In a time when traditional pensions might seem like a relic of the past, there are still some jobs with pensions out there. Pensions ensure a steady income in retirement, giving peace of mind and financial security after years of hard work. While many employers have shifted to 401(k) plans and other defined contribution options, some sectors continue to offer pensions, making them attractive to job seekers who prioritize long-term financial stability.
Which job gives the best pension? Here are the top seven jobs that offer pensions, in case you want to change to a career path that can provide this valuable retirement benefit.
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What is a pension and how can you get one?
Everyone reaches a stage in life when they start caring about old age. This moment comes when you realize you don’t want to work forever and begin questioning your productive timeline. You start making calculations and estimating what your income will be when you're around 70. Then reality hits, and it can be a little scary.
So you start thinking about pensions. A pension is a retirement plan where an employer contributes to a pool of funds set aside for an employee's future benefit. The funds are invested on the employee's behalf, and the employee receives regular payments upon retirement.
These payments are typically based on factors such as salary history and length of employment, providing a predictable and stable income during retirement.
To receive a pension, you generally need to work in a job that has a pension and meets certain criteria, such as years of service and age requirements. So, what jobs have pensions? They are more common in the public sector and certain industries, such as education and utilities, where long-term employment is prevalent.
The three magic numbers: pension calculation
Getting a job with a pension is the first step, but it is not all. Pension calculations can vary depending on the plan's formula, but they generally consider three main factors: years of service, average salary, and a benefit multiplier.
Here's a basic formula used by many jobs with pension plans:
Annual pension = Years of service × Average salary × Benefit multiplier
Years of service: The total number of years you have worked for the employer.
Average salary: Often calculated based on the highest earnings during a specific period, such as the last five years of employment.
Benefit multiplier: A percentage that represents the portion of your salary you'll receive for each year of service, typically ranging from 1.5% to 2.5%.
For example, if you worked for 30 years in a pension job, had an average salary of $60,000, and the benefit multiplier was 2%, your annual pension would be:
30 × $ 60,000 × 0.02 = $36,000
This means you would receive $36,000 annually in retirement.
How does the benefit multiplier work?
This number, which represents the percentage of your salary you’ll receive for each year in a job with a pension, is typically determined by your employer or the pension plan administrator and can vary based on the type of job, the industry, and the specific plan.
For example, if you have a benefit multiplier of 2%, this means that for every year you work, you’ll receive 2% of your average salary as your annual pension benefit. Therefore, a higher multiplier means a higher annual pension.
The benefit multiplier can differ significantly based on the industry and specific pension plan:
- Public sector: Government jobs with pensions often have higher benefit multipliers, typically ranging from 2% to 2.5%.
- Private sector: The benefit multiplier may be lower, often between 1.5% and 2%. However, some unionized industries, such as manufacturing, may offer higher multipliers.
- Military and uniformed services: These jobs can have higher multipliers to compensate for the physical demands and risks associated with the work. It’s not uncommon to see multipliers as high as 2.5% to 3%.
7 jobs with pensions to consider
By choosing careers with good pensions, you can enjoy peace of mind and a stable income after years of hard work. The good news is that several careers still offer this valuable retirement benefit.
Here's a list of the best jobs with pensions that represent the most viable and beneficial options, based on several factors such as the prevalence of pensions in the sector, stability of the industry, considering a mix of public and private sector, among others.
To compile this list, we relied on credible sources and resources that provide insights into which professions still offer pensions and the benefits associated with them.
1. Public school teacher
Public school teachers often receive pensions through state-run retirement systems. These pensions are typically based on years of service and final salary, providing substantial retirement benefits. Teachers usually have other benefits like health insurance and job stability.
2. Police officer
Police officers usually qualify for pensions through their municipal or state retirement systems. These pensions can be quite generous, reflecting the demanding nature of the job. In many cases, they can retire earlier than workers in other professions, often after 20-30 years of service.
3. Firefighter
Like police officers, firefighters often receive pensions from municipal or state retirement systems. Given the physical and stressful nature of the job, firefighters typically have the option to retire earlier, with a pension based on their years of service and final salary.
4. Government employee
Federal, state, and local government employees are commonly eligible for pensions. These jobs offer a range of positions, from administrative roles to specialized technical jobs, all providing the stability of a pension plan. Government pensions are known for being robust and reliable.
5. Utility worker
Fifth on the list of jobs with good pension plans are the employees in the utility sector, such as those working for water, electric, and gas companies. These jobs can range from engineering positions to maintenance roles, and they typically offer competitive pensions to ensure financial security in retirement.
Interested in this field? Read this next: 20 Highest Paying Blue-Collar Jobs (And How to Get One)
6. Nurse
Some hospitals and healthcare facilities offer pension plans to their nursing staff. Nurses who work in these environments can benefit from a pension that rewards their years of dedicated service and critical work.
7. Unionized manufacturing worker
They often have access to pensions negotiated through their unions. These pensions can be quite substantial, providing a stable income after years of physically demanding work. Industries such as automotive and aerospace are known for offering strong pension benefits to their workers.
So, are jobs with pensions worth it? Definitely! As you consider your career options, think about the long-term benefits of a pension. It could be a critical factor in achieving a comfortable and secure retirement.