Pensions are retirement plans that are offered to individuals by private employers or government entities. These defined benefit plans invest in funds on behalf of individual account holders for guaranteed payment (in lump-sum or in payment streams) at retirement. The plans originated as early as 1875 with the first plan offered by the American Express Company. In the 1940s, labor unions became interested in the retirement savings vehicle, and by 1950, more than 25% of the private sector workforce had a pension. In 2019, 26% of workers had access to a defined benefit plan, including 16% of private industry workers and 86% of state and local government workers.
The intentions that created pensions and the benefits they still provide to retirees are powerful and relevant to retirement planning for millions of investors. For this reason, we’re happy to introduce a new series of publications entitled, The Power of the PENsion. These messages will educate, update, and hopefully entertain readers, whether individual investors or pension plan sponsors, on pension-related topics. We’ll address matters like contributions, associated costs, asset allocation, asset management, and fiduciary responsibilities in upcoming posts.
If you have questions or comments on these topics, or if you’d like us to consider a topic of particular interest to you, please contact Mike Paolucci, email@example.com or 440-808-1500.