The “Golden Handcuff” Pension Isn’t Worth Burnout
That “Guaranteed” Pension May Not Be as Guaranteed as You Think
“Kenny Kim, I’m burning out. I’m so busy I don’t even have time to go pee at work. But I can’t leave - my pension is too good.”
I hear this all the time — especially from physicians who feel exhausted and stuck, but keep showing up because of the golden retirement benefits they’ve been promised.
“Stay with us for 30 years and you’ll retire with 50% of your final salary, for life.”
For someone earning $500,000 in their final years, this could translate to a pension of $250,000 per year for life.
Sounds amazing, right?
Here’s the twist: that promise can change.
The IBM Case: A Reality Check
Take IBM, for example.
In 1999, IBM made a major change to its retirement plan: it converted its traditional pension plan into a cash balance plan.
The impact? It hit older employees the hardest - the very people who had stayed loyal to the company the longest, expecting their pension benefits to ramp up sharply in their final years.
Why?
Because cash balance plans don’t work the same way as the traditional pension plans.
Traditional defined benefit plans typically use a backloaded formulas to calculate the pension benefits - often something like:
Years of service x final salary x a set percentage (e.g., 50%)
This means benefits grow much faster towards the end of a career.
Cash balance plans, on the other hand, offer flat, steady annual benefit accruals - typically something like 5% of pay, plus 4% interest credits.
That structure works well for younger employees just starting out.
But for someone in their 50s who’s been counting on a major retirement benefit boost in their final working years? A switch to cash balance plan can mean a significant cut in expected future benefits.
IBM employees sued. But after years of litigation, IBM won. The courts ruled that the conversion was legal - and that decision opened the door for other companies to follow suit.
Your Pension can “Freeze”: The Slow Death of a Pension
Even if your employer hasn’t converted your pension yet, don’t assume it’s safe.
Companies can freeze their pension plans — and many already have.
There are two types of pension freezes you should know about:
Hard Freeze:
All future benefit accruals stop. What you’ve earned so far is locked in - thanks to the IRS’s anti-cutback rules - but any additional years of service or future pay increases won’t count toward your pension. In other words, your pension gets stuck in time.
Soft Freeze:
Current participants can still earn benefits, but no new employees are allowed into the plan. This usually signals that the company is phasing the pension out altogether.
Either way, it’s a warning sign.
Even if your pension isn’t gone yet, it might already be shrinking in value each year - especially when you factor in inflation, rising living costs, and missed salary-based accruals.
That “guaranteed” benefit may not be as guaranteed - or as generous - as you think.
Don’t Let Fear of Losing a Pension Trap You
I get it - leaving a job with a pension feels risky.
But here’s the bigger risk: staying in a job you no longer love.
It can:
Drain your energy.
Dim your ambition.
Put your mental and physical health on the back burner.
All for a benefit that may not be as guaranteed as it sounds
Think about everything you did to get here:
Studying at the library until it closed - just to pull off that A and crush the MCAT
Balancing research with long clinical hours, impressing your attendings to earn honors, and taking on leadership roles to match into your dream residency.
Showing up every interview polished, composed, and over-prepared - just to earn your spot in a top program.
You didn’t do all of that just to feel stuck.
You deserve better.
Companies will do what they need to do to survive.
Even the ones that look financially strong or have a glowing reputation can change course the moment it benefits them.
And your pension?
It’s not a promise carved in stone.
It’s a corporate liability - and one that can be converted, frozen or quietly phased out.
Final Thought
Don’t stay just for the pension.
Even if it sounds too good to walk away from, consider the value of your time, happiness, purpose, and well-being.
You worked incredibly hard to get to where you are.
And you have the grit, skill, resilience to excel at whatever you choose next.
Let the pension be icing on the cake - not the cake itself.
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