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
2 reasons. First off, they are much preferred by corporate America. A pension creates a debt obligation for the company. If Ford has a pension, Ford has thousands of employees paying into it, and creating a real obligation to pay out to them in the future. With a 401k Ford gives you your employer match, and then they’re done with it.
Second, the reliability of a pension is basically 0. Back in the late 80’s or early 90’s one of the airlines was facing bankruptcy, largely based on it’s massive pension obligation. The courts allowed them to bankrupt out of the pension obligation, and restructure. Basically thousands of employees who had paid in for decades were told to pound sand, and the airline kept right on going without having to pay out.
Interesting note, the 401k was created to create a retirement account for a small group of executives at Kodak who were exempted from being able to contribute to their pension program. Corporate America saw the beautiful product of that lobbying, and realized that long term it was way better for them, so they started the shift.
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