Woerheide, 1994

Woerheide, W., Fortner R. (1994). The pension penalty
associated with changing employers. Financial Counseling and Planning, 5,


The Pension Penalty Associated With Changing Employers


Walt Woerheide (1) and Rich Fortner (2)

There are various costs associated with changing jobs. One potentially
significant cost is the reduction or loss of pension benefits associated with
the old job. Even if one is fully vested, a large reduction in pension benefits
may occur. Amounts of increases in salary from a new job necessary to make up
for pension losses are calculated for combinations of years and other factors. A
rule of thumb is calculated for the portion of the salary increase that needs
to be tax-sheltered in order to leave a worker economically unaffected by a job

 Key Words: pension, income tax, retirement


1. Walt Woerheide, Professor of
Finance, Rochester Institute of Technology, College of Business, COB-RIT, 108
Lomb Memorial Dr., Rochester, NY. 14623. Phone: (716) 475-5268 Fax: (716)
475-7450. E-mail: wjwbbu@rit.edu.


2. Rich Fortner,


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