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In fairness, this is part of why the US has moved away from employer-managed pension funds. Pensions are still common in government, universities, and certain l

In fairness, this is part of why the US has moved away from employer-managed pension funds. Pensions are still common in government, universities, and certain lifetime-employment industries (e.g. power plants). But even in good, white-collar jobs there's been a shift to 401k matching, where you get a personal retirement fund which your employer funds with some amount of money beyond your normal salary. There are a lot of reasons for that switch: it saves on the administrative headaches of having pensions from several companies, it encourages private retirement savings (because it's "matching"), it saves companies money (because many people don't contribute), and it lets companies keep predictable finances (because it's an investment paid up front, not a lifetime or fixed-dollar obligation). But on the employee side, a lot of the reason people with bargaining power accept it is that they trust 401k funds to stay safe (except from stock market crashes), and don't trust companies to fulfill pension obligations. The downside, as with healthcare and many other things in the US, is that when "good" jobs circumvent the problem, it takes away most of the social pressure to actually solve it for everyone.

mcv 7y ago
Getting it away from the company's budget is definitely an important step, but from what I understand, both old-style US pensions and 401k still fall short of the Dutch pension system, which has companies paying the money for the pensions into independent pension funds, so the pension isn't threatened by bankruptcy or mismanagement from the company, and the pension fund treats it as life insurance that keeps paying as long as you live. It's still not perfect; stock market drops and sudden increases in life expectancy can mean a pension fund won't be fully able to cover its obligations. This happened after the 2008 recession, so new laws demand that the funds need to aim for more leeway in their funding. Of course that means that with a good economy, the fund may end up with a lot of money it's not obligated to pay. For this reason there's a movement to give people a larger share of this risk, both on the beneficial end (when the economy grows more than expected), and effect of economic downturns (which is going to suck for people who retire during an economic downturn). This is actually what my pension does: I have a special kind of pension fund for self-employed freelancers where I seem to own the money in the fund and carry its risks, whereas normally it's the pension that owns the money and the risk. I'm not entirely sure how that works tax-wise, because it is still tax-deductible as far as I know. But if the investments do well, I get more money, and nobody's bankruptcy can cost me my money, which might still be a theoretical (though not actual) risk for a standard pension fund.

mcv 7y ago

Getting it away from the company's budget is definitely an important step, but from what I understand, both old-style US pensions and 401k still fall short of the Dutch pension system, which has companies paying the money for the pensions into independent pension funds, so the pension isn't threatened by bankruptcy or mismanagement from the company, and the pension fund treats it as life insurance that keeps paying as long as you live. It's still not perfect; stock market drops and sudden increases in life expectancy can mean a pension fund won't be fully able to cover its obligations. This happened after the 2008 recession, so new laws demand that the funds need to aim for more leeway in their funding. Of course that means that with a good economy, the fund may end up with a lot of money it's not obligated to pay. For this reason there's a movement to give people a larger share of this risk, both on the beneficial end (when the economy grows more than expected), and effect of economic downturns (which is going to suck for people who retire during an economic downturn). This is actually what my pension does: I have a special kind of pension fund for self-employed freelancers where I seem to own the money in the fund and carry its risks, whereas normally it's the pension that owns the money and the risk. I'm not entirely sure how that works tax-wise, because it is still tax-deductible as far as I know. But if the investments do well, I get more money, and nobody's bankruptcy can cost me my money, which might still be a theoretical (though not actual) risk for a standard pension fund.