Stay in Pension or go?

[Gina23]

My 1st reaction to your post was to wonder...how clear is your crystal ball? Will you continue with that state's employment for your entire career? Will pension plans years of service change in the next 33 years since the general life expectancy is increasing significantly? Is your state one of those more heavily indebted? Is that pension plan fully funded or is there a huge unfunded liability? Is there is not an insurance scheme in place to protect employees? Defined Benefit Pension Plans have nearly vanished except for public section, does this offer suggest state government is encouraging new hires to manage their own investments?

All great questions, thank you! That's the thing, my crystal ball is not clear due to the fact that I have 30 years yet to retire and it's unknown if I'll continue with state employment or if I'll live in Colorado that long. The funding for this plan being fully funded fluctuates, but it's not a government plan. I'm not sure about the insurance thing, but I am going to find out. This is a public secion plan and YES I AGREE - This choice that I have does suggest that state institutions are pushing employees out of PERA and that's exactly what I'm worried about.

It's already happened with the OP's seeing as she already has to contribute 2.75% more. How many more changes are to come?

I think the writing is on the wall honestly... It started at 8% while working here and in 6 years is going up to 10%. It will continue to go up, and as someone else suggested, this is money that is being managed for me in conservative funds. Being 33, is that the best place for my money right now?

What age do you have to be to draw on the pension? How much do you get? Is it 2% per year of service? Do you have a minimum? Are you grandfathered in or could your benefits could be cut in the future?

It's a sliding scale based upon years of service credits.... so if I put in say 28 years of service, I will get 80% a year of my highest average salary for the top 3 years of earnings. If I put in only 25 years, I'll get 70%... and so on. I'm fully vested as of this point, but again... the crystal ball is unclear, we're talking about the state of the economy and this pension plan in 30 years.

And an even BIGGER question, does the pension have a health care option tied to it?

No health care benefits are tied to the pension. And thank you for your number crunching equations, once again it's just very hard to 1) know what I'll be making in 30 years 2) know if I'll even be in Colorado or working for a public entity. There are a lot of blanks where the x, y, and z go. How I wish I could have a crystal ball!

Do you also contribute to SS if you are in the PERA plan? I assume you would be contributing to SS under to 401K plan.

No SS if you are in the PERA plan... yes I start contributing to SS if I pick the 401(a) plan. Yes I invest on my own heavily outside of PERA/other 401k rollovers up to around 30% of my salary per year. In addition to PERA, I have another 401(k) contribution option that I fund and fully fund my Roth 401(k) up each year.

Thank you everyone... I think the writing is clear... I would rather have the money and manage it myself and I'll more than likely go with the 401(a) and just let my existing service credits sit in PERA.

[jk120]

Thanks to Gina23 for starting this and to everyone who replied. I'm in a similar situation, given a one-time choice of staying with Colorado PERA or switching to the 401(a). The difference for me is I've only been on the job for around six months, so I haven't made many contributions to the pension plan. The questions and advice on here have been helpful, though I still have a lot to think about in the next few days.

[Gina23]

As an update for everyone... I did choose the 401(a) option and could not be happier. I continue to have many conversations with current and former colleagues whom have differentiating years of service credits with COPERA. I still very much feel as if I made the right decision. To add to the decision making process, one thing I didn't mention earlier in this post is that I was very close to having enough credits from a Social Security standpoint prior to making this decision from my prior work experience. If Social Security still happens to be around when I retire, I'm actually vested credit wise there at this point as well.