Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Of Course Employers like 401(k) Plans; They Avoid Risk

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Of Course Employers like 401(k) Plans; They Avoid Risk

Article excerpt

Regarding "Real-World Pensions," a July 5 letter by Nick Cortese:

After working all their lives, people with pensions should have a guaranteed income after they retire. It should be on the employer to make sure of this. This is exactly what a "defined benefit" plan does.

Mr. Cortese does not agree. He says the alternative to a 401(k) pension is "collecting a reduced 'defined benefit' provided by the Pension Benefit Guarantee Corporation that so many local retirees have been forced to accept." He does not tell you that this happens only when an employer fails to adequately fund its defined benefit plans - which they are required by law to do. Companies go bankrupt and the taxpayers pick up the tab for the pensions.

401(k) plans reduce pension costs to the employer and shift all of the investment risk from themselves to their workers. …

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