Function, Regulation, and Investment Strategies
Pensions offer guaranteed lifetime income in retirement, a key difference from 401(k)s, where savings can run out. While traditional defined-benefit pensions have largely disappeared in the private sector, they remain common and often generous in the public sector.
Private pensions are regulated under ERISA and backed by the Pension Benefit Guaranty Corporation, which insures certain benefits if a plan fails. Pension funds invest across bonds, stocks, real estate, and increasingly alternatives to meet long-term obligations. Their financial health varies; federal backstops show strength, while many state and local plans still face funding gaps.
Key Takeaways
- Defined-benefit pensions guarantee lifetime payments based on salary and…
