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My companies pension plan used to be defined benefits. It varied with pay, years of service and age. It was all rather murky, and heavily weighed towards accuring lots of benefits as one got older. As a young worker, I didn't worry about it too much.

However a few years ago, the company decided they wanted to switch to a cash balance plan. That is, you'd get a statement showing exactly how much you had. Also, the new plan would contribute a % of ones pay to the cash balance every pay period. It was to start out at 5% annually and climb incrementally to 8%. Much more straight forward, but all really one way of the company avoiding the rapidly escallating cost of the old plan.

Anyhow, I'm in the 8% bracket and felt a little smug since many people have few years than myself and are getting only 6 or 7%.

Well, I checked out another companies pension plan (I was looking to switch companies) and found that they will promise 1.5% of your pay for every year of service (5 years needed for vesting). On the surface, the other company sounded cheaper, but then I did the math an figured out that as long as you live more than 6 years in retirement, the new company's plan is a lot better. Still, I haven't jumped ship, but if an offer comes in I may.

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