Pension Case - History of the Pension Plan

Introduction

Pension plans have been around for over 200 years in the United States. Exactly where did pensions come from or why were they created or developed in the first place will be looked at and examined in this paper. Along with pensions is another form of a contribution plan, a 401(k) plan which like pensions most have heard about or more then likely have one of their own. In some cases people have both a pension and 401(k) plan at their employment. Like pensions, 401(k) plans have a history, not as long as the traditional pension, a few decades. The paper will look at how the country went from only offering pension plans to offering 401(k) plans collectively or solely, and why. During the discussion of pensions it will be brought up the different type of pension plans that are available for different classifications of workers, for example, an Employee Stock Ownership Plan, Simplified Employee Pension, Thrift Savings Plan, and Cash Balance Plan. There are two basic type of retirement plans, defined benefit plans and defined contribution plans. The meaning and differences between both plans will be examined. As businesses go in the United States there is public employers, such as the Federal Government or state government, as well as private employers such as PNC Bank, United Parcel Service. Each employer, private and public offer varying degrees of pensions or 401(k) plans, which will be discussed in the paper. As with most things in life there are pros and cons, and pensions and 401(k) plans are no different. With the economy in the United States being in a recession one cannot dismiss the current state of pensions and 401(k) plans and what effect if any this has had on the employers and employees alike.

History of the Pension Plan

Pension plans have been apart of the United States and its history from the beginning of the United States. Pensions started with the Presbyterian and Moravian Churches during the colonial days (History Pensions). The reason for the churches starting pensions was for the families left behind when the husband was a minister had passed away and the family needed money to sustain themselves (History Pensions). During the colonial days it was the standard practice for the woman to stay home and tend to the children and take care of the daily work at home. Since the wife did not have an income source the Presbyterian and Moravian Churches wanted to ensure the wife and family of the deceased minister was financially taken care of (History Pensions).

As the history of the country continued to evolve and mature so did the pension as well. From the colonial days and the Revolutionary War to the Civil War, pensions were given for various reasons. Most were to take care of the families left