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> Giving your workers $2k a year in 401k matches without any future risk looks a lot better on the balance sheet than putting $5k in a pension for them and assu
by jsight 6y ago
> Giving your workers $2k a year in 401k matches without any future risk looks a lot better on the balance sheet than putting $5k in a pension for them and assuming the risk that it will be enough to keep them from depending on government handouts.
I feel like this sentence undermined the rest of them. Even giving them $5k would be better for everyone involved, as now the company wouldn't have to assume the risk and the employee would be able to direct their own investment.
- StillBored 6y agoMaybe, the point being that they can claim a similar level of benefits by simply assuming a much higher rate of return (or whatever) and rather than under-funding a pension, for which there are legal requirements they can give the worker less cash in a 401k and claim the same rosy rates of return and benefits. Then when those projections fail and the worker ends up working until they die, or collecting government assistance, the company doesn't have to take any responsibility. But from a company overhead view, the company could just contribute whatever amount they want in a pension too. The problem though is that then they would have to use the conservative numbers and point out that the pension might only be 10% of their salary or some other similarly low value. I think if they put error brackets around the 401k they would look a lot less rosy. Here choose a pension with $ a year, or put the money in a 401k and it may yield $$$$ or it might yield $. In one case you will be able to retire on the beach, in the other you won't be able to retire at all. Or you just go with the safe pension option that lets you retire with the same lifestyle.