| > Back then companies didn't really go under like this. The mean time between job transitions was less. That's partially because pensions created job loyalty even if was through golden handcuffs. If people had to work another 5 years for another 15-20% in your pension, people would do it. It fell down because: 1. Corporate raiders would buy companies to take the money out of the pension plan. Pensions are by and large unregulated. And pensions are just a bunch of money sitting in an account of which payouts are largely determined by corporate policy instead of by contractual obligation. 2. Companies would fail to pay into their own pension fund based upon overly rosy economic projections that wouldn't come through. This forced companies to declare bankruptcy just to get out of the burden of paying a pension that was promised as part of the salary years ago, even if it was a contractually obligated pension. 3. 401k's became the norm. Because companies now no longer have a separate account they have to manage, and it's only x% (3 or 4 usually) of your paycheck. In the end it comes down to, how well you trust people to manage your future. Back in the 50's it worked largely well, because people weren't willing to break societal norms. |
Defined benefit pensions have been heavily regulated since ERISA (1974) and PPA (2006).
>Back in the 50's it worked largely well, because people weren't willing to break societal norms.
Back in the 50s, people were barely even getting paid from the pensions. And the population was young, everyone was paying into the funds, instead of receiving from them. And their lives were much shorter. There are consequences to future growth when people start having fewer and fewer children and living more and more years.