General Discussion
In reply to the discussion: Let me explain to you what happened to pensions [View all]laundry_queen
(8,646 posts)If a company goes bankrupt, the employees can often kiss their pensions goodbye.
Defined benefit is often a huge cost for employers, managing a large pension fund is often very expensive. That said, by switching to a defined contribution plan, the company is passing the cost down to the employees. However, at least if the company goes under, the employee still gets to keep their contributions.
No easy answer to this - I happen to think government programs like social sec in the US and CPP in Canada should be strengthened, because as it stands now, if you work in an industry that does a lot of contract work, or you switch jobs more than 3 times in your career, saving for retirement gets difficult, if not impossible for some. I agree sticking your money in the market is basically gambling, but what choice do people have? Stick it in a savings account that earns 0.6%? Most people don't have the money for the good financial advisors, and the ones they end up with don't know enough to earn them decent returns regularly. It's all a huge risk to the employee. That's why I think the government programs for retirees should be strengthened, and caps should be removed. The rich should pay into it and not collect. It's just the decent human thing to do.