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Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of genera

Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of general debt obligation. You may also be confounding private and public pension funds, the latter of which I am guessing makes up the lion's share of what the article is talking about. Of what I know of actuarial work (not much, admittedly,) outlooks are calculated on the combination of many risk dimensions. Changes to pay outs and qualifications are made decades in advance to attenuate the effect. But to address your concern head on - yes, the fund can go broke, and it's not the rest of the public's problem. That's the kind of loss that creates healthy risk aversion and should make for sensible negotiation by labor leaders and the politicians they put into office in order to limit corruption.

SilasX 9y ago
>Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of general debt obligation. You may also be confounding private and public pension funds, the latter of which I am guessing makes up the lion's share of what the article is talking about. I'm not confounding anything; it's the same the problem in both cases: your organization accrued a liability with no asset to pay it, so you had to take the payments from newcomers to this system. Whether that happens within a private or a public pension fund doesn't change the dynamics of the core problem, which is that your organization is at a cost disadvantage to competing organizations, which then spirals out. The example I gave was the dinosaur companies. Bethlehem offers $15/hour but must take out $1/hour to pay for unfunded pension obligations. NewSteelCorp offers $15/hour but needn't take out anything for legacy pension obligations. Where do the best workers go? And what does that to do the burden on remaining workers? Likewise, every time you raise SS taxes to cover increased obligations, you're risking the flight of contributors to other countries and the underground economy. I don't know what you think I'm "confounding" there; I see a recognition of a common pattern that I tried to explicate, with implications for the current problem. "Oh, this is public, not private" is non-responsive. >Of what I know of actuarial work (not much, admittedly,) outlooks are calculated on the combination of many risk dimensions. And my point was that the actuaries missed a big dimension, which is that the organization has actual competition. So when you say "oh, we'll just take one more dollar an hour from workers to shore it up, what's the problem?" you're failing to model the loss of contributing workers to companies that don't have to thusly gore them. You're right that pension funds can retroactively change pension formulas, but they typically don't, and Social Security definitely hasn't cut pensions to something sustainable. >But to address your concern head on - yes, the fund can go broke, and it's not the rest of the public's problem. That's the kind of loss that creates healthy risk aversion and should make for sensible negotiation by labor leaders and the politicians they put into office in order to limit corruption. So you agree a pension fund can go broke, but are simply claiming that governments are immune to an analogous problem? I'd say it becomes the public's problem at that point, when there are millions of seniors that expected payments they can't get without raiding other critical government services. Why don't you?
- lr4444lr 9y ago
  I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal mandates in the charter for how the public pension assets can be invested and the monopsony on the employment of public servants (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage). Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke. If it were the public's problem, it would be solvent. It's not like muni bonds. I'm with you on your description of the pitfalls in the private sector.
  - SilasX 9y ago
    >I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal Then you agree that you need to address the parallel's I've drawn if you want to maintain that position? > (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage). Are you reading my comments? In both replies, I already explained how there are relevant ways in public pension funds experience this problem: workers can be scared into other countries, other jurisdictions, other jobs, and the underground economy, with the exact same effect on ability to meet obligations. If you believe this can't happen, you need to flesh it out a bit more. "It's not like there's another company they can work for lol" is how GM etc got into this mess. > Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke I don't know any non-trivial sense in which "a massive class of people expected pension payments that will be cut off" doesn't count as the public's problem. To everyone in the world looking at the this, the problem is that a) lots of people are expecting to receive pension money and b) lots government services need to be provided, and we can't afford to do both. You're saying it's "not a problem" simply because "you can just reneg on a) while paying b)"? That's a non-standard conception of "not a problem".

SilasX 9y ago

>Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of general debt obligation. You may also be confounding private and public pension funds, the latter of which I am guessing makes up the lion's share of what the article is talking about. I'm not confounding anything; it's the same the problem in both cases: your organization accrued a liability with no asset to pay it, so you had to take the payments from newcomers to this system. Whether that happens within a private or a public pension fund doesn't change the dynamics of the core problem, which is that your organization is at a cost disadvantage to competing organizations, which then spirals out. The example I gave was the dinosaur companies. Bethlehem offers $15/hour but must take out $1/hour to pay for unfunded pension obligations. NewSteelCorp offers $15/hour but needn't take out anything for legacy pension obligations. Where do the best workers go? And what does that to do the burden on remaining workers? Likewise, every time you raise SS taxes to cover increased obligations, you're risking the flight of contributors to other countries and the underground economy. I don't know what you think I'm "confounding" there; I see a recognition of a common pattern that I tried to explicate, with implications for the current problem. "Oh, this is public, not private" is non-responsive. >Of what I know of actuarial work (not much, admittedly,) outlooks are calculated on the combination of many risk dimensions. And my point was that the actuaries missed a big dimension, which is that the organization has actual competition. So when you say "oh, we'll just take one more dollar an hour from workers to shore it up, what's the problem?" you're failing to model the loss of contributing workers to companies that don't have to thusly gore them. You're right that pension funds can retroactively change pension formulas, but they typically don't, and Social Security definitely hasn't cut pensions to something sustainable. >But to address your concern head on - yes, the fund can go broke, and it's not the rest of the public's problem. That's the kind of loss that creates healthy risk aversion and should make for sensible negotiation by labor leaders and the politicians they put into office in order to limit corruption. So you agree a pension fund can go broke, but are simply claiming that governments are immune to an analogous problem? I'd say it becomes the public's problem at that point, when there are millions of seniors that expected payments they can't get without raiding other critical government services. Why don't you?

lr4444lr 9y ago
I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal mandates in the charter for how the public pension assets can be invested and the monopsony on the employment of public servants (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage). Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke. If it were the public's problem, it would be solvent. It's not like muni bonds. I'm with you on your description of the pitfalls in the private sector.
- SilasX 9y ago
  >I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal Then you agree that you need to address the parallel's I've drawn if you want to maintain that position? > (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage). Are you reading my comments? In both replies, I already explained how there are relevant ways in public pension funds experience this problem: workers can be scared into other countries, other jurisdictions, other jobs, and the underground economy, with the exact same effect on ability to meet obligations. If you believe this can't happen, you need to flesh it out a bit more. "It's not like there's another company they can work for lol" is how GM etc got into this mess. > Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke I don't know any non-trivial sense in which "a massive class of people expected pension payments that will be cut off" doesn't count as the public's problem. To everyone in the world looking at the this, the problem is that a) lots of people are expecting to receive pension money and b) lots government services need to be provided, and we can't afford to do both. You're saying it's "not a problem" simply because "you can just reneg on a) while paying b)"? That's a non-standard conception of "not a problem".