By Maryalene LaPonsie
Source: US News & World Report
For decades, workers could count on their employers to continue sending them checks even after they retired. A traditional pension – also known as a defined benefit plan – was the norm in many workplaces, but rising costs have made them a relative rarity nowadays.
“The risk just became too much, I think, for employers to hold that on their balance sheet,” says Murtaza Rawat, pension actuary and risk mitigation expert with Gallagher, a global insurance brokerage, risk management and consulting firm in Austin, Texas.
Rather than promise to send employees pension payments in retirement, most businesses now use defined contribution retirement plans, such as 401(k) accounts. With these, a company deposits a certain amount into worker accounts but doesn’t have to pay out a specific amount in benefits in the future.