With all the funds going bankrupt and new laws governing them on the horizon I actually decided to look into mine. First off I don't even truthfully count this in my retirement planning because I don't think it will be around by then but I "pay" for it now so hopefully I'll get something.

My employer contributes $4.35 per hour worked. You need 1600 hours in one years to gain credit.

Each credit pays you $54.50 per month in retirement starting at 62 so 40 years in would be $2100 per month or about $25,00 per year

If you instead had that contribution into a defined contribution account earning a moderate 7% interest you would have $1.5m If you really wanted fixed income you could purchase an annuity for that that right now pays between $8500 and $9800 a month

Even at 4% average annual interest you could buy a fixed annuity that pays $4000+

The people who manage these funds for us hold this out there likes its some great thing and we need to keep it at all costs. I fail to see how it does anything but eat up funds and add major liability.

Is this common place for this type of pension or are our officers just managing ours poorly (though we are 90% funded which from what I understand is exteremely above average)

I like them, but not that style.

Over here they are more likely to be that you earn 1/60th of your final salary for every year that you work. Which would get you up to about 2/3 of your final salary on retirement. That is index linked (so you shouldn't be damaged by inflation). To get identical benefits I would need a retirement pot of £450K on my current salary, but as that is likely to be larger by the time I retire, it could be up to £1m (in todays money). Typical input is between 7% and 10% of salary.

I had an option to choose between a defined benefit plan and a defined contridbution plan. The defined benefit plan is actually quite generous, and given that it's substantially overfunded right now, it was probably a fairly safe bet. That being said, I'm just not comfortable with defined benefit plans right now given all the negative publicity. One problem with the plan is that I'm married, and in order to get survivor benefits (if I pre-decease my wife) I'd have to settle for a lower payout. Also, I wouldn't vest immediately. Thus, if we had some sort of emergency that would necessitate leaving my current employer, it would be compounded by the loss of a good chunk of our retirement savings. The defined contribution plan

I don't like defined benefits plans (it's a flawed concept).

No one can guarantee anything.

- If the plan isn't sufficiently funded, you don't get what's promised.
- If the plan is over-funded, management will raid the fund, and it's possible you won't get what's promised.
- If the institution goes into "hard times", you're screwed no matter what (no, you are not protected by regulatory control.)
- No defined benefits plan can promise a guaranteed return as high as a non-guaranteed return from a defined contribution plan (e.g., Warren Buffet says you can't look beyond 5-6% return for a defined benefits plan, compared to 10% in index funds).
- It's a shame that people will defer responsibility to some "parental institution" that really doesn't love you and won't watch out over you as much as you would like to think, all because you don't want to be bothered with taking responsibility for your own future well-being. (It promotes bad habits, betrayal, and ultimate misery.)

Good riddance to pensions. They'll only exist for government employees, because the taxpayer can't hold those programs accountable.

I looked a bit more into this and its even weirder. Apparently I have two defined benefit and a defined contribution. The first defined benefit was described above. Defined contribution is contributed to at $4.65 per hour worked. Now the other defined benefit works like this.

Pay in $1.18 per hour
need 1000 hours for a credit year, all overage is banked against future shortfall
payout starting at 60 of $32 per credit year per month.

So I pay 1/4 of the cost of the other fund into this one, and receive benefits well over 50% of the other fund.

All of this is quite ridiculous. I would be much happier with $10.48 per hour worked going into the defined contribution

Nickel: I have the same issue if I retire before 65. At 62 I can take full benefits and half for the wife as survivor benefits. Anything before that incurs a 5% per year penalty.

I won't even go into what my hourly health care contribution is. We cover all retiree medical expenses not covered by Medicare at 100%. While this is great for retiree's its EXTREMELY expensive.