You require the company to fund a pension held at a custodian. If the company goes bust, your pension benefits are not impacted. Importantly, the retirement contributions are on top of your wages, versus being expected to find the cash for retirement exposure out of your own wages such that a 401k requires.
The pension funds are protected, but that does not mean anything close to your promised benefit is available for you to receive. It also creates a recurring liability that the company is on the hook for. This has historically worked out to cases where employees must either get a partial payout from available funds and tank the loss, or have the company fold and everyone gets laid off.
Pensions are a better deal until they catastrophically fail.
Employers match employee contributions to a 401(k), so it's not purely out of one's own wages. In this case, Boeing is matching up to 12% of the employee's income, which is very high.
This is no silver bullet. If the pension custodian assumed retirees would live to 75 on average and they start living until 90 then it's going to have a problem.
Superannuation is very very similar to the 401k honestly. I remember when Australia brought in superannuation system and the biggest pushback was that it was blatantly a move to the us system (we had government pensions in the 90s). The tax treatment isn’t that different since 401k contributions aren’t taxed like income either. I work for an employer that pays 15% 401k contributions on top of salary. The main difference is that employers aren’t required to pay 401k contributions and I think that would be the better point to make.
toomuchtodo|1 year ago
Australia's system is a model: https://en.wikipedia.org/wiki/Superannuation_in_Australia
spywaregorilla|1 year ago
Pensions are a better deal until they catastrophically fail.
MajimasEyepatch|1 year ago
Manuel_D|1 year ago
AnotherGoodName|1 year ago