Estimated read time: 5-6 minutes
If your company has announced a pension freeze, you're not alone. Pension freezes are becoming increasingly common. And for many workers, it raises an important question: "What does this really mean for my retirement?"
The answer depends on where you are in your career. But for many people, the impact is bigger than they expect. A pension freeze isn't just an administrative change. It could represent hundreds of thousands of dollars in retirement income that will never materialize.
Tyson Thacker and his brother Ryan Thacker have seen this movie a thousand times. As the founders of Utah-based B.O.S.S. Retirement Solutions, they've helped over 55,000 families plan for a better retirement. And they say the financial impact of a pension freeze is often far larger than people realize.
"Most employees don't fully understand what they've lost until they sit down and do the hard math," says Tyson. "When you see the difference between what your pension was on track to pay, versus what it's now going to pay, the gap can be enormous."
What does 'frozen' actually mean?
When your pension is frozen, your company stops making contributions to your account. Whatever you've earned up until that freeze date is protected — and in most cases it will continue to grow with interest or investment growth.
But you won't receive any additional pension contributions after that date, even if you continue to work at the company for many years to come.
For someone mid-career, the math is sobering. The pension benefit you'll actually receive may represent a fraction of what you were on track to earn.
Understanding the shift to a 401(k)
When companies announce a pension freeze, they almost always pair it with news about enhancing their 401(k) program. This could include a slightly higher match, additional contribution options, a more robust benefits package, etc.
But it's important you understand what these things mean.
"This is a fundamental shift from employer responsibility to employee responsibility," says Ryan Thacker, President of B.O.S.S. Retirement Solutions. "With a pension, the company absorbs 100% of the investment risk. You're guaranteed a monthly paycheck in retirement, no matter what happens with the stock market. But with a 401(k), that risk falls entirely on you. Most of the contributions come from the employee, not the employer."
You may have more options than your employer told you
Here's what too many people don't realize: when a pension is frozen — or when you eventually leave the company — you typically have choices about what you can do with your pension or other company benefits. And the choices you make here could have a major impact on your retirement.
Below are some typical options…
- Option 1: Leave your money in the pension and receive guaranteed income for life when you retire, but with less flexibility.
- Option 2: Take a lump sum when you leave and roll it into an IRA where you control the investments. This means more flexibility, but also more responsibility.
- Option 3: Hybrid options. Depending on the plan, there may be partial lump sum options or other variations available.
"Make no mistake about it. These are not small decisions — they are often 6-figure decisions," says Tyson Thacker. "And each one of these options could also have significant tax consequences."
Make no mistake about it. These are not small decisions — they are often 6-figure decisions.
–Tyson Thacker
This decision touches more than just your pension
What makes pension decisions particularly complex is how far they ripple. The choices you make could impact the following…
- Your tax bracket, both now and in retirement.
- Your investment strategy in retirement.
- Survivor benefits for a spouse.
- The timing of your retirement.
- Your Social Security claiming strategy.
- Your Medicare premiums.
"This is not a simple decision about where you're going on vacation this summer," says Ryan Thacker. "This decision could determine your financial situation for the next 20 or 30 years. And getting it wrong — or simply not knowing all your options — could be incredibly expensive."
Get your free pension review
If you've received a pension freeze notice, or an early retirement package, you owe it to yourself to understand all your potential options before you make any decisions.
B.O.S.S. Retirement Solutions offers a free, comprehensive pension review. This customized analysis will outline all your options, including options you may not be aware of. And this analysis won't cost you a dime, even if you never become a client.
This review is best suited for families who have saved a minimum of $300,000 for retirement.
To schedule your free pension review, call (801) 682-4448 or click here.
About the Authors: Tyson Thacker and Ryan Thacker are the CEO and President of B.O.S.S. Retirement Solutions. They are published authors of the Amazon best-selling book, "The B.O.S.S. Retirement Blueprint, Your Guide to a Secure and Independent Retirement." Their award-winning firm has seven offices located throughout the Wasatch Front.
This is for illustrative purposes only, results may vary. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. BOSS submitted applications and paid application fees to be considered for the Utah Best of State for Retirement Planning awards. The award results were independently determined by the awarding organization's criteria (https://www.bestofstate.org/about.html) and the information BOSS provided in the applications. BOSS received the Utah Best of State award in 2019, 2020, 2021, 2022, 2023 and 2025. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials provided by Infinity Marketing Services.
