Employers usually match at least part of that contribution. This type of retirement plan has a lot of advantages, but of course, there are drawbacks as well. Pro's of the 401k Employers gain more control of benefit costs and employees gain investment freedom and control their contribution levels. However, while a 401k plan can be an excellent retirement benefit, an individual's plan is only as good as their investments. The 401k plan guarantees nothing.
Return depends entirely on how much money goes into the plan and the rate of return on investments.
A lot of employers do not offer pension plans at all, traditional defined benefit plans or any other type of plan, and much of the growth in 401K plans has been in very small plans offered by very small employers. Silverman speaks of plans with less than 10 participants with due consideration to the fact that 401ks are giving many employees, who never had any pension coverage at all, some pension coverage. According to Silverman, a 401K plan is also more flexible. With a regular pension, employees accumulate savings at a fixed level tied to their tenure and wages. You can far exceed those levels or do far worse than those levels.