Danielle Vaudrey, 33, of Denver is looking for a job. But she doesn’t ask prospective employers whether they offer a retirement pension. Pensions “seem to be a thing of the past,” she says.
Korshie Hart, 25, hasn’t “the slightest clue” what retirement plans are available. But she allows she’ll need something besides Social Security.
Pete Strain, 28, says that if “push came to shove, I’d rather have a 401(k).”
A career adviser urged Heather Linn, 22, who recently finished school at Parks College in Aurora, to inquire about 401(k)s.
A 401(k) offers more employee control.
And pensions? They offer less.
Talk to young people at local job fairs, and you’ll encounter a pronounced generational shift in how people plan for retirement – and what they expect from their employers.
The shift is wrenching for workers at United Airlines and other employers with pension plans that have ended or are ending. They and their families are losing some of the financial security on which they had come to depend.
Instability in financial markets has put many old-line companies in trouble. With pension plans, companies hold the responsibility for paying out what they promised. Some come up short.
Conversely, 401(k) plans put the onus on employees to put away enough for retirement. Though many get the boost of a company match, there’s no guarantee of any set payout in retirement.
Twenty years ago, employees might have been able to expect a pension, said Laure Grandin, who lives in Louisville and is looking for a job in the aerospace industry.
But now, “getting the job is No. 1. You can’t afford waiting around for the perfect job with the perfect pension.”
In fact, many younger workers don’t know anything about pension plans, sometimes called “defined benefit plans.”
And they don’t seem to care to know.
Traditional defined-benefit plans were once a common perquisite that provided stability for workers and their families long after they stopped working. But now, pensions are far from the norm.
Only 21 percent of workers in private industry have access to defined-benefit retirement plans, according to the U.S. Department of Labor’s National Compensation Survey released in March 2004.
Many companies have moved toward offering 401(k)- style “defined contribution” retirement plans, which in some ways offer employees more control over their retirement accounts but also burden them with the responsibility and risk for the investments.
Fifty-three percent of workers in private industry have access to defined-contribution plans, according to the compensation survey.
United’s principal competitor in the Denver market, Frontier Airlines, often touts in presentations that it is “pension- free.”
“United’s in a very difficult situation because it’s horrible to have to take away benefits,” said Ann Block, Frontier’s senior vice president of human resources, in-flight and administrative services. “They’ve built up quite a financial obligation there. I’m certainly glad I’m not in that position, because it’s a morale buster to have to take away a pension.”
Frontier executives in past years have discussed offering a pension plan to employees, Block said. But they decided the company’s 401(k) match and employee stock ownership plan were better for the long run. That way, employees’ retirement plans aren’t “tied to the company or our future or our stability,” she said.
As for pensions, Block says, “I’m not sure if the younger generation is expecting that kind of promise. I think they’ve seen their parents with that kind of promise, and some of it works and some of it hasn’t.”
Because of the relative scarcity of pension plans, the employers that can offer them can claim some level of exclusivity.
At Newmont Mining, “the pension plan is definitely a plus for us in recruiting as it’s not something that a lot of companies offer,” spokesman Doug Hock said.
The company also has a 401(k), but the pension is “a nice benefit,” Hock said.
Qwest Communications also offers a pension plan and a 401(k).
“For some, 401(k) may be more helpful than pension. For others, the pension may be very attractive,” said Qwest spokesman Robert Toevs.
The city of Denver called a series of information sessions this year to reassure its employees that their pensions will be safe in light of news about troubled plans at United Airlines and other companies, said Steven Hutt, executive director of the Denver Employees Retirement Plan.
“It’s a concern to people,” he said. “A pension fund is really only as solid as a sponsor, as an employer.”
The taxing power of the city provides security for the city pension plan, Hutt points out.
“Unlike United Airlines, which is in bankruptcy,” he said, the “city and county of Denver isn’t going anywhere.”
Governments are some of the last strongholds for pension plans.
While new employees going into a job with only a 401(k) may find that a pension doesn’t matter much, people with pensions might have made “all sorts of decisions about their future based on what their income is going to be after they retire,” Hutt said.
Employees may have made decisions about how long to stay with the company or whether to relocate based on their pension benefit, for example.
Hutt said that in his former position as city treasurer, he hired many employees for the city and said the city’s generous pension benefit in some cases helped tip the scale to draw new workers. But in most cases, “and particularly with potential prospects in their 20s, it is not a factor.”
Younger employees are most interested in salary, health insurance, work environment and promotional opportunities, he said. A pension is not a major concern to them, Hutt said. But “it should be – it’s very important.”
Staff writer Kelly Yamanouchi can be reached at
303-820-1488 or kyamanouchi@denverpost.com.
