Having a pension, any annuity or steady stream of income in retirement is great, even essential. Those of us who have a good pension rarely appreciate the value and security they provide. Unfortunately . . .
The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types. Source: CNN Money
Meanwhile in the public sector, federal, state and local workers still enjoy a defined benefit pension plan 84% of the time, higher than even during the peak of coverage for private sector workers.
Back in 1979 62% of did not have a defined benefit pension and although allowed by law, most people never heard of an IRA. 401k plans weren’t viable until 1981 and initially were mostly in large employers; the ones that typically had a pension plan too.
If 62% of American private sector workers never had a pension plan of any type, how do we conclude that access to various types of plans today is an indication of underperformance of defined contribution retirement plans?
There is a failure to perform for sure and that failure is with American workers. If you make it to age 55 and have not accumulated at least one years income in investments, whose fault is that? Not the plans; heck you don’t even need a plan.