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Wikipedia has more than just an American audience. "Pension" in many other countries means any form of retirement plan; that's the definition that the Wikipedia article on pensions describes. In colloquial usage in the U.S, it explicitly means defined-benefit plans to distinguish them from 401(k)s and other retirement savings accounts, which are defined-contribution.



Well it's more confusing that helpful then! Because as a foreigner when I look up what a 401(k) is and it tells me it's a pension, and then everyone tells me it's not a pension, I don't know what's going on!


This is one of those things where details matter, and that's why terminology is different. It's like if I went to England and someone told me "Parliament is like Congress" and so I go around thinking "Oh, you have two houses just like us, and you have political parties and elected representatives, must be just the same", blissfully ignorant that the way parliament operates is very different from how the U.S. Congress operates, and the different mechanics lead to very different emergent effects (I had no idea what this coalition government thing in the last election meant, for example; such a concept doesn't exist in the U.S.).

Whether you have a pension or a 401(k) has a very big impact in how you organize your career in the U.S. If you have a pension, you're strongly incentivized to stay with one employer for a lifetime, because you lose it if you leave and your benefit usually depends upon length of service. That in turn means that you don't care how your resume looks to the outside world, you don't invest as much time in professional development, and you generally accept whatever advancement schedule is available in the organization.

If you have a 401(k), you're strongly incentivized to maximize your earning potential, because you only get out of it what you put into it (plus investment returns). That usually means switching jobs, which means you need to consider how your professional experiences will look to the outside world. It means that you need to be constantly up-to-date with how the industry is changing around you, and with how the financial markets are doing, and manage your own finances & career development. On the plus side, you take your 401(k) with you if you quit or move, and so you have greater flexibility. And you're not exposed to the risk that your employer could just die and take your pension with it. You are exposed to the risk of the stock market crashing, though.

Because life strategies are so different based on the different retirement schemes, people will assume certain things about you if you say you have a pension, and they'll assume other things if you talk about your 401(k). If you say you have a pension when it's really a 401(k), those assumptions are likely wrong, which leads to awkwardness all around. That's why they're different terms in colloquial usage.


> because you lose it if you leave

Typically no, unless you're unvested, I think. You may get a much smaller benefit, though.




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