Help me compare two retirement benefit offers.

This was prompted by a discussion in another thread! I was given an offer that I already agreed to and I was very familiar with it except for the retirement benefits.

Here is what I accepted:

Here is what I would have been offered had someone in management not pulled strings for me:

How exactly are these different? At first glance, the one I did not accept looks better, but I’m guessing there’s a difference in fact that one is defined benefit and the other defined contribution. Still, the wording doesn’t differentiate how they are different at all. I looked into the two types of plans online, and typically a cash balance plan is not only added to as a percent of salary based on age, but there should be interest that you are earning on this account as well. The contract doesn’t say anything about that - can I assume it? How else, then, would these be different besides the timing of the payout? I know I should have looked into it more thoroughly before accepting the offer, I just assumed the pension plan was better because they had to get clearance to offer me this package since they officially moved to the other package. Plus, a lot of employees gloat over the pension benefits and how they still have them. I figured, it had to be better. Naive move on my part.

Funny, I thought these things were supposed to be no discriminatory. Like, you don’t have a choice in plans, it is what it is. Thats what I undertood the law to be. Naive on my part?..

I better disclose here that I have worked with a some pension specialist on a few case design, what type of plan can m y xyz co have type stuff.

Complicated world. I’ll be interested to find out if this thread rejects what I think I know about qualified retirement plans…you can’t discriminate.

What do you mean by discriminate? Here’s the full context to why there are two different plans I am comparing:

I was an intern working for the company during this past summer. In the middle of the summer, the company announced they were doing away with their pension plan and strengthening their contributions instead. At the end of the summer/internship, someone from HR called me and offered me a position and had alread mailed the offer letter package. I didn’t like the position, so I reached out someone in management who I came to know over the summer. She then said let me see what I can do, and came back a few days later to offer me the position that I wanted. I then asked her about the pension - I says to her… since I was technically an employee when pension was still in effect do you think I could qualify even though they did away with it? She apparently like that I asked the question and got back to me a few days later and said she talked to an HR manager and got the okay to offer me that pension. By that time I had received the old offer letter without the pension… this is how I know what the offer would have been. A few weeks later I received the offer letter including pension, so now I can compare.

TL;DR - I never actually got to choose my retirement plan, but I kind of did by asking if I qualified for an older plan since I interned for them when it was still in affect.

[original post removed]

“How exactly are these different?”

Let’s call the plan you got Plan A, and the other one Plan B.

First difference: Plan B would have given you more employer matching contribution for each dollar you put into the retirement plan. This is free money - for every dollar you put into the retirement account, your employer would put in an extra 80 cents, up to 8% of your income. Plan A’s rates are a bit worse (60% match up to 7% of compensation). Might be worth looking into whether the 8% and 7% caps apply to your total compensation, or your individual paychecks.

Second difference: Plan A gives you a Cash Balance plan that pay fixed rates. Plan B is an SIP - they invest in funds on your behalf and these have variable returns based on market performance. It’s unclear what the SIP is investing in, but main difference is that more market risk is shifted to the employees.

Well this is a really complicated area. Can you offer to different plans to other wise the same employee? No I don’t think you can. But in this case since he was employed by the company before they changed the plan, you’re allowed to continue the benefits he was eligible for. I saw it at my old employer; the people hired before year X, like 5 years ago, had a different and more generous retirement plan but was then closed to all new hires. You just can’t be selective in who is and who isn’t offered the plan.

Oh and discrimination isn’t allowed…until it is allowed. Imagine a unionized employer; do you honestly think the union vs non union employees earn the same benefits? Yet in this case all of a sudden its ok.

agreed, no discrimination only classification.

the ‘prior service’ issue didn’t come up in the original post. Regardless, the manager going to bat, was really just doing what I would guess the law required. Offering the benefit he would have been entitled to under the terms of prior service.