Years ago, â€œGreatest Generationâ€ employees would spend their entire careers with the same company, because at retirement they would get a lifetime pension.
Years ago, “Greatest Generation” employees would spend their entire careers with the same company, because at retirement they would get a lifetime pension.
There are pros and cons to almost everything.
Pros for the employees: Employees with a properly managed pension plan enjoyed financial security throughout their retirement years. During their working years, they had a good idea of how much money they would have for retirement and could plan ahead.
Cons for employees: Pension plan vesting periods tied employees to a company. If they transitioned to another company, the vesting period began all over again, or worse, the new company had no pension benefits.
Pros for the company: Employee turnover and turnover costs were very low. The employees with longer job experiences produced higher quality products and services.
Cons for the company: The pensions were expensive and funding the plans was a constant challenge. In some cases, the pensions were poorly managed and were not financially solvent.
In 1978, the Baby Boomers changed everything with the 401k.
What happened next?
As I said before, there are pros and cons to almost everything, and I’ll cover that next week right here on The Alemian File.
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