Economic Efficiencies Unique to Pensions Enable Plans to Deliver Retirement Benefits at Half the Cost of 401(k) Accounts, With Four-Fifths of the Cost Differential Occurring Post-Retirement
Article Excerpt: "...WASHINGTON, D.C., January 6, 2022 – A new analysis finds that defined benefit (DB) pension plans offer substantial cost advantages over 401(k)-style defined contribution (DC) accounts. A typical pension has a 49 percent cost advantage as compared to a typical DC account, with the cost advantages stemming from longevity risk pooling, higher investment returns, and optimally balanced investment portfolios.
The analysis also indicates that about four-fifths of the cost difference occurs during post-retirement years. Once retired, individuals typically experience substantially higher fees when retirement assets are withdrawn from a workplace retirement plan. ..."
Resource: www.nirsonline.org
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