Retirement planning

Having both a pension and a retirement savings plan can help set you up for a healthy financial future. Pension plans can be designed in different ways, but they all share a common goal: helping provide income in retirement. Your pension provides access to guaranteed future income* if you fulfill certain requirements. And your retirement savings plan puts you more in control—you decide how much to contribute and how you want to invest it.

Together, these two plans—plus any other retirement accounts you have—can help you build income to have the retirement you envision. It’s important to familiarize yourself with both benefits so you can make them work together to help create your best retirement. Comprehensive retirement planning support from Fidelity can help!

*Annuity guarantees are subject to the claims-paying ability of the issuing insurance company.

What you need to know:

Start planning for retirement by looking at all potential sources of income and understanding how the features of your pension plan, along with different factors, such as delaying retirement beyond your normal retirement date, may affect your future financial well-being.
Find out how and where your retirement savings plan fits into your retirement income in the future. Take the time to determine how much you may need to set aside now to help reach your future savings goals.
Check in on your accrued benefit(s) semi-regularly and take time to review information about your pension plan so you understand how your benefit is calculated and when it may become payable. Also ensure all your information, like your home address and designated beneficiary (if applicable), is up to date.
Consider the people who will continue to depend on you for monetary support in retirement. Taking time to plan now can help ensure a stable future for you and your loved ones when you are no longer working.

Shifting your savings strategy

See how having a pension may influence how you manage your other retirement savings as you plan for the future.

Optimizing your retirement paycheck

Learn about the different types of retirement income—and how and when to use each to serve different needs.

Your pension plan may offer a lump-sum benefit option. The videos below can help you understand if a one-time payment is right for you.

Note: Not all pension plans offer this option. Review your Summary Plan Description (SPD) for details specific to your pension.

Choosing a lump sum vs. an annuity

Learn about common pension payment options to see which one might work best support your personal goals.

Interest rates and lump sums

Understand the impact interest rates can have on the value of your lump sum payment.

Key terms

Below are some common pension terms to help you understand what they mean and how they may apply to your benefits.

Traditional pension plan: An employer-sponsored retirement plan typically funded* through a trust where contributions are generally invested on your behalf by your employer to provide you with set retirement benefits for life, regardless of how the underlying investments perform.
Cash balance plan: An employer-sponsored retirement plan typically funded* by your employer through deposits of pay credits and interest credits. Investments are generally managed on your behalf by your employer to provide you with set retirement benefits for life, regardless of how the underlying investments perform.
Early retirement age: The earliest date you are eligible to receive your pension benefit from the plan. When you run an estimate, you’ll be able to compare how retiring on this date impacts your benefit, as opposed to delaying retirement.
Full retirement age: The age when you can retire and receive full benefits (typically age 65). For complete details, review your Summary Plan Description on netbenefits.com.
Interest rates: A percentage used to calculate the present value of future monthly benefits. Higher interest rates generally result in a lower lump-sum payout. For cash balance plans, interest rates may impact annuity payments—an annuity amount typically goes up when interest rates go up, and the amount goes down when interest rates go down. Monthly annuity payments for traditional pension plans are typically not impacted by interest rate fluctuation since the payment is fixed once you commence.
Annuity payment: The set amount you receive every month once you commence your benefit, from your retirement date for the rest of your life.
Lump sum: A one-time payment of your pension benefit that typically represents the present value of your future pension benefit.
Eligibility: The fulfillment of all applicable plan requirements necessary for you to qualify for pension plan participation, benefit accrual, benefit commencement and/or other pension-related benefits.

*Contribution responsibilities may vary by plan. Review your Summary Plan Description for details specific to your plan.

Consider next steps

Estimate your future pension benefit at NetBenefits

Log into your account and, under “Your accounts and benefits,” click on your pension plan name. From there, you can model your benefit* by entering hypothetical information for your estimate, like a termination date, Benefit Commencement Date (BCD), and beneficiary details. You can also save your calculation or review prior estimates.

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