I've just been hired in a PA state system university and have to choose between SERS/PSERS (basically, pension) and ARP (basically, 403B).
Besides the fact that vesting takes 10 years in SERS/PSERS and immediately in ARP, I'm wondering whether I'd be more likely to do better financially in the pension-type or 403B-type retirement plan.
Any advice/experience would be much appreciated.
Pension or 403B?
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Re: Pension or 403B?
Impossible to answer which is more likely to do better. Check out the liability status of your pension and make sure that your 403b plan is low cost. I invested in both for 24 years and am a happy camper. I was able to retire a few years earlier than most because I had some bucks in my 403b to supplement my pension plan.Callalily wrote:I've just been hired in a PA state system university and have to choose between SERS/PSERS (basically, pension) and ARP (basically, 403B).
Besides the fact that vesting takes 10 years in SERS/PSERS and immediately in ARP, I'm wondering whether I'd be more likely to do better financially in the pension-type or 403B-type retirement plan.
Any advice/experience would be much appreciated.
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Check on how underfunded the pension is. You didn't state much details about the 403B, but I'm assuming you mean a percentage of your contributions will be matched if you choose it over the pension.
If pension is underfunded or if you don't see you self staying anywhere close to the amount of time it takes to be vested then the 403B makes sense. This is only assuming it has decent options and is not super high fee which many are.
If you might stay and you could transfer the pension contributions into an IRA then I would do the pension and in addition contribute some money to the 403B.
Post more specific info if you want better replies.
If pension is underfunded or if you don't see you self staying anywhere close to the amount of time it takes to be vested then the 403B makes sense. This is only assuming it has decent options and is not super high fee which many are.
If you might stay and you could transfer the pension contributions into an IRA then I would do the pension and in addition contribute some money to the 403B.
Post more specific info if you want better replies.
Never underestimate the power of the force of low cost index funds.
My brother teaches history in PA [at Kutztown]. He chose the 403(b) route instead of the pension in case a better deal came along from another school. You know, keep his options open. My dad and sis have done the same thing.
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Thanks much for your replies.
I am 40 and don't know how long I'll be here. At this point, I don't see it as being a short term job/have no plans to leave but I'm not adverse to leaving if something better came along.
If I left before vesting, I will take my own contributions plus 4% interest. I would assume that it could be rolled into an IRA. The formula is:
2% x Years of Service x final average salary x Early Retirement Factor (if applicable).
I have no idea what this means.
How do I check the liability status of the pension. Unfortunately, the 403b choices are high cost, ranging from .43 to .82 (although fortunately, without load). I get 9.29% from my employer in addition to my own contribution for my 403b.
I am 40 and don't know how long I'll be here. At this point, I don't see it as being a short term job/have no plans to leave but I'm not adverse to leaving if something better came along.
If I left before vesting, I will take my own contributions plus 4% interest. I would assume that it could be rolled into an IRA. The formula is:
2% x Years of Service x final average salary x Early Retirement Factor (if applicable).
I have no idea what this means.
How do I check the liability status of the pension. Unfortunately, the 403b choices are high cost, ranging from .43 to .82 (although fortunately, without load). I get 9.29% from my employer in addition to my own contribution for my 403b.
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- Posts: 1133
- Joined: Thu Apr 21, 2011 11:58 pm
Re: Pension or 403B?
My wife and I work at a university and were in a similar situation. We took the pension, but are also saving money through our 403b and 457 plans. The best of both worlds. The only issue that I see is the vesting period. If you plan to leave before the 10 year period you may be out of luck. We will probably retire in about 10 years and our pension will definitely provide more income than our tax deferred investments.Callalily wrote:I've just been hired in a PA state system university and have to choose between SERS/PSERS (basically, pension) and ARP (basically, 403B).
Besides the fact that vesting takes 10 years in SERS/PSERS and immediately in ARP, I'm wondering whether I'd be more likely to do better financially in the pension-type or 403B-type retirement plan.
Any advice/experience would be much appreciated.