RETIREMENT PENSION PROJECTIONS
American Pension and Retirement Services helps educators, public employees, and their families with pension planning and education.
Retire at 100% of your last year's income- not 60%.
American Pension and Retirement Services provides all pension members and their families with a FREE state pension report. Click the link below for a Pension Report and an APRS pension specialist will email you to educate you on your individual pension benefits.
HOW DO PENSIONS WORK?
A pension is a commitment on the part of an employer to provide retirement benefits. The employee (member) defers a portion of his or her salary that the employer holds in trust. That money grows over time and is paid to the member after he or she retires in the form of monthly payments payable for life.
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A traditional pension is a "defined benefit" (DB) pension. Under a DB plan, the amount of the retirement benefit is based upon a formula that includes the member's final salary and years of service (also known as "service credit").
The amount of the pension is not based on the value of the member's account. In addition, DB pensions are payable for life; the member can never outlive his or her pension.
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A different type of retirement plan is a "defined contribution" (DC) plan, such as a 401(k) plan in the private sector. Under a DC plan, the future retirement benefit is based upon how much the participant contributed and the earnings made on those contributions.
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PENSION MEMBERS RECEIVE AN AVERAGE RETIREMENT PENSION. A PENSION BENEFIT IS ONLY A PIECE OF THE RETIREMENT PIE.
Many teachers get paid average salaries, making pensions an essential driver for educator recruitment and retention. Pension is not 100% of the retirement pie. APRS takes the time to educate you on how much of the pie your pension will provide you. This information is essential when reviewing your retirement income.
Differences Between Defined Benefit
and
Defined Contribution:
Two key differences exist between a traditional defined benefit (DB) pension and a defined contribution (DC) plan:
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Investment Risk:
Under a DB plan, the employer assumes the investment risk. The amount an employer contributes to a DB plan depends on a number of factors, its members; ages, years of service, salaries, etc. as well as the return on investments. If investment returns are low, the employer's contribution increases. Conversely, if investment returns are high, the employer's contribution decreases.
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The amount of the member's contribution is often fixed by law. Returns on investments do not affect the amount of the member's contribution. Under a DC plan, the participant assumes the investment risk. Within certain guidelines, the participant has control over how much he or she contributes to the plan, as well as how those contributions are invested. However, poor investment decisions or negative investment returns due to market performance can result in lower amounts available at retirement.
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Longevity Risk:
Under a DB plan, the member can never outlive his or her pension. Once a member "vests" (earns enough service to become eligible for a pension) that pension is guaranteed and is payable for the life of the member. The amount of the pension is based upon a formula, not on the value of the member's account. Under a DC plan, the amount of the retirement benefit is unknown until the participant retires. Also, it is possible that the participant could outlive the value of his or her account.
THINK OF APRS AS YOUR “PENSION EDUCATORS.”
Regardless of which state your Pension is with, we are here to help explain how your Pension Plan works.
If you are a Public Pension Member in or nearing retirement, you must understand how your Pensions and Social Security payouts work.
You’ve worked hard for many years, and now you must sustain yourself in retirement!
Thankfully Pensions and Social Security exist, but they can be confusing and challenging to understand. That’s where APRS helps Educators and their families.
