NEW YORK(CNN/Money) - The old-fashioned pension is looking mighty appealing after three years of red ink in 401(k)s.

With stocks in the dumps, it could take years for battered 401(k)s to recover -- a rotten deal for those who've suffered heavy losses and are about to retire. Had they been in pension plans instead, in which their employer took on all the risk, they would have received their annual benefit no matter what's happening on Wall Street.

Still, 401(k) investors with years to retire might have the last laugh.

"Are you better off in a 401(k) or a pension?" asked Mitchell Kurtz, a certified financial planner and 401(k) consultant from Garden City, N.Y. "Unfortunately, the answer is always, 'it depends.' "

Pensions had their heyday in the era of Sinatra and poodle skirts, with a guaranteed benefit based on your salary and years of service.

How do the plans compare?   401(k)s  Pensions  Total assets  $2.1T  $1.9T  Total # of plans  674,000  56,000  Total # of participants  58M  42M    Source:  Employee Benefit Research Institute, 1998 study

According to one typical formula, you take your average salary in your last five years of service, multiply it by 1.5 percent; then multiply that figure by your number of years on the job to come up with your annual pension. For example, if you earned $100,000 at a job and retired after 25 years of service, you'd have a pension of $37,500 a year.

For workers, it was a free pot of gold waiting for them after 25 or 30 years, tended to by a professional money manager.

Then came the 401(k), one of the best gifts Uncle Sam ever gave to workers, allowing them to set aside part of their paychecks before taxes. (The savings limit is $11,000 in 2002, rising to $15,000 by 2006. For more on 401(k)s, click here.) Better yet, many companies kicked in a share, too - an average of 3 percent of a worker's salary.

401(k)s grew so fast that they overtook pensions in both the number of plans and participants starting in 1992. Now, the majority of American workers -- 58 million people -- have a 401(k). About 42 million have pensions.

The shift to do-it-yourself retirement plans has been a mixed blessing. On the one hand, 401(k) investors have the freedom to manage their own accounts and tap those funds in an emergency. But not all investors understand the level of risk they can afford to take. The Enron debacle, where employees invested most of their 401(k) contributions into company stock, proved that.

At the same time, 401(k) investors must fund their own accounts with pre-tax dollars, regardless of any company match they might receive -- making their paychecks that much smaller. (Of course it also lowers their tax tab.)

Let's go back to the example of the worker making $100,000. If he wants that same $37,500 in retirement, he'd need to save $400,000 in his 401(k). That's easier said than done when the market isn't cooperating - and who's to say we're not facing a 10-year downturn? The average 401(k) balance fell two years in a row to $36,390 by the end of 2001, according to a study released in June. Based on 2002's stock market losses, they'll probably lose money again this year.

Does that mean pensions were the better deal after all? Not necessarily.

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"Unfortunately there's no easy answer," said Rich Koski, a principal at Buck Consultants in New York, a human resources and compensation firm. "There are very cheap pensions and very generous pensions. There are very cheap 401(k)s and very generous 401(k)s. But are you better off with the cheap pension or the cheap 401(k)? Probably the 401(k)."

Consider this scenario from the Profit Sharing/401(k) Council, a non-profit group representing big employers with retirement plans. Let's say a man has worked at a company for 30 years. At retirement, he's earning $93,560. The company pays 1.25 percent of his average annual salary in the past five years. (Remember, it doesn't matter how the market is performing because he's guaranteed the benefit.) At retirement, he would have an annual pension of $32,488.

Now let's assume the man has a 401(k), instead. Same age, same salary. In this case, however, he contributes 6 percent of his own salary each year and the company kicks in 3 percent. After 30 years, he has enough saved for an annual income of $51,177, assuming an 8 percent annual return.

Such an example represents typical results for both types of retirement plans. But it doesn't necessarily reflect an apples-to-apples comparison, since those under a pension plan don't have to contribute anything out of pocket. So let's crunch the numbers again. This time, the man has a pension and decides to set aside 6 percent of his salary every year into a tax-deferred investing account such as an IRA or an annuity. We'll assume an annual market return of 8 percent. After 25 years, the account would produce an annual income of $31,667, giving him a total annual payout of $64,155.

But a fair mathematical analysis is virtually impossible. There are too many variables, including age, salary, years of service, amount invested -- even life expectancy. Plus, for better or worse, a 401(k) is optional. You can dip into your 401(k) to scrape together a down payment on a house; cash it out, or postpone retirement planning for the next decade. A pension, on the other hand, is off limits.

Costs are another wildcard. Any investment such as a pension that comes with a guarantee is going to be much more pricey for companies, which trickles down to employees. There are more administrative costs, and actuaries have to constantly recalculate the numbers. But a small plan, whether it's a 401(k) or a pension, also carries a higher price tag. Likewise, big plans of any variety are more cost-effective.

Some younger 401(k) investors who have watched their balances plummet might be relieved they're not looking retirement in the eye. Since younger people aren't likely to stay in the same job for 30 years, a 401(k) is the better bet. Other 401(k) investors who hoped to stop working in 2002, especially those with an unbalanced portfolio, will have to change their plans or lower their expectations for retirement. For them, a pension might have been the better option.

"People said you should ease up on the throttle and nobody listened," said David Wray, president of the profit sharing council. "There's no sugar-coating this: There are consequences for those individuals. But the reality is the people following them won't make the same mistake."

Of course, the best scenario of all is if you're lucky enough to have a pension as well as a 401(k). About 78 percent of the largest companies offer both, covering about 52 million workers, and here's how much it can mean to you in your golden years. Let's go back to the scenario from the profit sharing council. If you were that man earning $93,560, you'd get the $32,488 pension plus the $51,177 from the 401(k). That's $83,665 in annual retirement pay.

Yet oddly enough, employees at large companies do not always take advantage of both plans, Wray said. Only about 60 percent of participants with a pension choose to invest in the 401(k). "Because they have the pension, some of them have a reason not to save."