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Good Question: How Many Of Us Still Get A Pension?

MINNEAPOLIS (WCCO) -- In last night's presidential debate, the topic of pensions provided a surprisingly tense exchange between President Barack Obama and Gov. Mitt Romney. The president joked that his pension is "not as big" as Romney's.

We know that presidents and governors get pensions, but what about the rest of us? How many of us still get a pension?

First, a definition. "A pension plan actually gives you a stated amount for retirement for the rest of your life," said Amy Monahan, a professor of law at University of Minnesota's Law School. Monahan specializes in pension law.

According to the Bureau of Labor Statistics (BLS) about 22 percent of full-time private industry workers recently got a defined pension benefit.

That compares to 42 percent in 1990.

"In the public sector, defined benefits are still the norm, so governmental employees like teachers and police officers get it. Very few private sectors do," Monahan said.

According to BLS, 92 percent of full-time government employees got pensions in 2011.

Union members are also frequently pension recipients.

"Unions value that benefit and are able to negotiate for it," Monahan said.

Seventy percent of union members had pensions, and just 14 percent of non-union employees had pensions, according to BLS.

Monahan said that many companies started shifting to an employee contribution model for retirement in the mid-1990s. Now 401ks are the top form of company-sponsored retirement plans.

The costs are higher to an employer in a traditional pension plan, and so is the risk, Monahan said. The company funds it, hires someone to run it, pays federal insurance for it, and is on the hook if the investment goes wrong.

Monahan added that pensions work best for people who work at one company for a long time.

"Most Americans change jobs about seven times in their working lives. And defined benefit pension plans don't work well under that model. They're not portable, you can't take them from one employer to the next," she said.

401ks are better in those circumstances, because they are portable. Economists thought that giving people choice would result in better investment choices.

"We have lots of research that shows people make all kinds of systematic mistakes with 401k investments," Monahan said.

She sees employers incorporating some features of pension plans into their 401K programs, such as automatic enrollment, even guaranteed returns.

Incidentally, win or lose, Obama will get a pension of $191,300. Romney didn't take a salary, so he has no pension from Massachusetts.

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