How to Negotiate a Pension
Pension plans are an employee benefit program that, depending on the employer, might be negotiable. The plan is a way for employees to have retirement funds by allowing their employer to deposit a portion of their income into the plan along with contributions from the employer. Upon retirement, the employee receives payments from the pension plan. The payment amount depends on the pension plan's type. If the plan is a defined benefits plan, the retired employee receives a guaranteed monthly payment. If it is a defined contribution plan, the employer matches a portion of the employee's contribution while he is working but does not guarantee the monthly retirement payment amount.
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Instructions
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Negotiate your vesting in the plan. Vesting refers to the amount of time you must work for the employer to be eligible to receive the portion of the fund that the employer contributed on your behalf. Typically, in a defined contribution plan, the employee reaches total vesting in three to five years. Make a deal with your employer where he commits his total contribution to your plan sooner than he normally does. If the plan is a defined benefit plan, the employer bases the employee's vesting on a percentage. For example, after two years, the employee might receive 20 percent of the guaranteed payment. Talk with the employer about paying a larger percentage sooner than the normal schedule allows.
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Discuss with the employer the possibility of him matching your contribution at a higher rate than is typical for his plan. In a defined contribution plan, the employer matches the employee's contribution up to a set percentage of the employee's wages. According to CNN Money, the percentage is typically around 6 percent. Negotiate with the employer to receive a larger percentage than he currently pays. For example, if the employer typically matches any contributions up to 4 percent of his employee's pay, ask him to match yours up to 6 percent.
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Talk with the employer about increasing the amount of time you can buy back. Buy back plans for pensions allow employees to pay extra money into the plan to gain retroactive work time. For example, if you pay extra money into the plan to cover three years of contributions, you can retire in 17 years and your monthly pension payment reflects 20 years of service. If the employer limits the available buy back time for his employees, or doesn't allow buy backs at all, negotiate with the employer to gain permission to purchase extra years.
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Tips & Warnings
Reading the employer's plan description and details will help you know what parts of the plan you want to negotiate with the employer.
The employer may be unwilling or unable to negotiate his pension plan depending on the requirements of the plan's manager.
