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But many of those same factors affect public pensions. The existence of defined benefit schemes, as opposed to defined contribution schemes, itself causes econo
by mattmcknight 16y ago
But many of those same factors affect public pensions. The existence of defined benefit schemes, as opposed to defined contribution schemes, itself causes economic problems, including the bankruptcy of large firms. While there is risk in any investment, defined benefit simply imagines that it doesn't exist. Even traditional Ponzi scheme style public pensions are susceptible to drops in population growth.
- thrill 16y agoAny plan that is not fully funded, in cash, is not a pension - it's a bet - a bet that someone (else), somewhere, sometime, will assume the risk if it goes south. Those who offer "public" pensions are the worst offenders - everyone knows the taxpayer will be on the hook for it - it's easy to promise the world to a public employee when it's not coming out of a bottom line.
- jarek 16y agoThen again, a plan fully funded in cash is a bet that you have enough money, skill, and/or luck to keep its real value, after any inflatiatory and investment influences, equal to or above what you will need when you retire.