[lolinder]

Pensions compete with self-directed retirement in the same way that a salary competes with founding your own business: they take all the risk and all the mental effort and give you something you can (mostly) rely on without any added effort, in exchange for a smaller return than is technically possible if you took the risk and planning effort yourself.

Some people would definitely be better off managing their own retirement, but just due to the way these things work my bet is about half of all people (the left of the bell curve) would be better off with a pension.

[Retric]

Pensions are also risky when you’re young because so much of their value depends on the final salary. Leave a job young without those promotions and 5 years of service can mean almost nothing 30+ years later in retirement.

Where you sit on that bell curve isn’t obvious at age 20, but it’s much clearer at age 40. Benefiting people who have already messed things up and swap.

Thus that single binary choice after college is likely suboptimal.

[bluGill]

When my dad started work in the 1970s he only had a pension which he - like most his age - didn't bother participating in. He latter got old enough to realize that he should save (probably when a new job offered a 401k with match) and regretted it so much he looked things up. Turns out that if he joined until that company laid him off he would get $0.75/month from the pension once he turned 65. In short a stupid investment. Those who were older like you say did much better.

there is one big advantage of a pension: you cannot outlive them. If you die at 65 (as my dad did) bad luck, but if you live to 109 you still get that income to live on.

[lotsofpulp]

Assuming the entity paying the pension has the cash. Not a problem for the federal government, obviously, but for other governments, and especially non government entities, running out of cash is a possibility.

Another risk is not having it be sufficiently inflation adjusted. An investment in SP500, however, would protect you from declines in the currency’s purchasing power.

[bluGill]

Most pensions since the 1970s or prehaps before are government insured in the us. But my family has stories of the relative who worked for a company for decades the company sent bankrupt when he was 60 and the pension was invested in the now worthless company stock.

the above is why I tend to oppose employee owned conpanies. Too much risk for the common man to have so much net worth in their job.

[lotsofpulp]

Even insured, they constantly require bailouts by federal Congress because PBGC can’t handle the load, depending on the political influence of the group being bailed out.

Auto manufacturing, teamsters, coal miners, etc. Only question is how much pull your group has in Congress.

https://www.nytimes.com/2019/12/24/business/coal-miner-pensi...

https://www.cnn.com/2022/12/08/politics/biden-union-pension-...

The biggest pension (and IRA/401k) bailout, however, is the implicit backstop the US provides the public equity markets. Might as well cut out the middleman and own the inflation protected asset yourself rather than accept a defined benefit in someone else’s control.