In an era where employer-sponsored retirement plans like 401(k)s have become the norm, pensions are becoming an endangered species. Pensions are retirement plans that guarantee retirees a steady stream of income for life, with the employer assuming the investment risk. In contrast, 401(k) and 403(b) plans are defined contribution plans that require employees to assume investment risk and carefully manage their retirement savings.
Pension plans were once common across all industries, but economic pressures and changes in accounting rules have led many private companies to freeze or eliminate their pension plans. But there are still some bastions where traditional pensions survive. Here are some jobs that still offer this coveted retirement benefit.
government job
If your priority is a pension, a government job is the right choice for you. Many government agencies at the federal, state, and local levels still offer pension plans to their employees. This includes public school teachers, police officers, firefighters, and other public employees. Severance pay is typically part of compensation packages negotiated by public employee unions.
public works
Utility companies, such as electricity, gas and water companies, often still have pension plans in place. Because public utilities are regulated, some companies are able to maintain defined benefit pension plans.
Union
Particularly in industries like transportation, manufacturing, and construction, jobs covered by union collective bargaining agreements are more likely to include pensions as hard-won benefits.
army
Military members who have served for 20 years or more are eligible for a military pension, which provides retirement benefits for life.
some huge companies
Although rarer than in past decades, a small number of large companies still offer pension plans. These include some car companies, airlines, and other traditional businesses with high rates of unionization.
The appeal of pensions is clear. Annuities provide retirees with a reliable source of income that is not tied to market returns. However, the costs and risks associated with paying pension benefits are leading to their decline. For most workers today, a 401(k), IRA, or similar defined contribution plan is their primary employer-sponsored retirement plan, placing investment responsibility on their shoulders. Pensions, although in decline, still exist in certain professions, especially in the public sector.