7 Reasons You Don't Have a Pension

Here’s why you probably won’t get a guaranteed retirement payout from your employer.

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Many workers on the verge of retirement with poorly funded 401(k)s wish they had a traditional pension. But few workers still have access to a retirement plan that will provide guaranteed payments for the rest of their lives. Less than a third (31 percent) of employees were offered a traditional pension at work in 2010, and only 28 percent participated, according to the Bureau of Labor Statistics. Here are few reasons why you probably won't receive payments from a traditional pension in retirement.

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No union card. Workers who belong to a union are significantly more likely to be offered a traditional pension at work. Some 82 percent of union members have access to traditional pensions, compared with 21 percent of nonunion employees. "Unions certainly will negotiate and have some ability to hang on to pensions through negotiations," says Jonathan Barry, a partner with Mercer's retirement risk and finance consulting group.

You're not a public servant. Top-notch retirement benefits are prolific in the public sector. A large majority of state and local government workers (84 percent) were offered a traditional pension in 2010, compared with just 20 percent of private industry workers. The public sector professions most likely to come with pensions include primary, secondary, and special education school teachers (96 percent), natural resources, construction, and maintenance jobs (87 percent), and the protective service (84 percent). "State and local governments, some federal government employees, and the military are the primary areas where they remain strong," says Olivia Mitchell, director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania's Wharton School.

You work for a small company. Large companies generally offer the most generous retirement packages. While 63 percent of employers with 500 or more workers offer traditional pensions, that proportion gradually declines to just 10 percent at companies with fewer than 50 workers. "Having a pension plan is a fairly complicated thing to do and you need some resources to be able to deal with it," says Barry. "A small company probably doesn't want to deal with all the hassle when they can sign up for a 401(k) plan fairly easily."

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You picked a pension-less industry. If you're looking for a pension plan in the private sector, consider working for a utility, where 82 percent of employees are offered traditional pensions. Other industries that continue to offer traditional pensions to workers include credit intermediation firms (57 percent) and insurance carriers (48 percent). The job least likely to come with a pension is food service (3 percent).

You job hop. Most pension plans are designed to reward long-term employees. If you don't stay with an employer until you are vested in the plan, you may not qualify for any payout in retirement. Even after you are vested, payouts will generally be pretty small unless you rack up decades of service with the same employer. "Most traditional pensions plans have a five-year vesting period," says Barry. "If you are hopping form job to job to job, even if you make it to vesting, you might only get a very small pension."

You don't work full-time. If you cut back to part-time work, you may no longer qualify to participate in the retirement plan. While over a third (36 percent) of full-time workers are provided with a traditional pension, just 14 percent of part-time workers are offered the same benefit. "Most people today will never remain with the same employer for their whole career," says Mitchell. "If you have a job change, if you stay home to have a family, if you work part-time, all those things will make you ineligible for a defined-benefit pension."

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You don't live in an area where pensions are prevalent. Employers generally aim to offer retirement benefits that are competitive with other companies in the same geographic area and industry. Private sector pensions are the most common in the middle Atlantic (26 percent) and northeastern (25 percent) United States. Workers in the southern United States are the least likely to have access to traditional pensions.