The Boeing machinists went on strike last year hoping to restore the pension that the company froze in 2014. That did not happen.
A new report published March 20, 2025, shows just how far the workplace has moved from the traditional pension.
Under a traditional pension - what's called a defined-benefit plan - a retiree receives a fixed yearly sum for the rest of their life. The employer funds it and carries the investment risk, making up the difference if the fund comes up short.
A 401(k), in contrast, is a defined-contribution plan, which flips the arrangement. You decide how much money from each paycheck goes into your account, your employer may match some of it, and you pick from the investment menu.
The same idea goes by other names depending on your workplace: 403(b)s for public school, church, and some nonprofit staff, and 457(b)s for state and local government employees. What you end up with depends on the market, not on a guarantee.
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The Federal Reserve's Survey of Consumer Finances, a detailed household survey run every three years, tracks who has what. The data from 1989 through 2022 show defined-contribution plan coverage rising and traditional pension coverage falling.
This shift was not sudden. For much of the 20th century, a pension was a standard benefit for many factory and office workers. As employers moved toward defined-contribution plans, workers gained more control and portability, but they also took on the investment risk themselves.
Since workers can hold both types at once, the numbers can add up to more than 100%. The survey also changed how it was asked in 2004, which created an apparent one-year blip in the trend.
From 1992 through 2022, every industry recorded a net decrease in the share of workers covered by a pension. Public administration stands out because federal employees get both a pension and a defined-contribution plan through the Federal Employees Retirement System.
Employers had practical reasons to drop pensions. A pension is a permanent promise lasting as long as the worker does, and the company bears any investment shortfall. A 401(k), by contrast, gives the employer a predictable bill each pay period while shifting the investment risk to the worker.
Some economists argued that companies first offered pensions partly as a retention tool. If that theory were right, the end of the pension should have made people switch jobs more often. That suggests pensions no longer worked the way they once did as a retention tool. Workers still place a high value on them, as the Boeing and UAW strikes made clear.
The biggest change for workers is that retirement risk has moved from employer to employee. With a pension, the company absorbed the cost of bad markets. With a 401(k), your balance takes the hit. The guaranteed monthly check older generations relied on is largely a thing of the past.
The strikes show workers still want that security, while the settlements show employers are not returning to it.
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