What Happens to a Pension When You Quit
Pensions aren’t very common any more and I think they’re slowly going away completely. In 1980, 38% of Americans had a defined benefit pension. In 1997, that was down to 21%. It’s undoubtedly lower today.
I work for a company, however, that still has a pension (though they’ve suspended any more contributions). I’ve often wondered what happens to that pension when you quit (prior to retirement, that is). Well, I got my answer a few days ago when a friend decided to quit.
It turns out the answer is determined by the company plan.
Some plans hold on to the pension until you actually do retire, then begin your pay-out. Good luck keeping track of that until you retire.
Some, like mine, allow you to roll over the pension into an IRA. You can even take a lump sum right away with some pensions (at a vastly reduced amount).
So if you have a pension, check the plan to see what becomes of that money if you quit.
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