collect 75% of my income at 42 years old. My plan has a service time multiplier of 2.67% per year with a 75% max. After 30 years of service, full retirement benefits are offered at any age. After I became vested, I decided to purchase 5 years of service credit via payroll deductions, for $50k plus interest.

I know my situation is far from typical, so I feel extremely fortunate to be in the position I am in.
 If I stayed in my current position, Iíd collect $60k/yr and it would be adjusted for inflation. Post retirement increases start after drawing benefits for 3 years and increases range from 2-5% (cannot exceed CPI). From what I understand, a $60k/yr pension adjusted for inflation is equal to having at least $1.5 million saved in retirement accounts, using the 4% rule. With my salary, I could never save that kind of money in such a short amount of time. Iím only a few months away from completing my Bachelorís degree, so Iím hoping to increase my salary substantially in the next 12 years. Retirement benefits are calculated using my highest 36-month average compensation (no salary caps).

I understand anything can happen and pension plans are not ďprotectedĒ but at the moment, this pension plan is very stable and has been around for over 70 years. The system has over 200 participating employers with over 105,000 active members and membership has increased for the last 5 years. The system invests over 40 billion and has increased its net position in each of the last 9 years. Over the past 34 years, the fundís annualized rate of return was 9.4%, which exceeds the national average. The funded ratio (75.1%) has gone up for the past 5 years and the system has been restructured a few times in the past 10 years to be sustainable.

My plan also offers survivor benefits so my wife will be taken care of if I pass away before she does. I'm part of an Employer-pay plan, so my employer plays 100 percent of the retirement contributions and my base salary is slightly reduced to offset the contributions.
Title: Re: share your pension details
Post by: kendallf on February 02, 2019, 07:17:49 PM
The question of whether to stay for the medical is one of the central questions of my life right now. It's about to become more salient after I vest in the fall.


I don't think Sol's calculations affect me much, as my take- home isn't nearly that high and the coverage on offer from my employer is family coverage. I will likely qualify for subsidies as long as subsidies exist, but I don't have any confidence in either subsidies or the ACA in its current form being around for even a few more years. That's the real reason to be tempted by the employer coverage on offer, the certainty that we could have some kind of healthcare coverage. I went too many years without any not to  have some trauma around the issue.

I'm a federal employee and that's what's keeping me working until 56 (Minimum retirement age).  I figure the uncertainty in the health care market right now makes that gov't coverage and 75% premium payment worth a bunch in uncertainty reduction, never mind the cash value as Sol attempts to calculate above.  Plus in my case that 4 years results in a pension that starts immediately without reduction, a supplemental pension until I reach 62, and 4 more years to pad my TSP account. 

We've just hired a ton of young engineers, I'm running some development teams and trying to build up some knowledge base, and I don't really mind what I'm doing in general right now. 
Title: Re: share your pension details
Post by: Cassie on February 02, 2019, 09:06:51 PM
Richard, so you started the job st 17?
Title: Re: share your pension details
Post by: RichardSPBJJ on February 02, 2019, 11:57:40 PM
Richard, so you started the job st 17?

Yes, I graduated HS a week before turning 17 and got the job less than 3 months later. I started out as a low level clerk in the file room and have promoted up 3 times since. I work for the 5th largest school district in the nation (Clark County) so my job is very secure and Iím thankful for that.
Title: Re: share your pension details
Post by: Henrysmom1 on February 03, 2019, 02:23:27 AM
Retired federal FERS employee here. Started to work in govt late, only put in 14 years. Had to retire age 58 due to family issues, but wouldnít have ever gotten much because there is no way I would have worked 30 years. I honestly only stayed with the govt job because I wanted the health insurance benefit as I have a disabled son and health insurance is vitally important to us. I get a big $650 a month after insurance deductions plus the reduction due to retiring early. Of course when I am old enough I will get SS and did get the TsP match, but it honestly isnít the financial bonanza people think it is. When I retired a year ago I was easily making $30k a year less than I would have in private sector. That said, the little bit each month is nice along with the insurance security.
Title: Re: share your pension details
Post by: sol on February 03, 2019, 09:27:09 AM
Of course when I am old enough I will get SS and did get the TsP match, but it honestly isnít the financial bonanza people think it is.

I've been saying this for years, and recently proved it to myself.  I retired from federal service, and then a few months later was offered a job doing virtually the exact same thing I did as a fed, for a 35% raise.  If anything, the private sector version of the job was a bit of demotion, because it was only the technical side of the job and not the public or legal side of it.

There are definitely advantages to federal service.  Pay is not one of them.  These days, job security isn't one of them either.
Title: Re: share your pension details
Post by: Cassie on February 03, 2019, 09:31:40 AM
Thatís awesome Richard!
Title: Re: share your pension details
Post by: The Fake Cheap on February 03, 2019, 09:58:51 AM
Canadian so our system is a bit different as your pension payout is clawed back at age 65 for Canada Pension Plan (CPP) adjustment so  your total income stays the same. Once you hit 85 factor (age +years of service) they pay 2% of best 5 years ◊ years of service. We pay around 13% into our plan. Employer contributes around 14%.

For CPP we pay an additional $2500/yr matched by employer.

Yes my paycheck deductions are substantial.

The way I look at this is is you get a bonus until age 65, so if you retire at 55, you get 10 years of those bonus payments, which you otherwise woudln't get.  The 13% payments are the high rate amount once you hit the CPP max, until then you pay about 9.8%.   There are also a lot of options for payouts with the fed system, you can take a lump sum under 50, or take a reduced pension starting as early as 50, penalties depend on age and/or years of service.

But yeah, those contributions are prety darn high, you definately pay for that benefit.