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Millions of Workers Are in the Dark About Their Pensions


People with pensions are planning for retirement in the dark.

Many of the 42 million  U.S. workers still lucky enough to be in traditional pension plans are counting on them in retirement – but they don’t know much about those benefits, including how much they’re worth, according to a study that Fidelity Investments, which services plans for more than 4 million participants, released last week.

More than two-thirds of more than 500 workers surveyed said they do not have detailed knowledge of how their pension plans operate, but more than half said they are counting on those pensions to help pay for living expenses in retirement.

Nearly one-third said they don’t know their plan’s vesting schedule, 40% don’t know what their payment options will be when they retire or leave the company, and 27% don’t know at what age they can start getting payments.

Those statistics are a “red flag” that companies need to do a better job educating workers about the value of the benefit, says Wendy Foster, senior vice president in Fidelity’s defined-benefit business.

If you’re reading this and realizing that you don’t know much about your pension, it should be easy to learn more. Most of that information is now accessible online, along with tools calculating different payout estimates based on your retirement age. You may have to track down how to get to it through your benefits department, however. Following passage of the Pension Protection Act of 2006, employers are required to send a notice to employees once a year that the information is available, Ms. Foster says. So, you should be getting at least one form of communication each year about your pension.

And what if you’re realizing you’ve lost track of a pension from a previous job? A publication on the website for the Pension Benefit Guaranty Corp. has a publication titled, “Finding a Lost Pension,” offers strategies for finding it.

One bright spot: Workers are finally getting the message that, for many people, it makes more sense to choose to receive regular payments throughout retirement rather than taking a lump sum that the retiree is then responsible for making last. More than half of the workers surveyed – 56% — said they expected to get regular “annuitized” payments when they retire. Only 10% plan to take lump sums, and 9% expect a combination of the two.

“There’s been a mental shift,” Ms. Foster says. “With the uncertainty of the markets, it’s created a new recognition of the value of annuity payments.”

Are you covered by a traditional, defined-benefit pension plan? If so, do you think it’s hard to get information about it from your employer?


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.