In Which We Lose Our Pensions
Yesterday everyone at my company (nameless here; I do not speak for them) received an email stating that starting in ’08 our employer will stop depositing funds in our pension accounts. Up until this time we have gotten 5% of our salaries in the pension account, and 401(k) half-matching up to 3% (that is, we contribute 6%, our employer 3%); under the new system, there will be no pension, and we will get an automatic 2%, plus full matching up to 6%. That is, whereas I used to have a guaranteed 5% retirement contribution from the corporation, with up to 8% if I added to it, now I have a guaranteed 2%, with up to 8% if I contribute. This is not that big a deal; I currently contribute more than 6% anyway, so I really don’t mind.
I won’t lose the money currently in my pension account, and it may still earn interest, but my employer will no longer deposit any funds into it.
What does bother me is that the old pension could be used before reaching the 401(k) retirement age; the new way of doing things cannot. This is annoying; if I die at 45 then all I’ll have done is enrich my brothers.
OTOH, I believe that I’ll get better performance out of my 401(k) than out of a pension; if this holds true, then I’ll be able to retire when I’m old with a nice nest egg. If it doesn’t, then I’ll be in trouble—but given the current troubles with pension funds, I think I’m better off this way.
