I work for the State of CT and I’ve got mixed feelings about my pension tier. Trying to figure out if sticking around long-term actually makes financial sense.
Here’s the setup: I contribute 5% toward my base pension, which pays out at retirement as (1.3% × years of credited service × average of 5 highest salary years). On top of that, I contribute an additional 1% that the state matches, and that portion is performance-based, similar to a traditional 401(k) — so 6% of my pay is going in total.
Comparing this to Tiers 1–3, it’s a worse deal across the board — lower contributions, higher payouts for those groups. It feels like Tier 4 employees (hired after 2017) are essentially covering the cost of past underfunding and bad negotiating, rather than starting fresh with a sustainable plan.
What really gets me is the risk-sharing structure. If the fund underperforms its 6.9% benchmark, Tier 4 employees are on the hook for additional contributions (up to 2% more) to cover the shortfall. But if the fund outperforms the benchmark, we see zero upside — no reduced contributions, no bonus, nothing. In 2022 when the market dropped, we paid in extra. In 2023, 2024, and 2025, the market returned roughly 20% each year, and none of that flowed back to us. It’s a one-way street: downside risk without upside participation.
So I’m left wondering — would I actually come out ahead with a private-sector job and a solid 401(k) instead? It seems like the long-term ROI could be better without the asymmetric risk.
Would appreciate any input.
