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Not any more... "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the
by joeyrideout 7y ago
Not any more... "The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types." [1]
[1] https://money.cnn.com/retirement/guide/pensions_basics.moneymag/index7.htm https://money.cnn.com/retirement/guide/pensions_basics.money...
- lotsofpulp 7y agoI mean that in common vernacular, when someone says "pension", they are referring to a defined benefit pension. Otherwise, in the US, we use 401k, IRA, "retirement funds", or other words.
- walshemj 7y agoAnd a 401k and IRAs is are very poor "pension" plan compared two other countries.
- lotsofpulp 7y agoI'm not sure what you're claiming. It's possible to design a very lucrative and costly defined benefit pension, but in the US, no employer is offering it other than governments, and even the governments are beginning to croak under the stress of unsustainable benefits, so new employees are not eligible for them.
- walshemj 7y agoI was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a SIPP).
- lotsofpulp 7y agoBased on some quick Googling, I don't see what is so much better about an SIPP or a group personal pension plan? SIPP offers some kind of matching from the government, but it doesn't seem significant.
- nguoi 7y agoI don't know anything about the 401k system, but the money going into my pension is from my gross salary. Combined with high taxation, it means that it's worth up to twice as much going into my pension as it would be going into my bank account. SIPPs are beyond my lifestyle.
- lotsofpulp 7y agoIt's the same in the US.
- walshemj 7y agoMain one is Tax relief at your highest rate on income tax you get an extra 20% into your pension - if your a higher rate tax payer you can reclaim the extra tax relief. For a higher rate taxpayer you put in £60 and get £100 in your pension. You can also do salary sacrifice and reduce you income tax and NI lability
- sokoloff 7y agoUnless your retirement tax rate will be lower than your working years rax rate, it comes out in the wash eventually. It's quite likely that some people today will end up paying higher income tax rates in retirement than today.
- walshemj 7y agoId like to see that worked out in detail have you got an example? unless you mean you bust the lifetime limit, which is just bad planning. And you can use drawdown to manage your income from the pension and you would of course make use of income from your ISA.
- Rebelgecko 7y agoI don't think I've ever heard someone refer to their 401k as a pension
- lotsofpulp 7y agoI think they use the word "pension" for defined contribution retirement plans in the UK since they, of course, don't have the US tax code section 401k.
- deleted 7y ago[deleted]
- SketchySeaBeast 7y agoAll that tells me is that there are no more pensions, not that the definition has changed. Employers are contributing money now, but have pushed any risk onto the employee, making it feel pretty worthless as a retirement strategy.
- ghaff 7y ago> Employers are contributing money now, but have pushed any risk onto the employee, making it feel pretty worthless as a retirement strategy. You seem to be arguing that saving for retirement is futile. You can invest is (almost) arbitrarily low risk to principal investments like US treasuries. I probably wouldn't advise that as the sole investment strategy for most people. But it is one way to reduce certain types of risk. (And most defined benefit plans have the same risk with respect to inflation.)
- sokoloff 7y agoI think all they're arguing is that the word pension =~= "defined benefit retirement plan".