[joeyrideout]

An important distinction to make with GE is that most of their pension plan is "defined benefit" as opposed to "defined contribution". The latter is much more common nowadays because it avoids these massive long-term obligations to the company.

EDIT: Added "most of". A percentage of their employee base has already transitioned to defined contribution.

[lotsofpulp]

In the US, "pension" typically means a defined benefit pension.

[joeyrideout]

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.money...

[lotsofpulp]

I 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]

And a 401k and IRAs is are very poor "pension" plan compared two other countries.

[lotsofpulp]

I'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]

I was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a SIPP).

[SketchySeaBeast]

All 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]

> 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]

I think all they're arguing is that the word pension =~= "defined benefit retirement plan".

[Rebelgecko]

I don't think I've ever heard someone refer to their 401k as a pension

[lotsofpulp]

I 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.

[charles_f]

Earnest question from a non-American - aren't companies legally bound to pay these benefits?

It's always surprising to me to see those huge companies stopping payments and the story ending there

[lotsofpulp]

Legally bound doesn't mean much if it doesn't have the power to print money. If it affects enough voters, the government usually steps in with a bailout for part of the benefit.

[chrisfinazzo]

In the past, this was generally true, but not anymore. Case in point, my great uncle - yes, that's a thing in genealogy, look it up - was fortunate enough to retire with one in the late 80's/early 90's.

You don't even have to know much about the system to understand how this works.

Defined benefit - Your pension is X, determined by rank, years of service, etc.

Defined contribution - While the above conditions may still apply, the bottom line of how well you do is determined by how much you put in on a regular basis.

Not hard to imagine why most companies made the switch or simply stopped offering traditional pensions - they're really expensive over the long term.

[CalRobert]

I never heard anyone in the US in my 30 years there use the term "pension" to refer to the typical retirement plans available in the US.

In UK and Ireland, though, most retirement plans are called "pensions", even defined contribution.

The first time I told my mom about pensions after moving, she said "oh my god you get a PENSION?!??" like it referred to the paycheck for life her parents got from the paper mill.

It's just semantics.

[nilkn]

I think the point is about vocabulary more than anything. Most people (in the US) understand the word "pension" to specifically refer to a defined benefit plan.

[hammock]

"Defined contribution" is a euphemism to give a softer landing for employees that were expecting a pension. Workers should consider not using that language. The fact is the words are 50% the same but the product is 100% different.

[sokoloff]

I think it's a quite literal and clear explanation of the differences between the types of plans.

Which variable is fixed?

In a defined contribution plan, the contributions are fixed/defined and the benefits vary.

In a defined benefit plan, the benefits are defined/fixed and the contributions vary.

[hammock]

That's the spin coming through. In a traditional pension plan, the company pays you a defined amount for your retirement. In a "defined contribution" plan, the employee pays for their own retirement (maybe some of what they pay gets matched).

[beached_whale]

It seems that when the companies do not own the pensions and they are funded properly this issue goes away. It's when the companies play games with other peoples money that we have victims. Independent 3rd party management of pensions often means less shenanigans and trouble