Retirement Benefits for Postdocs: UK 1, US 0

Posted: May 1, 2011 in Academia, UK Academia

Given the recent world-wide financial crisis that has been taking place over the last several years, and the current fiscal troubles of both the state governments and the federal government in the US, the last words I thought I would ever hear from an employer were “defined-benefit pension plan”. Apparently, all one has to do is move to the UK (and presumably many other EU countries?).

Aside from trying to put myself in the position to obtain a tenure track position in several years, one of my other primary life concerns is figuring out how the hell I’m going to obtain the $1,000,000+ I need to fund a comfortable retirement in 35+ years (and that’s if I were to retire NOW, I don’t even want to think about how much I’ll need when I retire to have the same purchasing power as a cool million today). This is just an absolutely daunting number, particularly considering the paltry pay of graduate students and post-docs.  Nonetheless, I have been contributing what I can via Roth IRAs throughout grad school, knowing that the sooner I start saving the better (if you are reading this and saying “what the hell is a Roth IRA, FDX just gone flipped his lid” then you need to do some research on retirement saving, like yesterday).

Unfortunately, while living overseas and earning money in a foreign country, you cannot make contributions to an IRA unless you want to get taxed twice*. BUT, at least in the UK, you are given access to a University Superannuation Scheme (aka, a defined-benefit pension plan) no matter what University your work at. You put in 6.3% of your salary, your employer pops in 16%, and voila Bob’s your uncle, when I hit the ripe old age of 65, they start sending me checks based on my final salary and how long I made contributions. Easy as insulting a Brit with sarcasm. It’s a no brainer**.

Now, it is my understanding that in the US there is considerable variability concerning the offering of retirement benefits to postdocs. I did a little searching, and it looks like some universities may offer benefits (about 50% according to one National Postdoc Association estimate (this is a PDF)). This is absolutely ludicrous. At the very least, ALL universities should offer any full-time employee a match of up to 5% of their salary to contributions made to a 403(b) or 401(k) plan. Anything less is an absolute disgrace. University  administrators of these 50% of universities should be ashamed of themselves for taking advantage of thousands of bright young men and women just to pad their bottom line (what other reason is there to not meet the basic life requirements of an essential employee?). Saving for retirement is simply too important for administrators to ignore just because they can.

Now, if postdocs are offered a retirement plan and don’t take advantage of it, they need to get their head out of their ass and get with the program.

So, gentle reader, if you are a postdoc, are you offered retirement benefits? If so, what sort of match does the university offer you?


*You can exclude up to about $95k of foreign income from paying US income taxes, but if you do this you forfeit the right to contribute to an IRA or Roth IRA.

**This, of course, assumes the pension plan remains solvent. I actually think defined pension plans are typically unsustainable and should be phased out over time. They are not risk-free investments, but should just be one part of a diversified portfolio.  Luckily, changes will soon be implemented to the University Superannuation Scheme here in the UK to help ensure its long-term solvency.

DISCLAIMER: I am not a certified financial adviser. In case you missed it on the way in, I’m just an “American life scientist keepin’ it real while living and working in the UK”. In no way should that be interpreted as meaning I have the appropriate certifications to provide financial advice. Actually, if you are looking for good financial advice, you probably shouldn’t be looking to someone that took the financially ruinous path of obtaining a PhD.

  1. The UK is a great place for benefits (other than the first ammendment) when compared to the US. My current institution has a multi tierd post doc track. Some are considered faculty, some are not. If you are lucky enough to be considered faculty, you have access to all faculty benefits. If you aren’t, and you have more than a 1 year position at the university, you have access to a similar program after the first year. Which, I suppose is better than other academic homes I’ve had. Its a very bizarre system, and further proof that universities _are_ run like businesses in this US, that that there are reasons for faculty and grad students to unionize… but that’s a different rant for a different day.

    • funkdoctorx says:

      Hmm, that’s interesting, a tiered system for postdocs? Well it sounds like at least there are some options, which is better than nothing. I hope they match contributions as well.

      The only thing I worry about with the benefits here in the UK is whether they will be around when I’m ready to retire. Much of Europe is going to run into some pretty big demographic issues over the next 20-30 years with an aging population and low fertility. I just hope they find a way to figure it all out!

      • They do match contributions. As for how long retirement money will be around, I know the situation in Europe is more severe than in the US, but that the situation in the UK is not as bad as the one on the mainland… I’d done some research into this at one point in time, long time ago… But I remember thinking that there was some amount of fear mongering to behind those that said that pensions and other social safety nets will disappear by the time the new generation of workers retire.

        But those are arguments for whatever the equivalent of social security is in the UK. Money you put into private retirement savings is yours (unless the market crashes), so you shouldn’t have to worry about that.

        Your post spawned a musing of mine.

        Thanks for making me think.

  2. funkdoctorx says:

    I’m glad to have inspired another post! Thanks for the comments! I have been thinking of blogging about some of the pending demographic issues here in Europe and the UK and their potential outcomes, just haven’t gotten around to doing the necessary research. I think it is a real issue that will lead to Europe as a whole (maybe not the UK?) becoming much less competitive than it already is relative to the rest of the world in the coming century.

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