But over the long term, pension plans are a cheaper way to provide retirement benefits than an equally generous 401(k) plan, says Towers Watson consultant Alan Glickstein. A pooled pension fund is more efficient and can safely take more investment risk than individual savers can. That may be one reason two-thirds of big insurance companies still offer new employees pensions, he says. Many are mutual insurance companies that don’t need to answer to shareholders every quarter.
It’s always been hard to get a pension at a retailer, a tech company or in other industries where employee turnover is high. And, despite holdouts such as utilities, other employers have adopted their short-term attitude toward workers. The number of Fortune 500 pension plans open to new employees dropped by half since 1998, closing at a rate of 12 a year.
Older employees and retirees generally got to keep their benefits. Most younger workers, however, have no retirement safety net beyond Social Security and a 401(k) plan they must fund themselves. Or they may not even have a 401(k). For half of private-sector workers, the problem isn’t an inadequate retirement plan. It’s no retirement plan at work at all.
Article Appeared @http://www.bloomberg.com/news/2014-09-05/retirement-royalty-where-workers-still-get-a-pension.html