Pensions May Actually Be Cheaper For Employers Than 401(k) Plans

Pensions May Actually Be Cheaper For Employers Than 401(k) Plans

With a few notable exceptions, the age of pensions is largely over in the U.S., with traditional defined benefit plans mostly being replaced by defined contribution retirement vehicles like 401(k) plans. A new study from the National Institute on Retirement Security, though, seems to suggest that the end of pensions may not actually be as beneficial to companies as once thought. In fact, a giving employees a traditional pension plan may actually be less costly than operating a 401(k) or other defined contribution plan.

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Why Are 401(k) Plans Costlier Than Pensions?