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Originally Posted by IowaHawkeyeChief
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 business 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. As an employee with a money purchase plan, I prefer the cash balance over a traditional pension plan for a variety of reasons.
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It's interesting to me that annuities still exist, as they're essentially a self-funded pension. So they've obviously found a way to make the model work.
On paper, annuities make a ton of sense to me. As an individual, I have to worry about a market that goes south for a decade. As a perpetually living corporation, an annuity (or a pension plan) doesn't need to worry about that as long as they're adequately funded. I guess there are some variables such as life spans that could be a risk, but it seems like those could be built in.
I'm not necessarily advocating for the return of pensions, but my own observations is that people who get them feel much more secure in retirement, rightly or wrongly.
I'm also a big fan of society putting $1,000 into a long-term deferred investment fund for every kid that's born. It's not a huge cost, and it confers huge long-term benefits to the kid.