A traditional pension plan provides a steady income to former employees. Once retirees meet the job tenure and age requirements, they receive regular monthly payments throughout their lifetime. A minority of private industry workers (18 percent) participated in a traditional pension plan through their jobs in 2015, according to Bureau of Labor Statistics data. However, a few career fields continue to offer traditional pension plans. Here’s how to get a job that will provide you with a stream of payments in retirement.
Get a government job. Among state and local government workers, 84 percent had a traditional pension plan in 2015. Primary, secondary and special education teachers enjoy almost universal (98 percent) traditional pension plan coverage. Members of the protective service (86 percent) and those employed working with natural resources, construction and maintenance (90 percent) also enjoy strong rates of pension membership. Government workers involved in health care and social assistance (68 percent) or who teach at colleges, junior colleges and universities (77 percent) have slightly lower rates of pension coverage, although still much higher than in the private sector. Government employees in the Midwest (79 percent) are less likely to have traditional pension plans than public employees in the rest of the country.
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Join a union. A union card just might be your ticket to better retirement benefits. Unions negotiate with company management for better retirement benefits for their members. That’s why 72 percent of union members continue to enjoy traditional pension plans, compared to just 13 percent of nonunion employees. Collectively bargaining for better retirement benefits often yields better results than negotiating on your own.
Work for a big company. Large employers are much more likely to provide a traditional pension plan than small businesses. Among firms with 500 or more workers, 43 percent have a traditional pension plan. Only 21 percent of employers with between 100 and 499 workers provide a pension, and it drops to 8 percent among companies with fewer than 100 employees.
Join a very small firm. Most small businesses don’t provide traditional pension plans to employees, but the exception is ultra-small companies with five or fewer employees. Sometimes small groups of professionals, such as doctors, dentists or lawyers, will set up a pension to defer some of their compensation for retirement.
Move to the Northeast or Midwest. Jobs in the Northeast and Midwest are more likely to provide traditional pension plans than employment opportunities in the West and especially the South. The Middle Atlantic region has the highest rate of traditional pension coverage, with a quarter of private industry workers eligible for a pension.
Join the management track. Managers, especially those who work in business and finance, have better retirement benefits than most other occupations. Some 30 percent of private-sector employees in a management role have a traditional pension plan.
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Work full time. Many pension plans are closed to part-time workers. While 22 percent of private-sector full-time employees have a pension plan, just 9 percent of their part-time counterparts are eligible to participate.
Earn a large income. Over a third (36 percent) of workers in the top 10 percent of the income distribution also have a traditional pension plan. Only 6 percent of people in the bottom quarter of the earnings distribution enjoy the same level of retirement security.
Carefully consider your profession. A few specific industries are especially likely to maintain traditional pension plans. The majority of employees who work for utility companies (78 percent) have pension benefits. Also, just over half (51 percent) of people who work for credit intermediation firms have pension plans. Other industries with above average rates of pension coverage include insurance carriers (48 percent), information services (47 percent), transportation and warehousing (34 percent) and manufacturing (27 percent). Leisure and hospitality jobs (3 percent) and especially food service (2 percent) are the least likely to provide retirement benefits.
Stay at the same job for much of your career. Working at a firm that provides a traditional pension plan doesn’t mean you will get payouts in retirement. You will likely need to work for a specific number of years for the same employer before you qualify. If you change employers, you might not qualify for any retirement payout at all, or only a very modest one. Most pension plans are set up to provide the biggest rewards to people who spend decades with the same employer.
Marry someone with a pension. If you are or were married to someone who vested in a traditional pension plan, you may qualify for traditional pension payments, even if your spouse with the pension passed away. Traditional pension plans are required to provide qualified joint and survivor annuities to spouses. However, over a third of married couples with pensions opt not to receive a spousal survivor benefit, often to get higher monthly payments in the short term, according to a GAO report.
[Read: How to Find a Lost Pension Plan .]
Create your own pension. If you have some savings, you can create a stream of retirement payments using an immediate annuity. This insurance product provides payments that are guaranteed to last the rest of your life. However, they’re also known for fees, complicated mechanics and the risk that the insurance company could go out of business.
Adapted from “Pensionless: The 10-Step Solution for a Stress-Free Retirement” copyright 2016 by Emily Brandon and published by F+W Media, Inc. Used by permission of the publisher. All rights reserved.
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A Guide to Getting a Pension originally appeared on usnews.com
