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Pensions are inherently unsustainable because they guarantee returns. What investor in the world is ever able to guarantee returns, especially at the volume of

by PakG1 9y ago

Pensions are inherently unsustainable because they guarantee returns. What investor in the world is ever able to guarantee returns, especially at the volume of clients that get served by pensions? It is likelier that the pension: - gets rid of the obligation by selling it to someone else: https://www.forbes.com/sites/joannmuller/2012/06/01/gm-unloads-26-billion-in-white-collar-pensions-could-union-workers-be-next/ https://www.forbes.com/sites/joannmuller/2012/06/01/gm-unloa... - raises more capital or debt to fund the pension (or in the case of government pensions, raise taxes) and kick the can down the road: https://www.wsj.com/articles/gm-to-take-on-3-billion-in-debt-to-fund-pensions-moved-to-peugeot-1488832404 https://www.wsj.com/articles/gm-to-take-on-3-billion-in-debt... - just lets bankruptcy kill the obligation: https://mobile.nytimes.com/2006/10/24/business/retirement/24pension.html https://mobile.nytimes.com/2006/10/24/business/retirement/24...

mooreds 9y ago
Life insurance guarantees returns (essentially) through the magic of actuary science. It's expensive and you need scale, but it can be done.
- gozur88 9y ago
  The cash payout part of a pension is, as you point out, just math. The problem is health care. If you retired in, say, 1980 with a pension that included health care, the company ended up paying out (on average) far, far more than they expected.
  - mooreds 9y ago
    That is a fair point. I don't know how to handle healthcare because it is a good with almost infinite demand (who doesn't want to live longer or be healthier), and a finite supply (of doctors, nurses and other folks who can provide services to help us live longer healthier lives). What happens when you have demand with limited supply? Prices go up.
dpark 9y ago
They aren’t inherently unsustainable except when they’re underfunded. A solvent pension is essentially just an annuity.
deleted 9y ago
[deleted]

by PakG1 9y ago

mooreds 9y ago

Life insurance guarantees returns (essentially) through the magic of actuary science. It's expensive and you need scale, but it can be done.

gozur88 9y ago
The cash payout part of a pension is, as you point out, just math. The problem is health care. If you retired in, say, 1980 with a pension that included health care, the company ended up paying out (on average) far, far more than they expected.
- mooreds 9y ago
  That is a fair point. I don't know how to handle healthcare because it is a good with almost infinite demand (who doesn't want to live longer or be healthier), and a finite supply (of doctors, nurses and other folks who can provide services to help us live longer healthier lives). What happens when you have demand with limited supply? Prices go up.

dpark 9y ago

They aren’t inherently unsustainable except when they’re underfunded. A solvent pension is essentially just an annuity.

deleted 9y ago

[deleted]