But seriously, guys, don't offer your employees a pension, and if a potential employer offers you one, laugh in their face. Let us manage our own retirements.
Are there products that let you do this pre-retirement as opposed to at retirement? If so they certainly don't seem as popular as the traditional save-to-65-then-buy-one approach.
In my view, there are 2 kinds of pensions. One is Defined Benefit, which is crazy to count on. On the other hand, companies can offer Defined Contribution, which is fine. If a company offers a 401K, and makes a 10K contribution, I'm happy. It's 10K more income that will probably get taxed at a lower bracket when I retire.
In most countries the backstop is to have a small defined-benefit state pension, so they won't end up literally penniless (in the U.S. this is Social Security, which pays a minimum of ~$9,500/yr). Other countries have tried to move more people into essentially buying annuities to mitigate the varying-lifespan risk. For example most defined-contribution private-sector pensions in Denmark now pay into pension funds (third-party, non-profit organizations) that by default are essentially the purchase of an annuity. You can cash it out as a lump sum upon retirement, but if you do nothing, the default is a traditional monthly pension for life, with the amount dependent on your contribution.
The reason pension obligations can be discharged in bankruptcy and 401k contributions can't+, is because the former is a contractual obligation to a future stream of payments, while the latter is a transfer of vested property.
Neither employers nor unions like this idea however because they both like to use pensions as a slush fund. Some workers also might not like it because annuities don't have great returns.
+There is the unlikely possibility of a clawback of 2 years at most.
We already know from pre-social security times that approach doesn't work; most people end up destitute.
Perhaps a mandatory 401k everyone must have, contribute to and refrain from using until age 65 would be the best of both worlds?
Social security is a pension.
> To which a 401k or IRA is infinitely preferable.
I dunno, the people who have had 401k's wiped out in various economic collapses might disagree on whether such plans are "infinitely preferable" to defined-benefit pensions.
> But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget.
Well, except voters, which have stopped politicians on several occasions who wanted to make much smaller changes -- which would not even affect current beneficiaries -- to Social Security than eliminating it.
> Perhaps a mandatory 401k everyone must have, contribute to and refrain from using until age 65 would be the best of both worlds?
Well, certainly, it would be one of the best (of the very many!) public subsidies the financial services industry has received. Not sure it would be good for anything beyond that, though.
There are some 401K plans (not many) that allow you to have index funds as your core which is definitely good. But not sure how to handle the market crash problem.
The same goes for salaries. There's nothing to stop them from offering them and enforcing slavery.
Except, you know, the people that would be affected.
Society needs to find some way to make promises of future money in exchange for present goods and services enforceable. If only there was some mechanism for that...
I didn't say you were, I merely pointed out that we already know people can't in general handle their own retirements.
Yes, let's see how that turns out, when 80% of the population over 65 is destitute or working at Walmart/McDonalds well into its seventies...
Yet while the excuses are legion the majority of these same people have no issue with car notes(s), cell phone contract(s), and buying breakfast/daily.
Fortunately my company offered a pension when I joined, they have since converted to 401k and frozen pensions at the end of the year. Yet it is there and one more safety for me.
It will take decades to undo this mans legacy.
The best we can do is withdraw 25% as a lump sum and then buy an annuity with the remainder ( or draw-down a Government-controlled small % each year ).
Not much of a safety net.
So naturally people decide to use a different savings vehicle, one in which they can decide how to use the capital. Hence the headline 'underfunding' of our personal pensions.