Quote:
Originally Posted by Third Eye
As a former pension actuary, the move from pension to 401k was primarily driven by desire to de-risk on the employer side. Plain and simple. Yes, portability is an advantage for employees, but let's not get it confused. The current hiring marketplace is a symptom of the disincentivizing of staying long-term, not the other way around.
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As someone who worked closely with ERISA and plans in the past I don't necessarily disagree. However, as 401k's became more prevalent in the late 80's, it allowed certainty on the books for employer, as you mentioned, as well as an alternative for employees. This de-risking was necessary to compete in the evolving global economy, more so, than "how can we screw employees". Those that needed to compete for employees on the benefit side, still had substantial cost for matching contributions/profit sharing contributions, it was just a much more predictable cost. Many employers have went to cash balance plans in lieu of traditional Defined benefit plans in addition to their 401k plans. While this continues to grow and is a great benefit for employees, I've seen many employees leave and go to companies that don't offer a money purchase plan at all, which is a huge loss of a benefit. As an employee with a money purchase plan, I prefer the cash balance over a traditional pension plan for a variety of reasons.