'The 401(k) Could Prove a History-Making Fiasco '

[Ferocious]

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<< By switching from defined-benefit plans to 401(k)s, companies have effectively cut worker benefits. But there's little evidence that they have simultaneously raised wages to offset that effect. >>

 

[vi edit]

*cough*bullsh!t*cough*

Many pension plans are nothing more than a pyramid scheme similar to social security....and we know how well that works!

Also, many pension plans are based off of market indexes and stock values. If a 401k based off of a market index is failing, then it's a pretty safe assumption that the pension fund is going to be hurting as well. If the company is garanteeing a set payout, and their fund isn't gaining money, and in fact it's loosing money, then the company actually has to take money out to make up for it. If you've got baby boomers retiring here in the next 10 years, for 20 years straight, then you are going to see a MAJOR gouging of pension plans.

Corporations have to cough up those payout amounth from somewhere, and it's just going to be from people who are contributing now, and will be for the next 40 years with a huge "IOU" put in there place. Social Security is a prime example of how this "IOU" system DOESN'T work.

Sure a 401k may not pay out as much as a pension fund, but it's better than a) not getting any money at all because the company had to use your investments to pay for all the baby boomers, or b) not having a job because the company went bankrupt trying to support the pension fund, and c) better than not having any retirement plan at because it's the only plan a company can afford.

Some pension funds have done, and will continue to do very well. My father's pension is one such fund. But he is in a special pension fund that is municpal owned and has certain advantages over a private corporations own pension plan.

I'll wait for the retirement of all the baby boomers and the affects of it to come full swing before I call shots on which one is better. For the people retiring right now the pension may be the better deal. But, 20 years down the road when the coffers are empty from lots of funds going out, but not many going in, we'll reevaluate things.