Are you set for retirement without a pension?

Used to be, pension plans were the ticket to a less-stressful retirement. You work for a company for years and in return the company continues to provide a regular check for your golden years. Not so much anymore.

According to the Employee Research Institute, over the last three decades the share of private-sector workers in pension plans dropped from 28 percent to only 3 percent in 2008. During the same period, the share or workers enrolling in 401 (k)-type plans was up to 31 percent from 7 percent. Twelve percent were able to take advantage of both plans in 2008.

With a pension plan, known as defined benefit plan, the company promises you a certain income for the rest of your life based on the number of years you put in. With a 401(k) plan, known as a defined contribution plan, both you and your employer contribute to a tax-deferred savings account designed to supplement Social Security and a pension, if you have one.

As the AJC reports today, SunTrust Banks will freeze its employee pension plan at year’s end, following the examples of other companies trying to cut their costs. The freeze doesn’t mean SunTrust is getting rid of its pension plan, but the company no longer will take into account compensation earned after the end of the year in determining future checks.

How are you set for retirement? Will you be able to rely on a pension, 401(k) and/or Social Security without taking on another job? Are you looking at a life of toil?

71 comments Add your comment

KJ

November 18th, 2011
12:30 pm

If a freeze is the worst thing that happens to you, consider yourself lucky. My dad’s company looted his entire pension, and refused to pay out over half of his severance earned over 30+ years of service.

greedybosses

November 18th, 2011
12:49 pm

You expect anything different? How else can the ceo’s and cfo’s keep there huge bonuses and golden parachutes? lets balance the books on the backs of our employees while keeping the proftis for ourselves.

I used to listen to the BG's

November 18th, 2011
12:57 pm

While I never want to look a gift horse (defined benefit pension) in the mouth, I know that a defined contribution pension (401Kk), etc.) is far more sustainable by the company. That’s probably better in the long run – you know, working for a company that can actually stay competitive. At least I’ll continue to have a job.

You only have to look at the recent defined benefit pension problems that forced Jefferson County, AL (Birmingham) into municipal bankruptcy and Rhode Island into a comprehensive pension reform legislation to understand the need, particularly by municipal, state and federal governments, to move toward a defined contribution format.

Butch Cassidy

November 18th, 2011
1:28 pm

I’m curious. Did the ERI do a comparative study showing how much CEO Golden Prachute clauses have been reduced over the same time period?

economist II

November 18th, 2011
1:36 pm

All the CEO bonuses combined don’t equal what Obama spent, which was $800 billion, in two short months to “stimulate” the economy. Sure, the greedy CEOs took their loans and paid themselves for running their companies into bankruptcy, that goes without question. The question should be how do we stop spending on political programs that are masked as social programs….

CJ

November 18th, 2011
1:44 pm

@economistII: It was under Bush that the housing bubble expanded and then burst, causing our economic meltdown. Why didn’t he have a closer eye on the situation? What did he do to stop it? Obama is trying to clean up another man’s mess.

squirrelly

November 18th, 2011
1:55 pm

I am a former SunTrust employee, and SunTrust is a horribly managed, profit on the backs of the employees, top down company. It wasn’t always that way; ALL employees used to get yearly bonuses based on how the company did for the year, and then they did away with that about 10 years ago for the EMPLOYEES, but top execs still get huge bonuses every year. This is just the latest example of how employee un-friendly SunTrust is as a place to work. Over the last 10 years, SunTrust has degraded as a workplace, demanding more and more work out of the employees while figuring out a way to pay them less and less every year. Thankfully, I took my pension in a lump sum & retired this year before the SunTrust execs could loot that!

Tychus Findlay

November 18th, 2011
1:55 pm

If you’re not planning to foot your own retirement, don’t plan on retiring.

Um

November 18th, 2011
1:56 pm

CJ well you don’t clean up a mess by throwing #$%^& into the pile!

Nancy

November 18th, 2011
2:06 pm

Google “Ellen Schultz” and watch the many video clips on what she has found out about how companies are raiding pension funds. Using pension funds to provide for CEO golden parachutes, using pension funds to further increase executive pension plans, “dead peasant” life insurance plans on low level employees. Truly mind boggling.

joe

November 18th, 2011
2:07 pm

CJ, you need to look at WHO was running the organization that started the housing bubble crisis. It was none other than Barney Frank. He caused this by forcing Freddy and Fannie to advocate housing loans to unqualified people who could never afford the mortgages. DEM Barney Frank. End of story. You can’t blame Bush for that…so pin the blame where it’s due. And Obama trying to stimulate the economy with never ending spending is going to fix anything…it will things worse and therefore, he must be voted out next year for our country’s future.

jay

November 18th, 2011
2:08 pm

Once again, the rich screw up the economy and want to correct it on the backs of the
middle class. Are the ceo’s, cfo’s and board of director’s foregoing their bonuses, golden
parachutes, stock options? My guess would be no.

joe

November 18th, 2011
2:09 pm

oops, should be not going to fix anything…it will make things worse…

jay

November 18th, 2011
2:10 pm

Hey Joe. Did you learn about Fannie and Freddy’s history from their chief historian Newt Gingrich?

Reader

November 18th, 2011
2:14 pm

CJ, You people are wearying,Bush did try to clean it up but was assured by the great statesman Barney Frank that things were just fine.

Former ST employee

November 18th, 2011
2:38 pm

I worked at SunTrust for 11 years before my escape. It is horribly managed and they treat their workers terribly. I am surprised it has taken them this long to dump the pension plan. The insurance I have at my new company costs half as much and covers twice as much. SunTrust goes on these cost cutting sprees every few years but they do not do it with any forethought. Instead of investing in smart technology to create efficiencies, they cut people then double the workload of those that are left. SunTrust is so far behind in technology it will never catch up. How the IT management has kept their jobs is baffling.

GetAGrip

November 18th, 2011
2:38 pm

“Private-sector pensions are becoming less common as firms seek to control costs.”
Defined Benefit pensions were/are being suffocated out of existence by decades of well-meaning government regulation.

@CJ – You are a president/party off.

A book to read is “Reckless Endangerment” by Morgenstern and Rosner. Gretchen Morgenstern is a Pulitzer prize winning NY Times business reporter. The Bush administration inherited an out-of-control Fannie Mae/Freddie Mac, and struggled against a anti-redlining, pro-affordable housing, equal opportunity, Acorning, economic justice cabal to rein in progressively looser and more dangerous lending practices.

This book names names, along with dates and verbatim quotes. To help you keep up with everything, it begins with a “Cast of Characters”.
Included in the “Fannie Mae and Friends” section are Bill Clinton and Barney Frank. Our current Secretary of the Treasury, Timothy Geithner, leads off the “Feckless Regulators” section in his former role as the president of the New York fed.

old man

November 18th, 2011
2:52 pm

@Economist II

If you could go back in time and undo TARP and the Stimulus, you would do that? Really? When every economist on the planet (except, I suppose “Economist II”) is telling you that your failure to act will trigger the greatest economic meltdown in history? Thank God we did not have a President in 2009 with the tremendous “courage” you would have shown in the face of such unanimous pleading by the most prestigious intellects in the world. I guess we will never know exactly how bad things could be right now if there has been no Stimulus Bill, will we? Thank God for that too.

Truth

November 18th, 2011
3:11 pm

Instead of the Stimulus, why not give all Americans a tax holiday for 12 or 24 months. This would have let all Americans spend the “Stimulus” money in their local areas with no corruption issues such as Solyndra.
We don’t need to trust Government to know how to spend our money better than we can.

Truth

November 18th, 2011
3:15 pm

Be careful of putting too much of your money into retirement accounts such as 401k or IRA’s because the money is taxed when you take it out not what your rate was when you funded your account.
The government can raise the tax brackets with the stroke of a pen and make the retirement accounts very bad investments from a tax standpoint. Also, if both you and your spouse pass with a large amount in your retirment account then the Government counts it as income in the year of your death which could put you in a higher tax bracket than you ever were in during your working years.

gregory

November 18th, 2011
3:24 pm

Wanna bet a thou this not affect the upper management, that is what 99 is about, its all about these men who are clearly gods that run these corporations and the politicians live in a different world than the rest of us, politicians allowed to do inside trading? Warm up the tar, I have some chickens.

Ted

November 18th, 2011
3:27 pm

Why should we care after they start charging every fee under the sun (no pun intended)? $1 for check image!!! Let them go out of business!

Terri

November 18th, 2011
3:39 pm

EconomistII- I guess you MUST HAVE FORGOTTEN how the budget was balanced when Bush, Jr. got into office and within 90 days we were in the RED!!! It amazes me how racist pitiful people – such as yourself- want to blame President Obama for this jacked up economy…give me a break! He is trying to bail us out of the 8 very LONG-LONG years that Bush was President.

gregory

November 18th, 2011
3:44 pm

If corporations had to cut all of our pay for the new world economy then why has theirs grown by so much? Right wing losers love to yell about a Solar Company whilst they give gas companies billions every year in tax write offs, while they ripe us off again with gas going up for no reason, except greed from Wall Street. Its not the left or right, its all of them, they are bought off. The politicians are the pimps, the corporations are the Johns and guess show is the one’s that gets it?

Charlie The Tuna

November 18th, 2011
3:56 pm

I worked at Scientific-Atlanta for many years and the pension amount I had been set to receive was cut by 2/3 before I was able to start collecting, so I have advised my children to invest their retirement savings first in a Roth IRA up to the max, then only in a 401K up to the match if there is one, then in non-sheltered investment accounts they control. Everyone should keep their retirement accounts under their own control as much as possible, and away from the greedy, crooked, dumb-dumbs at their employers. Much as they would like you to believe otherwise, they are not the all knowing and caring masters of the universe they want you to believe they are.

mem

November 18th, 2011
3:57 pm

@Nancy, I saw her on John Stewart and it was truly mind blowing to hear what they have/are doing. Interestingly, I’ve not heard anybody else talk about her book.

GetAGrip

November 18th, 2011
4:08 pm

Ellen Schultz has been doing excellent reporting on pensions and other employee benefits for the Wall Street Journal for years.

Kady

November 18th, 2011
4:18 pm

I am a former SunTrust Employee – I bled Trust Company Blue. When I started, I loved working there. They cared about not only their employees but the community they were making money off of. Bud Gould is rolling over at the mess going on there now..Shame on you SunTrust management. I still own a red truck!

economist II

November 18th, 2011
4:26 pm

Terri you just showed that you are as ignorant as everyone else who doesn’t agree with the current admin by calling them a RACIST. I guess being as black as Mr Cain also makes me a racist.

zylepp

November 18th, 2011
4:48 pm

While I never want to look a gift horse (defined benefit pension) in the mouth, I know that a defined contribution pension (401Kk), etc.) is far more sustainable by the company. That’s probably better in the long run – you know, working for a company that can actually stay competitive. At least I’ll continue to have a job.

You only have to look at the recent defined benefit pension problems that forced Jefferson County, AL (Birmingham) into municipal bankruptcy and Rhode Island into a comprehensive pension reform legislation to understand the need, particularly by municipal, state and federal governments, to move toward a defined contribution format.
******************************************************************************
The AL BK was caused by kickbacks (2 in jail so far) on their new sewer system and had nothing to do with pensions!

Z

November 18th, 2011
5:25 pm

Phil Graham, a Republican was the politician who drew the bill up to do away with Glass Stielgal. Yes, Clinton signed that bill in December 1999 when all tricky bills that they want to screw the public with get passed. Clinton has said, signing that bill was a big mistake, I’ll say. Barney Frank was in the minority party until 2007 what could he do? On Video, on YouTube, you can see Bush saying he wants everyone to be able to buy a home.

When you have no regulations you will have problems, that’s just the way it is. Humans will always default to the dog eat dog mentality when they don’t have a master to watch over them. In other words unless you have rules and regulations in place there will always be those who will default to their worst. In the housing mess that transpired from 2000 to 2008 we had this fiasco created where almost everyone jumped on the wagon of destruction and the wheels fell off. Very sad situation not for just this country but the whole world as it turns out.
This mess came about long before Obama was on the scene. Thank Goodness we have an intelligent President in office trying his best to get this country turned around. It has not been easy, with no help at all from the majority Republican 112th congress but Obama hopefully will prevail in spite of this hateful congress. Vote smart come election time 2012 and remember do not vote against your own self interest.

GetAGrip

November 18th, 2011
6:23 pm

@Z
Fannie Mae lit this candle in the 90’s under Clinton’s watch – Community Reinvestment Act ring a bell? Acorn? Redlining? Clinton drove the ‘homeownership for all’ bandwagon.

@zylepp – Yes, what you said. Jefferson County’s/Birmingham’s bankruptcy is a tale of interest swaps/derivatives gone wrong; it is not pension-related.

Esquatisha

November 18th, 2011
8:40 pm

The key to a financially successful retirement is to have NO DEBT. If you enter retirement debt free you don’t need a huge pension to sustain yourself. I still see retired seniors struggling with six figure mortgages – just insane.

Already Done

November 19th, 2011
6:03 am

Obama will take care of me, right?

TrustCompany Blue(many years at SunTrust)

November 19th, 2011
9:43 am

Let’s face it. Traditional pension plans are not sustainable so what SunTrust is doing here is reasonable. That being said, SunTrust is a company that’s been managed into the ground over the past decade. This used to be one of the best companies to work for in Georgia, and at one time I would even argue it was one of the best banks to work for in the country. The company once treated its employees as family and its employees returned the favor. The culture of the place really started to change about a decade or so ago when some greedy executives decided to start throwing hundreds of their IT employees to the curb and replacing them systematically with cheap labor from India while being paid large bonuses for doing so. What was done was criminal for all intents and purposes and it helped to ruin what was once a great company. The company showed it could care less about its employees, and the feeling of employees toward the company’s leadership was degraded to the point where few cared anymore to go the extra mile. Once you ruin the culture at a great company, it’s only a matter of time before that company is as far from being great as one can imagine. That’s the story of SunTrust. But it’s no different than the story at so many once great companies.

Tom Saunders

November 19th, 2011
10:35 am

All of you that continue to attempt to exculpate Barney Frank and his fellow Democratic cronies from being ground zero of this housing mess are ideologically delusional. You are so delusional that you don’t have a frackken clue that in offering your pathetic excuses you continually highlight your own inability to absorb information – which has pretty much been the case since you skipped the punctuation classes in the 4th grade. As far as CEO bonuses go, take back the massive payouts to Franklin Raines (google him as I sure you don’t have a clue who the man is) and then lets talk.

Now, get back to uttering some idiocy like “People before Profits” or some such other blather.

roughrider

November 19th, 2011
11:03 am

Don’t be bitter about losing your pension. Someone has to pay for the bailouts,TARP, Bush’s War in Iraq and his tax cuts. Surely you don’t expect the rich to pay.

Old Timer

November 19th, 2011
11:26 am

I’ve been drawing my pension for 14 years. I got out while the getting was good, before the company froze pensions, stopped offering them to new employees, got into financial trouble, and then had to merge with another company and offer pathetically small fringe benefits. The new merged company, however, is still offering large bonuses and deferred plans to top execs. My early retirement allowed me to latch on with another company, and as a result I’ll be drawing a second pension in a year. Coupled with savings, a 401k plan, Social Security, Medicare, and health insurance I’m allowed to carry into retirement, my retirement benefits will be adequate.

The campaign to stop defined benefit plans began in the 80s, and it continues to this day, with astounding success. The unbridled greed of the Reagan and Bush I years led to the practice of regarding employees as “resources” to be treated as any other resource—disposed of whenever practicable and rewarded minimally. I feel a great deal of pity for younger and middle-aged employees, some of whom have even accepted this BS that companies cannot “afford” defined benefit plans and thus are justified in pension freezing, downsizing, right-sizing, perpetual reorganizations, and other antics designed to reward top executives and dispose of every employee possible. They’ll never know what it was like to work for an employer in a situation where employees are valued and regarded as members of a team.

Pension?

November 19th, 2011
11:37 am

What’s a pension? I’m 34. My (global) company quit matching 401k contributions three years ago. I will not receive ANY of the Social Security or Medicare that is stolen from my paycheck. Retirement? Ha! For my generation there isn’t going to be any retirees!

zeke

November 19th, 2011
11:39 am

having worked for banks while going to undergrad and grad school years ago, it was easy to see the game….first efficiency experts made operations run smoother, then middle management squeezed some more and after thinning out working ranks, the big boys then thinned out the middle management ranks…with the guys at the top patting themselves on the back and in the wallet for their great efforts……truth be told these guys at the top could be replace almost as easily as the worker and mid manager bees…yet they really make the big bucks and get to keep pensions….but in truth they are just overhead

2012 can't get here soon enough

November 19th, 2011
11:52 am

Obama is nothing but a train wreck. Anyone else would be better than this loser.

It’s hilarious reading political blogs at the ajc… obama supporters only know how to point fingers. Oh look, McDonald’s is to blame for this mess, PILE ON!

yuzeyurbrane

November 19th, 2011
11:52 am

Thanks for column. About time. Both fixed benefit pensions and 201k’s (before 2008, they were 401k’s) are vastly overrated. Only your “financial advisor” is guaranteed a secure retirement from these. Additionally, our pals who brought us the 201k’s are trying to get the SS action for themselves (i.e. privatize). There has been class warfare for some years and essentially the middle class has lost. Argentina here we come.

Obama can we have our stimulus back you moron

November 19th, 2011
11:55 am

Occupy the White House… with somebody else.

Hope for change to bankrupt us?

November 19th, 2011
11:58 am

Hey Obama-

The democrats are so brainwashed they think you’ve actually been doing a great job. Sure, I guess we are just dreaming all this.

Signed,

Everyone you have screwed since you have been elected

Obama is just following the European model

November 19th, 2011
12:00 pm

Give the Pres a break-

He doesn’t know what he is doing. He doesn’t care either. More Solyndra scandals please… we’ve got money to burn.

Hey Democrats

November 19th, 2011
12:03 pm

What is it that Obama has done well?

Or are you are just waiting for the results?

I guess we’ve got time to wait eh?

Oh yeah. We don’t.

Blaim it on the rain.

November 19th, 2011
12:16 pm

Keep blaming Obama. Keep blaming Bush. Keep blaming Repubs. Keep blaming Dems. Meanwhile, politicians on both sides are laughing all the way to the bank.

Brian

November 19th, 2011
1:10 pm

All pensions should be frozen and all new ones outlawed. People should take care of themselves and not depend on the government or their company.

Prof

November 19th, 2011
1:10 pm

I will probably attract your scorn by relating my story, but I don’t care.

I am one of those public school/college/University teachers who managed to get along on a modest salary for more than a total of 30 years, but always on the general understanding that one gave up the big salary for the benefits, including a solid retirement income. Public policemen and firemen also are in my situation. My family has always lived frugally: a bungalow we’ve lived in for 25+ years, no travel vacations, and no debt when I retired last Spring either.

And now we live nicely on my benefits from a defined benefit pension from TRS. In addition, Georgia does not require retired public school employees to pay state income tax; and of course I don’t have to make Social Security payments now either.

The ancient Latin writer Aesop had some great animal fables that seem relevant here: the tortoise and the hare, the ant and the grasshopper…..

Political Mongrel

November 19th, 2011
1:18 pm

Georgia doesn’t require retired public school employees to pay state income tax? In what universe? I’ve had Georgia taxes taken out since my retirement, have paid my taxes, and have most certainly NOT been getting all my state taxes back. It may be true past a certain age, but it’s not true for all PS retirees.

Pension plans where the company properly budgets for and takes care of its pension obligations most certainly can be run properly and stay solvent. But plans where companies refuse to take care of their obligations (often deliberately to torpedo their plans and their workers) will fail. The fault is not in pensions themselves. The fault lies with employers who’re happy to cheat their employees in the name of higher profits and compensation for their executives.