Setting Straight Common Misconceptions About Pensions
When it comes to pensions, there are plenty of myths floating around. It’s easy to get lost in a sea of misinformation, especially when the topic is as important (and sometimes complex) as your pension and retirement. Let’s set the record straight on some of these common misconceptions and bring a little clarity—and maybe even a smile—to your pension planning.
Myth 1: Pensions Are Only for Old People
Reality Check: While it’s true that pensions are associated with retirement and that may seem like a lifetime away, you don’t have to be on the brink of getting a senior discount to start thinking about your pension. In fact, the sooner you start planning for your future, the better off you’ll be. Think of it as planting a tree: the best time was 20 years ago, and the second-best time is now.
Myth 2: Pensions Are Too Complicated for Me to Understand
Reality Check: While pensions can seem complex, they’re not as mysterious as they put off. There are plenty of resources available - SLOCPT and Human Resources Staff who can help untangle your benefit. Think of it like assembling furniture from IKEA — daunting at first, but entirely manageable with a bit of guidance and instructions.
Myth 3: I’ll Never See My Pension Money
Reality Check: A common fear is that pension funds will somehow vanish into thin air. However, pension plans, like SLOCPT, are well-regulated and managed to ensure they’re there when you need them. The “California Rule” protects workers from future reductions by lawmakers and the California Public Employees’ Pension Reform Act (PEPRA) was established in 2013 to help better manage future pension costs.
Myth 4: My Pension Will Cover All My Expenses
Reality Check: While pensions are designed to provide a steady income during retirement, relying solely on them might not be the best strategy. Contributing and growing assets in SLO County’s 457(b) plan through Nationwide can supplement your income from any unanticipated shortfalls. Contact Human Resources or visit www.sanluisobispo457.com for more information.
Myth 5: I Don’t Need to Worry About My Pension Until I’m About to Retire
Reality Check: Procrastination might work for laundry but it’s not a great strategy for preparing for retirement. Start educating yourself on what your retirement future may hold. Log in to your MemberDirect (member.slocpt.org) to review your projected benefits and familiarize yourself with plan benefits. SLOCPT is available by phone, email, or in-person to answer your questions.
Myth 6: If I Change Jobs, I Lose My Pension
Reality Check: Say it with me – Reciprocity! If an employee enters employment with a reciprocal employer within six (6) months of termination, they can enjoy the benefit of shortened vesting time, a potential reduction in contribution rate in the new employer’s plan, and a monthly pension benefit based on the highest final pay among the employers. Keep in mind that you must apply for reciprocity and it is not automatically granted. Contact SLOCPT for more information.
Are there other myths or questions you have about your pension benefit? Educate yourself with the right information by contacting SLOCPT. Having a proactive mindset can reduce anxiety about your retirement planning and pave the way for a relaxing and enjoyable future. Cheers!
For questions regarding your pension, please call us at 805-781-5465 or email us at slocpt@co.slo.ca.us. Many of your questions may be answered by logging in to MemberDirect!
Katie Girardi
Executive Director, SLO County Pension Trust