In this article, we will look at 15 jobs that still offer traditional pensions while exploring the changing landscape of pensions in the U.S. We will also look at companies and industries which have pensions as a part of their compensation package for their employees. If you want to skip our detailed analysis, you can head straight to 5 Jobs That Still Offer Traditional Pensions.
Retirement is often envisioned as a chapter of life filled with relaxation, fulfillment, and the freedom to pursue passions long put on hold. Yet, retirement plans in the U.S have faced unprecedented challenges. Economic volatility, shifting employment landscapes, and lingering uncertainties have compelled retirees in the United States to reevaluate their post-retirement lives.
Where are the golden traditional pensions in the U.S Today?
Defined-benefit plans or traditional pensions, once common in the private sector, have largely been replaced by defined-contribution plans like 401(k)s. Only 15% of private-sector workers currently have access to defined-benefit plans. Defined-contribution plans are preferred by companies due to their lower cost and complexity compared to pension plans. This shift has placed the responsibility of saving and investing for retirement on employees.
On the other hand, in defined-benefit plans, employers funded the plan, and employees received a predictable monthly income in retirement. However, estimating pension liabilities became complex for companies, and funding these plans from corporate earnings affected profits.
Many companies opted to freeze or eliminate their pension plans and transition to defined-contribution plans. Employees now bear the investment risk and are responsible for managing their retirement savings through options like 401(k)s or IRAs. Thus, the importance of personal savings, tax-advantaged retirement plans, wise investment choices, and prudent spending is emphasized today to achieve a financially secure retirement.
COVID-19 Sparked ‘Unretirement’ Trend
Given the hard time the retirees face in the absence of a traditional pension, the number of people working past retirement age has been steadily increasing. In the US, 32% of individuals aged 65 to 69 were still employed in 2017, compared to 22% in 1994. Similarly, in the UK, employment rates for individuals older than 65 doubled between 1993 and 2018.
During the COVID-19 pandemic, there was an initial exodus of older professionals from the workforce, with at least an extra 250,000 50-to-64-year-olds leaving their jobs in the UK and over 3 million Americans retiring early. However, inflation and financial concerns have led to a rise in the number of people “unretiring.” In the US, Indeed.com reports that “unretirement” levels are currently at 3.3%, higher than the sub-3% average since 2017.
In the UK, there has been a surge in 55-to-64-year-olds urgently seeking work, and two-thirds of people who retired during the pandemic expect to continue working in some capacity. These numbers reflect the changing landscape of retirement and the increasing need for older individuals to work beyond the traditional retirement age.
Do All Retirees Want to Work After Retirement?
Labor economist Teresa Ghilarducci suggested that coaxing retired workers back into the workforce could alleviate labor shortages, particularly in industries like healthcare and childcare. However, many employers are reluctant with it, with age discrimination leading to increased layoffs of older workers and their higher salary demands. Also, some retirees may simply have no intention of returning to work.
The trend of higher retirement rates among baby boomers has been ongoing, but the pandemic has brought it into sharper focus, revealing long-standing labor force trends that have been slow to be acknowledged. You can read more about the problem of labor shortage in the US in our list of the biggest issues in America and the companies working on solving them.
Hence, for many who are unable or unwilling to work after retirement, pensions serve as a critical lifeline, providing financial stability and support during their non-working years. These individuals rely on pensions to meet their basic needs and maintain a decent standard of living, especially when they may face limitations or health challenges that prevent them from engaging in employment
It has also been reported that 75% of retirees are failing to meet their retirement income goals. In the US, while Social Security provides a safety net, the average yearly payment of $21,968 covers only a fraction of retirees’ expenses. Additionally, most retirees have limited personal savings, with a median total savings of $54,300 and income from savings averaging $1,814. In contrast, retirees with pensions enjoy greater income security, as the median pension income for those aged 65 and older is $10,606, contributing significantly to their overall financial well-being.
Pensions also have a broader impact on the economy, as they represent the world’s largest source of capital, with approximately $25.8 trillion invested. However, the cost of providing pensions in tax subsidies amounts to $332 billion, demonstrating the significance of this benefit. These figures underscore the importance of pensions in supplementing Social Security, providing retirees with a more comfortable income, and contributing to the overall stability and growth of the economy.
Although remote jobs with pensions are rare, there are easy part-time retirement jobs that pay well with remote positions that many retirees may consider, as traditional pensions seem to be fade.
What Industries Still Offer Pensions?
Firstly, in the public sector, government jobs at the federal, state, and local levels provide defined benefit plans, such as the Federal Employees Retirement System (FERS) for federal employees. Secondly, military personnel can receive retirement pay after serving for a minimum number of years, typically 20, along with additional benefits from the Department of Veterans Affairs.
Thirdly, the utility sector, including electric, gas, and water companies, often negotiate pension plans for their unionized employees. Lastly, in the education sector, colleges and universities offer pension plans to faculty and staff, although a shift towards 401(k) plans has been observed.
As far as companies are concerned, Accenture plc (NYSE:ACN), Shell plc (NYSE:SHEL), and PepsiCo, Inc. (NYSE:PEP) are some of the biggest companies that offer pensions.
In 2022, Shell plc (NYSE:SHEL) rewarded its employees with an 8% bonus as a testament to its robust financial performance and remarkable profits resulting from the increased prices in the oil and gas industry. This gratifying gesture was extended to the majority of Shell plc (NYSE:SHEL)’s extensive workforce of 82,000 employees across the globe, demonstrating the company’s focus on employee benefits.
Moreover, PepsiCo, Inc (NYSE:PEP) has made changes to its retirement savings plan for certain hourly employees. Started from January 2023, PepsiCo, Inc (NYSE:PEP) contributes an additional amount of money to their 401(k) plan. The exact amount of the contribution is between 6% and 8% of the employees’ pay.
Let’s now go to our list of jobs that still pay traditional pensions.
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Methodology
Our methodology for listing 15 jobs that still offer traditional pensions is based on assessing industrial stability. Further, we conducted thorough research using reputable sources such as relevant Subreddits on reddit, and Quora discussions to assess what employees have to say about these jobs on the ground.
By analyzing industries with a long-standing history of providing pension benefits to their employees, we aimed to identify sectors that have consistently demonstrated their commitment to retirement security. This approach allowed us to curate a list of jobs that offer pensions.
Here is a list of 15 Jobs That Still Offer Traditional Pensions:
15. Public transit operator
Public transit operators in the United States may have access to traditional pensions, depending on the specific transit agency and its policies.
Many public transit agencies in the United States, such as Metropolitan Transportation Authority (MTA), Chicago Transit Authority (CTA), and San Francisco Municipal Transportation Agency (SFMTA), offer retirement plans that include traditional pensions for their transit operators. These defined benefit pension plans ensure a guaranteed retirement income based on years of service and salary.
14. Police officer
Police officers often receive traditional pensions, for the purpose to attract and retain qualified personnel for demanding and risky jobs. As public sector employees, their pension plans are typically part of government benefit packages. Pensions provide a stable and secure retirement income, ensuring financial security for police officers who dedicate their careers to protecting and serving their communities.
13. Firefighter
Similar to the case of police officers, given the nature of their work, which involves protecting lives and property in emergency situations, traditional pension plans provide firefighters with long-term financial security and stability during retirement. These pensions are typically part of government benefit packages and help ensure the well-being of firefighters who selflessly serve and protect their communities.
12. Teacher
Teaching is a critical profession that requires specialized skills and knowledge. Traditional pension plans serve as a significant incentive by providing teachers with a reliable and secure retirement income. The majority of public school teachers, approximately 90%, are enrolled in defined-benefit pension plans. These plans calculate a teacher’s retirement benefits using clear formulas that consider factors such as their salary and years of experience.
11. Airline pilot
Airline pilots in the US receive traditional pensions for the acknowledgement of their long-term commitment to the profession. Retirement values for a 35-year career as an airline pilot at major US airlines can vary between $1.8 million and over $3 million. When a defined benefit program is in place, retirement benefits are typically estimated at 7.5 percent of the program’s value. Alternatively, retirement benefits can be estimated at 3% of the pilot’s final annual salary.
10. Doctor
Doctors in the US are often provided traditional pensions as a means to recognize their dedication to the medical profession and incentivize long-term commitment. While doctors do earn higher than average salaries during their careers, pensions serve as a valuable retirement benefit that ensures their financial security and rewards their years of service and contributions to the noble sector of healthcare.
9. Nurse
Nurses are mostly part of the defined benefit (DB) pension plans, which are the “gold standard” of pensions as they guarantee a specific retirement allowance based on a predetermined formula. With the assurance of a promised amount, nurses typically have excellent retirement plans that provide financial security after their retirement. It is also a highly sought-after option for Part-time Retirement Jobs that Pay Well, given the high salaries they make on average. It is one of the best jobs with pensions.
8. State and Local Government Employee
Government jobs are prominently among the jobs still offering traditional pensions. In fact, close to 86% of state and local government employees in the United States are eligible for traditional pension plans. These plans remain prevalent within the government sector, both at the federal and state/local levels. While some state and local governments have transitioned to defined contribution plans, defined benefit pensions are still widely available for new government employees. Union government workers are more likely to have access to pensions compared to nonunion employees.
7. Utility workers
According to data from the Bureau of Labor Statistics (BLS), around 76% of utility company employees in the US receive pension coverage. While some utility companies have closed their pension plans to recent hires, they continue to provide pension benefits to existing workers. The presence of unions in many utility companies plays a role in preserving pension plans.
Duke Energy Corp (NYSE:DUK) and NextEra Energy Inc (NYSE:NEE) are two big names in the US associated with utility sector that offer generous retirement pension plans to their employees.
6. Railroad worker
Railroad workers in the US, specifically those employed by companies under the Railroad Retirement Board (RRB), are eligible for traditional pension benefits through the Railroad Retirement system. This system provides retirement, disability, and survivor benefits to qualified railroad employees and their families based on their years of service and earnings.
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Disclosure: None. 15 Jobs That Still Offer Traditional Pensions is originally published on Insider Monkey.