This avoids trusting the employer.
In this case, the article uses the term pension to include "defined contributions", like in https://www.moneyhelper.org.uk/en/pensions-and-retirement/pe....
> Countries have various mechanisms to save for retirement and it’s wise to do so Could you elaborate on why is it "wise to do so"? On paper, these contributions is free money.
In practice, you don't have access until retirement and the law can change at any time. (See article for more disadvantages that are often overlooked or not mentioned.)
How can anyone forecast the economy in 40 years? It looks like people rightfully "avoid trusting the employer", but how can anyone trust the governments more than employers?
And for the N American systems, the funds are accessible at any time with probable tax penalties and possibly other fees. Only the defined-benefit pension is out of reach. Each country might define loopholes that permit use of funds for specific purposes - have not checked.
My point was to draw a distinction between this and the UK (where the author of the post is). In the UK there's
- state pension (similar to social security in the US) (not the topic of this thread)
- defined benefit pensions - increasingly rare because they're expensive for the employer (some older companies and the National Health Service still have this type)
- defined contribution pensions - similar to a US 401k - you contribute some % of your salary, your employer does too, you can decide what to invest in or transfer to a different provider when you move jobs - this is still called a pension in the UK, it's the most common type of pension and it's the topic of the original post