Pension plans and 401(k) plans can both help workers during their retirement years. While once commonplace, pensions have largely been replaced by 401(k)s in the private sector.
Employers offer an array of benefits to attract and retain employees, and helping workers save for retirement is one of the most common perks. The two main types of retirement plans are 401s and pension plans. While both can ensure you have a steady stream of income during your retirement years, these plans are very different in some fundamental ways. Read on to learn more about each type of plan and how they are different.
While pension plans were once commonplace, they’ve become increasingly rare. Only 15% of private-sector workers have access to defined benefit plans, according to the Bureau of Labor Statistics. They are more common for state and local government workers, with 86% of such employees having access. Many companies have found that sponsoring pension plans is economically burdensome and too complex to manage.
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