Northwell Health Employees - Should you take the Defined Benefit Pension Option or Stick With Employer Contributions to your 401(k) - a real life example
- Daniel Harris
- Nov 25
- 5 min read
This article is written in response to a real world question on reddit:
"Northwell offering Pension
I’m 34f, working as a cardiac sonographer for Northwell Health. I make $114,00/year and contribute 10% to my 401k. Northwell matches 7.5%. Northwell is now offering a pension plan. We are vested after 5 years. The formula for the pension plan is #years worked x 1.6% x average last 10 years of pay. We currently receive a 5% raise per year but it ranges from 1%-5%. If we select the pension plan, Northwell will fully fund it but will no longer match the 401k. Current $ in 401k is $23,000. I don’t plan on moving or leaving my job. I theoretically will have 31 years under the pension plan (if I take it) and an average salary is looking like it would be an average of around $250,000/year (if I receive a 3% raise per year) during the last 10 years of working.
I need recommendations on if I should take the pension or stick with the 401k with contributions from my employer. Thanks for any advice!
Job security is high, one tech makes them about $2,000-$3,000/day"
Now, while everyone has to make their own financial decisions and we are not your financial advisor unless you have a signd written advisory agreement with us, we are going to use this question to provide our perspective on these questions and give our take on what we would do. Because the poster is anonymous, we'll use their facts, but this is not specific financial advice directed at them, personally.
Northwell Health recently started offering a Defined Benefit Pension Plan, and many employees are wondering whether it’s better than continuing with the traditional 401(k) plan. Here’s a breakdown.
Northwell Health Pension Plan Basics
You’re vested in the Northwell Health Pension Plan after 5 years (before that you get nothing if you leave before 5 years at Northwell Health).
Formula (using the poster's stated facts): Years worked × 1.6% × average of last 10 years’ pay.
Northwell fully funds the plan if you participate, but they will stop matching your 401(k).
Northwell Health 401(k) Plan Basics
Employee contributes a percentage of salary (example: 10%).
Northwell currently matches 7.5% (using this poster's facts - our data suggests Northwell may contribute between 7.5% and 10.5% of salary to employee's 401(k)s under certain conditions).
Vesting schedule: roughly 20% per year after year 1 (it takes 6 full years until you can leave Northwel and keep their contributions to you 401(k) - this is the maximum length vesting schedule permitted by the IRS - which is an indicator that Northwel likely has or anticipates a lot of turnover in the first few years of employment at Northwel health.
What to Consider
Job Tenure
The pension plan only pays out if you stay 5+ years. However, data suggests that the average Northwell employee may be 48 yeas old and has worked at Northwell for 12 years.
Potential Benefits of using the pension
Using the example scenario:
31 years of service
Average last 10 years’ pay ~$250,000
Pension payout formula = 31 × 1.6% × $250,000 = $124,000/year. That’s a guaranteed income stream in retirement—not subject to market volatility like a 401(k).
The Pension Plan also provides professional investment management and no cost to you - while theoretically you can assume a certain investment return on foregone 401(k) matching contributions most people do not achieve a 7% real return on their money.
A Defined Benefit Pension Plan is typically a qualified plan - this means that creditors usually can't get to the defined benefit pension plan to our knowledge (unlike a non-qualified deferred compensation plan where creditors can get to that money)
401(k) Pros and Cons
Northwell's 401(k) already has a pretty strict vesting schedule on their 401(k) to our knowledge meaning that if you were getting a 7.5% employer contribution subject to a 6 year vesting cliff (so no vesting in year 1 and 20% vesting in year 2, 40% vested in year 3, 60% vested in year 4, 80% vested in year 5, 100% vested in year 6) the 7.5% might be only worth 20% of that amount per year or a 1.5% match per year.
If an employee was pretty sure they would leave within 5 years so they wouldn't vest in the pension, the 401(k) would generally be a better option.
If the employee thought they might have an average tenure of employment at Northwell (about 12 years according to the defined benefit plan data, to our knowledge) then the pension plan would likely be very compelling and potentially superior in our view.
The reason why a pension plan is often superior to a 401(k) is because if there is a shortfall, it is the responsibility of the employer to make it up.
If you invest in your 401(k) and you hit a bad market or the investments don't do well, it might be up to you to make up the shortfall if your investments don't do well. Being able to shift that risk to an employer is a powerful thing.
Pension plans can fail and when they do the benefits are usualy paid or partially paid by the Pension Benefit Guaranty Corporation (sort of like the FDIC but for defined benefit pension plans). Below are the maximum monthly payouts of those guaranties and information about the Pension Benefit Guaranty Corporation.
Maximum guarantee tables for 2026:
For clarifcation a straight life annuity is a pension payment for your life only, a joint and 50% survivor annuity is for the life or you and your sposuse.
PBGC Maximum Monthly Guarantees for 2026 | PBGC maximum monthly guarantees for 2026 | |
Age | Straight-Life Annuity | Joint and 50% Survivor Annuity 1 |
75 | $23,680.90 | $21,312.81 |
74 | $21,530.92 | $19,377.83 |
73 | $19,380.95 | $17,442.86 |
72 | $17,230.97 | $15,507.87 |
71 | $15,080.99 | $13,572.89 |
70 | $12,931.02 | $11,637.92 |
69 | $11,606.76 | $10,446.08 |
68 | $10,438.29 | $9,394.46 |
67 | $9,425.62 | $8,483.06 |
66 | $8,568.75 | $7,711.88 |
65 | $7,789.77 | $7,010.79 |
64 | $7,244.49 | $6,520.04 |
63 | $6,699.20 | $6,029.28 |
62 | $6,153.92 | $5,538.53 |
61 | $5,608.63 | $5,047.77 |
60 | $5,063.35 | $4,557.02 |
59 | $4,751.76 | $4,276.58 |
58 | $4,440.17 | $3,996.15 |
57 | $4,128.58 | $3,715.72 |
56 | $3,816.99 | $3,435.29 |
55 | $3,505.40 | $3,154.86 |
54 | $3,349.60 | $3,014.64 |
53 | $3,193.81 | $2,874.43 |
52 | $3,038.01 | $2,734.21 |
51 | $2,882.21 | $2,593.99 |
50 | $2,726.42 | $2,453.78 |
49 | $2,570.62 | $2,313.56 |
48 | $2,414.83 | $2,173.35 |
47 | $2,259.03 | $2,033.13 |
46 | $2,103.24 | $1,892.92 |
45 | $1,947.44 | $1,752.70 |
Bottom Line
For employees who plan to stay for 5+ years, like cardiac sonographers with high job security, the pension is likely to be more lucrative than the 401(k) match. Even though the 401(k) offers flexibility and portability, a fully funded pension with predictable income can outweigh the benefits of employer matching, especially with decades of service.
Key Takeaway for Northwell Health Employees: If you anticipate staying at Northwell for more than 5 years, as many employees do with an average employee tenure of 12 years, the pension plan could provide a more secure and substantial retirement income than continuing to rely solely on your 401(k).
If you are an employee of Northwell Health and you have more than $2 million saved for retirement and you would like to talk to a fiduciary financial advisor you can fill out the following form to request a call.
Disclaimer: The information in this article is provided for educational purposes only. While we believe the information in this article is correct, only your employer can be considered as an truly accurate source of information about employer matching and retirement plans. You should consult with Northwell Health benefits people before making any financial decisions or acting on any information you read about in this article. Neither Daniel Harris nor D.R. Harris & Co. are your financial advisor unless you have a signed written agreement with us. Before acting on any information you read about in this article we recommend that you do all of your own independent research to verify our statements and/or consult with your own professional financial, tax or legal advisors.
