> Most financial risk can't be reduced, only shifted around between parties. The problem with defined benefit pension plans is what happens when the sponsoring entity goes bankrupt and can no longer pay?
You take a haircut, and your pension ends up getting reduced to ~70% of what you were going to get paid. That's the "Flip a coin, and lose scenario". But at least you're still getting paid.
These funds don't magically drop to zero out of the blue, and neither will social security (Which is the biggest example of a defined benefit pension fund.)
> And as for a market crash two years into retirement, only an idiot would be in volatile assets at that stage. The default investment option for most defined contribution plans is a target date fund, which protects against that scenario.
Keeping all your money in safe, zero-return investments doesn't protect against the scenario of 'you lived longer than expected'.
My parents have recently retired. They aren't keeping every penny of their money in a zero-return mattress. If they did, it would run out when they hit 82. Investment orthodoxy agrees with them - it instructs that when you are 70, you should have ~30% stocks.
If you follow that orthodoxy, and get a recession a bit into your retirement, and live longer than expected, you are going to be old and broke, but I suppose you'll feel really smart for not getting hoodwinked by one of those defined payment pensions...