It used to be quite common for private sector workers to get defined pension plans that allowed them to retire and know that they were financially secure. After putting in enough years for the company, they knew that the company would take care of them after retirement.
Just how common was it? In the early 1980s, reports show that around 60 percent of workers had these plans in place. Most workers felt fairly secure and knew that they were preparing for retirement, even if they did not have large savings accounts of their own.
These days, things have really changed. The percentage of workers who have only a defined benefit pension plan has dropped all the way down to just 4 percent. Most workers do not solely rely on these plans. They generally crop up in very select industries that have strong unions, such as auto manufacturing and aviation.
That’s not to say that only 4 percent of workers have some type of company-based employment option, just that they have only these defined pension plans. Many others have retirement savings accounts and about 14 percent of companies provide smaller pensions along with other retirement options.
While many younger workers may never know what it is like to work toward a pension, those who entered the workforce in the 1980s and 1990s are far more familiar with these assets and understand their value. That’s why it is so important for those who are now thinking about divorce to take these pensions into account. Depending on when they were earned and when the couple got married, they may need to divide the pension.