zlacker

Technically a pension is a trust that is independent from the employer. Its duties are to hold the shareholders (employees) funds. The issue is that the trustees is most likely the employer. So in the event of a employer insolvency, the pension is not affected by.

>>yohann+(OP)
What usually happens is the trust is underfunded, and the company makes it up in real time. When the company goes under, the pension plan gets assigned to the federal government's Pension Guarantee Corporation and if your promised pension is above the guarantee amount and above the funded amount, you take a hair cut.

If you're lucky, you've been getting audit reports about the underfunded pension for years, so you could prepare, but you probably couldn't do anything about it.

If your employer had put the pension funding in a 401k account for you, you would know what you have, and be able to separate from the employer and not have to keep in touch to make sure they're holding their end of the bargain.

>>yohann+(OP)
The pension may be held in trust, but if the employer goes under, the pension stops getting new contributions. In many cases, this led to insolvency of the fund as well, since contributions before employer insolvency were usually not high enough to ensure fund assets could cover future obligations.

>>toast0+y2
Pension mechanics are always important to remember, but especially important when the company is struggling.

>>kbolin+33
Indeed. A proper fund should be a managed investment fund like the Canadian Pension Plan fund for example.

I do not think a fund is better than a 401k in terms of returns over investment. But it's for sure easier for the employee, as retirement fund is a complex topic better managed by professionals.