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Currently work for municipality, 32k providing defined benefit pension - they are considering pension reform within next yr - i have been offered private sector position for 36k with no pension..which is financially a better avenue?

i have 1 yr in towards the 5 y vesting @ 32k salary - current pension 2.55% multiplier, 3% cola, i can purchase 5 yrs of past service for 17k which will go towards current plan before they change it -so i would have at least 6 yrs with these benefits then whatever they implement....new job has no retirement - i would have to self fund...but the pay is 36,500 - which is going to provide a better financial future ? will the $4k increase provide a private retirement funding? and if so - will it just be a wash financially ? and only really offer portability ?

Oct 07, 2012 by Lisa from Summerfield, FL in  |  Flag
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6 votes

Municipalities are stressed to the breaking point, in most areas. Because of this, they are doing everything they can to restructure their legacy costs/responsibilities. Of course, I would need a lot more specific information regarding your age, your current municipal employer and the prospective private sector position, before I could give a definative answer. Generally speaking, however, it seems the 'buy-in' is a bit expensive considering the multiplier and cola amounts. Any multi-year run of serious inflation will make these percentages seem trivial. If you are near retirement, then the offer seems to be reasonable. If you are 20 - 30 years from retirement, $4000.00 per year into a ROTH IRA could become a very nice 'nest-egg'. Please seek out a qualified Financial Advisor in your area to further advise you before making any decision.

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