Pension Funds a Pending Disaster?

[cm husker]

Interesting read.

 

http://app.ft.com/cms/s/66b6b70c-eba6-11e5-bb79-2303682345c8.html?sectionid=home

 

Although I think pensions are a misguided form of compensation for a number of reasons, particularly in the public sector where there is no shareholder value tethering pensions to profitably, I do sympathize with pensioners who accepted lower pay in exchange for deferred compensation in the form of pensions.

 

Beyond those fiery political issues, there's a more profound underlying problem related to a city/states interest in bolstering an economic outlook, even artificially, to fund its obligations/remain solvent. It's visible in the article with the mention that in 2007 the pension funds were almost equal to the pension obligations.

 

It's a major problem when politicians are pulling economic strings to engineer their own solvency rather than setting up structures designed to promote "real" growth.

[BigRedBuster]

I definitely sympathize with workers who count on pensions for retirement. However, they are absolutely the worst form of retirement savings/program there is.

 

When you retire, you want total control over your retirement funds. Tying both parties for what can be decades to an agreement is just assigning.

[84HuskerLaw]

The government has been 'managing' our economy to varying degrees since the 1930s when FDR attempted to socialize the U.S. To a substantial extent, FDR achieved his desired outcomes and created such 'pensions' ans social security and many other government mandated "make work' type concepts. These notions are contrary to basic economic immutable economic principles. The result is there is no economically true or real way to guarantee future outcomes from anything financial or economic in nature. Free market principles give a society the best possible chance for economic improvement in life. Without the profit motive and economic incentives of income and wealth accumulation and the rewards for hard work and productivity, economic decline and social degradation is inevitable.

 

Social security is the ultimate FAIL in pension funds and is so fiscally unsound and INSOLVENT there is no other financial con that compares in history.

 

Obama economics has been devastating to the senior citizens certainly but also to all individuals generally. Zero interest rates for seven plus years has meant the wiping out of huge portions of the life savings and wealth of most of our people.

[cm husker]

What do you mean in your last paragraph about low interest rates?

[HuskerShark]

The idea of social security, pensions, and required retirement plans are all basically a loan to the government. It's obviously not for the benefit of the common person who pays into those things, because if it were, they'd have done those things themselves instead of the government mandating them.

[cm husker]

Another story on this problem. Similarly to '07, you have people with a vested interests swearing that all is well even as the economists raise alarm.

 

http://app.ft.com/cms/s/c9966bea-fcd8-11e5-b5f5-070dca6d0a0d.html?sectionid=home

[HuskerNBigD]

Interesting read.

 

http://app.ft.com/cms/s/66b6b70c-eba6-11e5-bb79-2303682345c8.html?sectionid=home

 

Although I think pensions are a misguided form of compensation for a number of reasons, particularly in the public sector where there is no shareholder value tethering pensions to profitably, I do sympathize with pensioners who accepted lower pay in exchange for deferred compensation in the form of pensions.

 

Beyond those fiery political issues, there's a more profound underlying problem related to a city/states interest in bolstering an economic outlook, even artificially, to fund its obligations/remain solvent. It's visible in the article with the mention that in 2007 the pension funds were almost equal to the pension obligations.

 

It's a major problem when politicians are pulling economic strings to engineer their own solvency rather than setting up structures designed to promote "real" growth.

 

Was this specifically talked about in the article? For some reason, the link isn't working. I take that back, it is working but you have to register and pay to see the article. Would definitely be interested in seeing what was published.

[cm husker]

They talk about the mathematical probability of it collapsing and how some of the numbers have been covered up by political engineering. The commentary was mine, including about the trouble and bad incentives around linking stock market performance to pension and ss obligations.

 

Not saying we can or should completely delink them, because of the value generated in the market, but it's something to think about.

 

Im leaning more toward immediate compensation and then allowing employees to invest their compensation as they see fit.

[cornographic]

The bad ol' banksters started raiding the Teamsters pensions a few months back--not reported in the MSM, of course--why the hell should the corporate news report anything to do with Labor as they generally don't give a rat's ass about Labor and Fox is especially hostile towards Labor. Anyway, you work for ~30 yrs as a UPS driver and what not, time to retire and find out your pension is somehow inconveniently--for you--being cut by 50-60%. And the MSM wonders why there are so many angry blue collar men out there...

[cm husker]

Do you have a link to what you're describing?

 

 

Anyway, this is about public pensions.

[cornographic]

Do you have a link to what you're describing?

 

 

Anyway, this is about public pensions.

Well, there're plenty of links as to the Teamster cuts. http://www.startribune.com/retired-union-workers-to-rally-at-state-capitol-over-pension-cuts/371873431/

 

The Koch bros and their labor hating henchmen like Scott Walker and the like are really going after unions all over the country. Nothing particularly new, but more intensified in recent years it seems.

[cm husker]

You really don't seem to understand the difference between public and private pensions huh?

 

 

As I said, I'd prefer companies pay more up front rather than use pensions, but recall that labor agreed to that and had to understand it was tied to economic performance.

 

Sorry a person can't retire at 50 with a 70% pension. But that's the gamble they took in exchange for up front (but less) pay.

[cm husker]

I don't want to shift the discussion too much but the teamsters situation does illustrate the problem. I note in that link that some paid as much as $15,000 a year into their pensions. Imagine if they'd simply been allowed to save that in an index fund rather than rely on their industry to continue to perform well during the next 50 years.

[Stumpy1]

I must be one of the lucky ones. I do not pay anything into my pension as it is 100% paid by the company. It is based off of your top 3 yearly earnings and the number of years of service. They have a formula that they use to figure it. When you retire, they will allow you to take it in cash or have it rolled into any account you want. A guy I work with just retired and his pension came out to be 2x his currently salary and he had been with us for 25yrs.

[BigRedBuster]

I don't want to shift the discussion too much but the teamsters situation does illustrate the problem. I note in that link that some paid as much as $15,000 a year into their pensions. Imagine if they'd simply been allowed to save that in an index fund rather than rely on their industry to continue to perform well during the next 50 years.

Relying on an industry (or anyone for that matter) have control over your retirement account and not you is just simply idiotic. It really is the dumbest form of retirement funding ever invented.

Let the employee have control over the money and own the money themselves. Once the employee retires, there is no more fiduciary relationship between the company and employee.