American companies have traditionally made two promises to workers: a pay check for today and, for those with defined benefit plans, the promise of a future pension. Work hard and retire comfortably – it is part of the proverbial American dream.

Pension plans, which began in the rail industry in the 1880s and became commonplace among America’s bigger corporations during and after World War II, covered 23 million workers by the 1960s – or nearly half of the nation’s industrialised labour force.

Stiff competition for top-notch talent, a need to defer some of the cost of earning employees’ loyalty and favourable tax and wage legislation spurred companies to offer the plans. But as the post-war baby boom generation nears retirement, many companies are realising that walking away from pensions plans can be much more profitable than to sticking by their promises to workers.

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