DB vs. DC

Defined Benefit vs. Defined Contribution Retirement Plan

There are important differences between defined benefit pension plans like the ILPF and defined contribution plans such as 401(k)s and IRAs.

Participants in a defined benefit plan have the ability to calculate in advance exactly how much they can expect to receive every month once they retire. That’s because the benefit is calculated on a fixed formula that takes into account factors such as contribution levels and/or years of service. Participants in the Inter-Local Pension Fund can calculate how much they will receive once they retire based on the dollar amount that they contribute each pay period. Retired ILPF participants can count on receiving the same monthly check whether they live to be 66 or 106, and cannot outlive their benefit.

This sets the ILPF apart from defined contribution plans such as 401Ks and IRAs, which provide no guarantees that retirement savings will last — or that poor investments or a plunge in the market won’t wipe out years of savings.  There are a lot of unknowns with defined contribution plans and the amount available upon retirement depends on a number of factors: the individual investment selections made, market conditions, how long a retiree lives, and the amount paid in annual administrative and investment fees to fund managers. With a defined contribution plan, once the money is gone, the benefits stop — regardless of age.

Furthermore, participants in a company-sponsored 401(k) cannot continue to contribute to the plan if they leave their employer. That is not the case with the ILPF. Your right to continue to participate in the ILPF does not depend on keeping your job with your current employer. You can continue to participate in the Inter-Local Pension Fund as long as you work in the same industry and maintain your membership in the Teamsters Union.

Norma Balentine

Local 577M
Milwaukee, WI

“None of my previous jobs offered a defined benefit pension plan.  We’ve seen how the benefits provided by plans based on stocks, such as 401(k)s, can erode as the stock market plummets.   The ILPF is a gift that very few workers have – a lifelong benefit.

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James Klug

Local 577 M
Cedarburg, WI

“It’s a rare fund and my retirement would be poor without it. I can’t think of any other fund that you get every penny you put in. When I retired, I had paid in a total of $88,000 over 39 years. If I live 25 years past my retirement age, the fund will provide a little under a million dollars in pension payments. I got what I paid in a couple of years and the rest is pure profit.

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Harold Moore

Local 285M
Washington, DC

“I plan on working until I’m eligible for full retirement benefits. I think the ILPF provides really excellent benefits. My contribution is taken directly out of my paycheck. I don’t have to think about it, so it’s easy to save for retirement. Belonging to the ILPF gives me a great sense of security. 

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John Greco

Local 14M
Philadelphia, PA

"The ILPF is a good investment. I’ve been working at my present job for 39 years, but the employer plan will provide me with less than $800 a month when I retire. Contrast that with the payment I’ll receive from the Fund. Even by age 63, before I plan to retire, I’ll have already earned more than twice as much a month.

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Teamsters Local 299

New Boston, MI

“We felt like we needed to take control of our retirement. That’s why we voted to join the ILPF. The Fund is run exclusively by and for Teamsters. It was set up decades ago and has provided generations of union members with secure retirements.

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Christopher Yatchak

Local 577M
Germantown, WI

“Today’s workers fear that they might run out of retirement savings before they die. It’s important to compare how defined benefit and defined contribution pension funds work and know what you should expect. How do you make your savings last the rest of your life?

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