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
Pensions are a bit of a relic from times when many people worked for one company for most of their lives. It benefits people who stay in a company for long periods because the payouts are tied to last salary drawn. This doesn’t really work out as well for modern careers where most people don’t stay that long in a single company.
Pension funds are also rather expensive for companies and there was a history of some companies bailing on their pensions (this involves the govt picking up the bill in some cases). It really turns out bad when people are living much longer – as older pensions were designed around retirement at 60 with average lifespan of 68. Nowadays a person who survives until 60 has a better than even chance to make it to their mid 80s.
401k’s are tied to the person and basically doesn’t matter how many companies a person works in or for how long. The downside is that it requires that a person diligently contributes.
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