These days, very few people get guaranteed pensions and they are almost always 401ks instead.
If you are running a business, isn’t it cheaper to provide pensions? You can invest the money in the same sort of funds that a 401k is invested in, but money not paid out (say, both retiree and spouse die) can be pocketed where 401k goes to whoever is a beneficiary like kids, extended family, charities, pets, etc).
In: Economics
Simple explanation:
Pensions are a pool of money that you all pay into and you get a set amount out of every month until you die based on your years of service and age of retirement.
401k is money you contribute into your own account and then when you work with a planner to know when you can retire and how much you can draw out monthly until it’s all gone. It’s based on investments.
Pensions are losing steam because people are living longer and not staying at the same companies for life anymore. It’s just not feasible to have a large enough staff to operate one and be able to keep funds in it while still keepIng up with the retirees monthly distributions.
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