Why Do Some Companies Still Offer Pensions? (And Which Ones?)

In today’s gig economy and startup culture, the idea of a company providing a pension for life seems almost archaic. Yet some employers continue to offer this retirement benefit. So which companies still offer pensions, and why is this practice becoming increasingly rare?

The Great Pension Exodus

To understand which employers still provide pensions today, you first need to understand why so many stopped. The shift away from employer-funded pensions has been dramatic. Between 1987 and 2022, the percentage of private-sector retirement costs covered by defined-benefit pension plans dropped from 86.1% to just 29.4%, according to the Bureau of Labor Statistics. Meanwhile, employees have had to shoulder more responsibility—defined-contribution plans like 401(k)s now account for 70.6% of retirement costs, compared to only 13.9% three decades ago.

Why the massive change? When tax law reforms in the 1980s allowed workers to save for retirement pre-tax, many private employers saw pensions as an unnecessary financial burden. Unlike defined-contribution plans where companies match contributions and wash their hands clean, pensions require ongoing employer funding and create long-term liabilities that can threaten balance sheets.

What Exactly Is a Pension?

Before exploring which employers offer them, let’s clarify what makes a pension different from modern retirement plans. A pension is a defined-benefit plan—meaning your retirement income is guaranteed based on a formula that typically considers your salary and years of service. Once you retire, the company pays you a fixed monthly amount for the rest of your life, regardless of market performance.

This creates a fundamental advantage over 401(k)s: longevity protection. You cannot outlive a pension. Your employer assumes the investment risk, not you. Plus, there’s no guesswork about how much you’ll receive each month. For workers who value predictability and security, this is unmatched.

Where Pensions Still Thrive

So which employers still maintain pension programs? The answer is concentrated in three sectors:

Government and Public Sector

Federal government employees, including FBI agents, IRS staff, and NASA personnel, receive pensions through the Federal Employees Retirement System (FERS). State and local government workers—police officers, firefighters, and public administrators—similarly enjoy defined-benefit pension plans. The reason is straightforward: government budgets can accommodate long-term liabilities, and public sector positions are designed to attract and retain talent through stable benefits.

Military Service

The U.S. military provides government-funded pensions to anyone serving at least 20 years. The pension formula is straightforward: years of service multiplied by a percentage of your average highest three years’ base pay. This structure encourages long-term commitment and reflects the military’s emphasis on stability.

Public Sector Teachers

Public school teachers represent one of the largest pension beneficiaries in America. Teachers access pension plans through state-managed retirement systems, with eligibility varying by state. These teacher pensions typically offer lifetime payouts and are among the most robust pension programs still operating.

Union-Protected Workers

Union membership is perhaps the strongest remaining pension predictor. According to the Bureau of Labor Statistics, 66% of private-sector union workers have access to defined-benefit plans, compared to just 10% of non-union workers. Construction, transportation, and utility workers—many unionized—have negotiated pension benefits into collective bargaining agreements. Utility companies, in particular, continue offering pensions to employees handling electricity, gas, and water services.

Healthcare Professionals (Public Employers)

Nurses and other healthcare workers employed by state or local government hospitals may receive pension benefits as part of their compensation packages, though this is less common than in other public sectors.

Why Union Jobs and Government Positions Preserve Pensions

The preservation of pensions in these sectors reveals an important economic reality: pensions survive where employers have the bargaining power or statutory obligation to maintain them. Union contracts explicitly negotiate pension benefits, and this collective power has prevented the wholesale abandonment that swept the private sector. Government employers, funded by taxpayers and less concerned with quarterly earnings reports, can justify long-term pension obligations.

The Pension Decline and Workforce Consequences

Declining union membership further explains pension scarcity. As fewer workers join unions (partly due to cultural and legislative shifts), fewer workers gain access to pension-protected negotiating power. The result: private-sector workers increasingly bear full responsibility for retirement planning through self-directed 401(k)s and IRAs.

What if Your Employer Doesn’t Offer a Pension?

For the vast majority of private-sector workers without pension access, alternatives exist:

401(k) Plans allow you to contribute salary portions (often with employer matching) into tax-advantaged investment accounts. Unlike pensions, your retirement balance depends on investment performance and contribution discipline.

Individual Retirement Accounts (IRAs) let you save independently, with both traditional and Roth options offering tax advantages. However, there’s no employer match and the burden of growing your retirement fund falls entirely on you.

Thrift Savings Plans (TSP) are available to federal employees and military members, offering low-cost investing similar to 401(k)s with employer contributions.

Annuities provide guaranteed lifetime income purchased through insurance companies—essentially a pension you buy yourself, though typically at a higher cost than traditional employer pensions.

The Bottom Line

The question “Do any companies still offer pensions?” has a clear answer: yes, but increasingly only government agencies, military organizations, public sector employers, and unionized workforces. The private sector has largely abandoned this benefit in favor of shifting retirement risk to workers. If you’re considering a career change and retirement security matters to you, positions in government, education, public utilities, or unionized industries may offer advantages that private-sector roles cannot match. For everyone else, the responsibility for building retirement security through 401(k)s, IRAs, and disciplined saving falls squarely on your shoulders.