This is one of the best defence of Defined Benefit Plans I have seen for a while… but given the current trend, these won’t be around that long
I understand why DPP are not popular with companies, it shows up on their books as liabilities and it can keep growing as their employees live longer, but it is by far the best type of pension to have.
There’s lots of pundits that think that Defined Contribution Plans are just as good, but the problems is that the only way to make really good returns (average investor’s return is 3% after inflation) is to own companies, which individual investors just can’t do. Defined Pension Plan usually have a pension board who has the money to buy companies. In Canada, the Teacher’s pension plan is one of the largest owner of commercial real estate, they even owned the Maple Leafs for a while.
Maybe the solution is a new type of pension plan where it’s defined contribution, but managed by a fund manager like it’s currently managed so that the money can be pooled, something like TIAA-CREF. This way there’s no liability for companies and the funds management is out of individual hands who in general is terrible at managing money.