this post was submitted on 18 Aug 2023
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One big place where 401ks are better for the modern workforce is portability, because the investments in the 401k are vested property of the worker, so the worker gets to bring that retirement with them even when changing jobs. Under the traditional pension programs, people who left the employer for another job would often be leaving behind a lot of pension benefits, and be behind at the new employer's pension plan.
That's a fine point, but I also think there's a case to be made for attributing this difference in policy to the practical reality that traditional American pensions were popular decades in the past while 401k policies are popular today. Viewed through that lens, it seems fairly obvious that a modern 401k policy would be more accomodating of modern work sensibilities than a traditional pension plan originally penned 60 years ago!
With that being said, I think it's a little self-defeating to limit our discussion to such things. Our non-American friend who originally asked the question would almost certainly be more familiar with the more modern and less all-or-nothing pension varieties. Indeed, depending on where they live, it may even be possible to transfer accumulated pension benefits between plans when changing jobs.