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The Investor Class Hates Pensions

100 points by tysone 9y ago

jpao79 9y ago
With respect to the activism/pushing for improved corporate governance near the end of the article, I like to think it is happening on the 401K and individual side and that the reason it is behind the curve is because 401Ks are a more recent invention than pensions. Here's an example of it happening on the 401K front. https://www.morganstanley.com/articles/audrey-choi-ted-talk-sustainability https://www.morganstanley.com/articles/audrey-choi-ted-talk-... “Today we have more choices and more opportunity to make our voices heard than ever before,” says Audrey Choi, head of Morgan Stanley’s Institute for Sustainable Investing. And collectively, we have the power to change the way companies and other institutions approach environmental, social and governance (ESG) issues. Finance, she says, “can be one of the most powerful forces for positive social change at our disposal – if we ask it to be. We have the power to make sustainable investing the new normal,” says Choi. Choi calls out the fable that many of us carry in our heads that if you care about environmental or social issues when you invest, you probably aren’t going to make as much money. To bust those myths, she cites studies showing that investing in companies with strong sustainability strategies can result in the same if not better returns than investing in those that don’t.
- jpao79 9y ago
  Another example is Larry Fink's letter to CEOs: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter https://www.blackrock.com/corporate/investor-relations/larry... As we enter 2018, BlackRock is eager to participate in discussions about long-term value creation and work to build a better framework for serving all your stakeholders. Today, our clients – who are your company’s owners – are asking you to demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens.
poster123 9y ago
When a state puts matching funds in workers 401(k) plans each year, that is an easily quantified expense. A state that makes pension promises can minimize the stated expense by using unrealistic investment assumptions. Government workers' unions and politicians have collaborated to make promises that are ruinous in the long run. If politicians had been more honest and unions less greedy, I would be ok with public pensions. But both groups have shown that they are not to be trusted.
alwaysdoit 9y ago
The author just kind of brushes by this, but my main problem with pensions in general is their tendency to be underfunded. It's just one more way for current voters to externalize the costs of their benefits onto future generations. 401(k)s by design can't extract funding as future liabilities. Are there proposals for ways to do this for pensions? I know there are pushes to "fully-fund" them, but the temptation to use overly optimistic projections seems like it will never really go away.
- hackermailman 9y ago
  Indeed nothing was written about city/state pensions that do not make projected returns year after year and require significant funding which most cities can't afford.
  - boomboomsubban 9y ago
    It's in the second paragraph, and the collective shareholders voice isn't really part of the underfunding issue.
- dalbasal 9y ago
  I think that to some extent it's a case of 'who takes the risk' or 'what happens if things don't work out'. Anyway, consider that this is all quite new to us. A highly financialized pension setup is not something multiple generations have done and the pension demographics have never really been what they are now, or will be soon. I'm not sure the macroeconomics of that many pensioners, living for 30-40 years on savings... it goes beyond just financial math, or even political-financial math.
- boomboomsubban 9y ago
  The article isn't promoting the absolute return of pensions. They're arguing that whatever system ends up replacing it should have some collective shareholders voice for dealing with the financial industry.
- Spooky23 9y ago
  Some states, like New York mandate public pension funding and do pretty well. There are issues with pension spiking for public safety positions, and some municipalities have had to bond to make payments, but as a whole the system works. The formula is simple, don’t allow skipping out on liabilities and have an independent entity administer the plan. In New York, the state comptroller controls the pension funds as well as 529 plans. This avoids the issues in many states and the private sector where executives raid the funds. The other issue with the anti-pension crowd is that people need to live. So no matter what you do, the public ends up paying for things like subsidized housing, healthcare and other entitlements that impoverished elderly people end up needing without adequate income. I think will start to appreciate this phenomenon when the wave of 50-somethings purged by the Fortune 1000 start qualifing for Medicaid.
darawk 9y ago
It's disgusting to me that something like this could even be published in the NYT. Pensions are absurd financial instruments. Paying someone a percentage of their salary in perpetuity is financial nonsense, and creates all kinds of perverse incentives for the recipients. The only reason these things ever got popular in the first place is because they were a way of borrowing from the future to pay the present. Creating a massive latent risk that allows you to get cheap labor in the short term and exposes you to catastrophic failure on the backend. Corporations realized this decades ago and stopped using them. If the problem is that 401k fees are too high, let's make 401k's more mobile. Let's create a liquid market in 401k managers so that fees get pushed towards zero - as they should be.
- deleted 9y ago
  [deleted]
- poster123 9y ago
  "Pensions are absurd financial instruments." I don't agree. Retirees do need money as long as they live, which is what pensions (including Social Security) provide. Pensions needed to be properly funded, as the income annuities offered by insurance companies are.
  - acchow 9y ago
    > as the income annuities offered by insurance companies are To which kind of insurance are you referring?
    - poster123 9y ago
      Life insurance companies commonly sell various kinds of annuities as well, since they are experienced with pricing life expectancy. Google "immediate annuity" or "income annuity" to get quotes.
    - colinsidoti 9y ago
      Deferred income annuities. They're insurance against your risk of longevity. Here's an example from New York Life: https://www.nylinvestments.com/annuities/products/New-York-Life-Guaranteed-Future-Income-Annuity-II https://www.nylinvestments.com/annuities/products/New-York-L...
rayiner 9y ago
Pension funds are some the biggest investors in underperforming asset classes like VC, and have been epically fleeced in recent years by professional asset managers (pension bond debacles). Pension funds are desperate and easily manipulated because many of the big ones, especially public ones, are basically insolvent. Governments overpromised and under saved and now pension funds are counting on 8% returns that they’re not going to get.
kcorbitt 9y ago
I feel like private annuities should be more popular than they currently are. Like a pension, an annuity pays a defined benefit until the day you die. They can also afford to pay out a slightly higher annual benefit than you could safely take from your own 401(k), because it's a statistical certainty that X% of the risk pool will die early, whereas with your own savings you can never be sure how long you'll have to make it last. Unlike a pension, an annuity isn't tied to a specific employer, so it doesn't have career-immobilizing vesting requirements or weird payout rules tied to how much money you make in the last N years of your career. And you can select an annuity provider based on its fees and how solid its financials are, factors that aren't necessarily high on the list while selecting an employer. So, why aren't annuities more popular as a retirement savings vehicle?
- gowld 9y ago
  It's too easy to write an annuity as a scam, and there's huge counterparty risk of insolvency over 10-40 years. So we only see annuities where's there's no meaningful choice whether to opt in (Social Security and pensions)
  - kcorbitt 9y ago
    So maybe we just need to invent the Vanguard of annuities? An annuity provider with a governance model designed to work in the interest of its customers that can build trust as a reliable player? EDIT: it appears that Vanguard itself offers annuities, but they're not particularly transparent so I'm unsure if they're "good enough" for general-purpose retirement savings.
    - whitepoplar 9y ago
      Social security is an annuity, and a damn good one--it's guaranteed by the US Government. What we need is for supplemental annuities (above SS amounts) to be offered by the federal government at cost, or to guarantee annuities sold by insurance companies (a la FDIC).
      - 9y ago
DanielBMarkham 9y ago
Stream-of-consciousness - The Investor Class hates pensions? Really? I know a lot of investors. None of them hate pensions. Quite the opposite, actually. And since when did they become a class of people? I have some friends who are politically-involved in California and quite concerned about public sector unions and the fiscal sustainability of the pension promises that were made. This couldn't be about that, could it? On HN? "...his relentless, well-funded attack has taken every form of political advocacy available. It ranges from campaign contributions to ballot initiatives to model legislation to lobbying to lawsuits to financing academic and judicial conferences...The justification is that these pensions are in crisis. The familiar claim is that states and municipalities face unsustainable pension obligations that will crowd out other government spending and lead to higher taxes. Therefore, traditional pensions, which guarantee retirement payments to workers — leaving states and cities on the hook — must be replaced by 401(k)s, which offer no such guarantee...Though the mainstream media has mostly taken the crisis claim at face value, economists and actuaries debate its extent and even its existence..." Well fuck me. There it is. This isn't an analysis of pension funding. It's not a survey of financial managers. It's political cover-your-ass. Some folks think pension funds are in trouble. We're going to attack and say their claims are politically-motivated. Everything is politics now, including, it seems, figuring out whether you have enough to retire on or not. I know plenty of people who are serious investors who are concerned about public pensions, but it's got jack squat to do with politics. All of the folks I know are huge union supporters. It has to do with the numbers not adding up. We gotta stop this thing we do where we form up into teams and throw crap at one another. It's certainly possible that these two things are unrelated. It's also certainly possible, highly-likely even, that this essay is a desire to politicize something for the purpose of obfuscating the real issues involved. That's a shame, especially for both the citizens and workers who are not expecting a crisis.
- phil21 9y ago
  > economists and actuaries debate its extent and even its existence I mean... I'd ask for a citation right here. Maybe it's due to my "bubble" but I've never once heard an actuary state that most public pensions are perfectly fine. The opposite is almost universally true with a few notable exceptions. Heck, a high schooler with a napkin and basic math skills can figure out how utterly unsustainable so many of these plans are - and how they've only sustained so far by being what amounts to a pyramid scheme. Illinois in no way is even a sustainable state long-term at this point, almost solely due to insane unfunded pension debt coming due. You can be pro-pension or anti-pension, but either way the math is pretty clear.
ng12 9y ago
> We let ourselves be charged high fees that we do not understand, we accept poor returns quarter after quarter, we never sue to enforce our rights, we never vote as shareholders and we never tell our investment managers how we think they ought to vote. Is this satire? How is a pension better than a 401k in any of these dimensions? If my retirement is invested in overpriced, underperforming funds it's 100% my own fault. If my pension is chronically mismanaged (as they tend to be) there is literally nothing I can do about it.
- ydt 9y ago
  Although I agree with you that many pension funds have been mismanaged, it's not 100% your fault if your 401k plan only offers poorly-performing, high fee funds as many do. I'm not sure either model is a good solution going forward.
  - dragontamer 9y ago
    > it's not 100% your fault if your 401k plan only offers poorly-performing, high fee funds as many do. Well, IRAs and Roth IRAs are the competitor in that realm. I don't trust most people to handle their own funds in an "automatic" 401k plan however. How many "normal" people do you know who has a Roth IRA for example? Not a lot. A ton of people I know even pull money from their 401k early for luxurious reasons. (It makes sense to do so in an emergency. But not for like... a Euro-trip or Cruise Vacation like some people in my circle...) Honestly, each time I hear about stupid personal finance stories like that, I wish that those people were on a pension instead. There's a lot of stupid out there.
    - emodendroket 9y ago
      That's exactly the problem. We've moved to a system where the individual bears all the risks and is supposed to know what he's doing. But what if the individual doesn't? Are we going to just accept an explosion of old-age destitution? Are we going to pay to mitigate it some other way?
  - hkmurakami 9y ago
Lev1a 9y ago
> turning retirement savers into passive investors I.e. stealing money from pension accounts so you can satisfy your urge to gamble with money you don't have for money you'll inevitably lose in the next bubble or blow on unnecessarily expensive shit noone needs? Cool, so when I rob someone on the street, I could tell the judge I just turned the victim into a passive investor for that new phone I want to buy...
gascan 9y ago
This doesn't seem to even try to explain by what measure 401(k)'s have failed (if the problem is low contributions, that is not the fault of the 401(k)), or back up the suggestion that pensions are not bankrupting municipalities. It seems to mostly invoke the Koch brothers and paint a target on The Investor Class, and hope that is proof enough. If the Koch brothers favor pension reform, then by definition pensions are not failing! (I'm sure it is for some)
- mfringel 9y ago
  You assert "if the problem is low contributions, that is not the fault of the 401(k)", but that conjunction doesn't hold. To wit: is it possible that the requirements for participation in a 401(k) are such that fewer and fewer people can actually contribute to one for a significant period of time? In that case, low contributions would be a result of the 401(k)'s structure, and your conjunction's consequent would be false.
williamscales 9y ago
I've never quite understood how pensions are supposed to work when one changes jobs every 1-5 years. With 401(k) I can roll my account into a Vanguard IRA and keep all the control. I'd hate for my retirement to be beholden to 5-10 different sets of pension fund managers.
- srtjstjsj 9y ago
  Correct, it's a huge pain to juggle pensions if you job-hop.
adolph 9y ago
Would pensions be needed in a world with Universal Basic Income?
- gwright 9y ago
  Do you mean would "saving for your retirement" be needed? Or were you specifically asking about pensions? In any case I don't think any basic income plan works if you imagine that everyone stops saving their earnings and relies on the basic income for their working years and retirement. It is called universal basic income after all and not universal "luxurious" income.
- sokoloff 9y ago
  Some type of retirement system would be needed (whether pension, 401K, IRA, or simply "money you saved and invested"). I did some back of envelope calculations that suggest to me that UBI for Americans would be no more than $650/mo - 0 Realistically, it might be $600/adult and $200/minor 5-18 or something like that. Basic indeed. In that type of a world, people who chose to work during what we today call "working years" would likely feel the need to put some money aside for their "post-working years" so they didn't slip back to the $1200/mo as a couple standard of living. [0] - https://news.ycombinator.com/item?id=13595493 https://news.ycombinator.com/item?id=13595493
forapurpose 9y ago
Many comments blame 'politicians'. I agree that some particular politicians exacerbate the problem of underfunded pensions. But it's easy to blame someone else. The problem is the people posting here, including me, and the people posting on every other forum on the Internet and people who don't use the Internet. People don't vote, they don't hold politicians accountable, they create perverse incentives for politicians to kick the can down the road by voting against those who are fiscally responsible, and people oppose paying their share to fund the pensions. I know it's more complicated than blaming the voter, but on the other hand, it's also much more complicated than blaming the politician. There's also a systemic problem, but that's also on the voter IMHO. Trivia question: Name your local elected representatives (e.g., state legislators, or the equivalent wherever you live. Can you? Those are the people dealing with the pension issue to a large extent.
- lopmotr 9y ago
  This is an underappreciated point when people see voting as just a way to keep the evil enemy party out of power and forget to use it for what it's really powerful at - getting the government to do what you want. I think it would be a great idea if when people on the internet complain about the government, they also identify who they voted for. Then they're forced to face responsibility for whatever that guy does when the next blame-the-politicians new story comes up.
leroy_masochist 9y ago
This op-ed is a dog's breakfast of Big Labor talking points, and pretty much what one would expect from a law professor flogging his latest book, entitled, "The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon" (see author bio at bottom of piece). TLDR: The Kochs are trying to kill pensions because they don't like Calpers' political activism. The author doesn't get into specifics, preferring to make sweeping accusations such as, "This relentless, well-funded attack has taken every form of political advocacy available. It ranges from campaign contributions to ballot initiatives to model legislation to lobbying to lawsuits to financing academic and judicial conferences." Sounds pretty scary. And as a former investment banker I can confirm that, in fact, F500 CEOs and boards are afraid of Calpers and Ontario Teachers and a few others who have gone the activist route. So maybe there is something to the thesis that all these fat cats want to stymie the ability of the working class to effect meaningful change through its collective ability to influence corporate governance. But as someone currently involved in the government of a small town, I can also tell you that pensions are, legitimately, a major problem. Especially when they pertain to unionized public employees whose unions are allowed to force every member of that group of public servants (cops, teachers, garbage collectors, etc) to pay union dues regardless of whether they want to be part of the union. The tenacity of union leaders, coupled with the universally bad optics of management not giving labor the future financial security that labor wants, often results in management making pension promises that they won't be able to deliver in a decade's time -- especially if the discussions happen during a good market run when modeling a perennial 7% YoY return on the pension portfolio seems reasonable. This is ultimately much more of a public sector problem than a private sector one. Unfunded pension liabilities can kill companies, giving union leadership a strong incentive to compromise in cases where the pension is going to bankrupt the company. On the public sector side, what you see instead is hiring freezes that benefit tenured union members, tax hikes that prompt wealthy residents to move to Florida, and cutbacks in other areas (e.g., paving roads). It's not a pretty picture, and this op-ed is a good example of the rhetoric that can be deployed against people trying to make sources of funds equal uses of funds. Please DO NOT take that as an implicit defense of anything the Kochs are doing, btw.
- sokoloff 9y ago
  > especially if the discussions happen during a good market run when modeling a perennial 7% YoY return on the pension portfolio seems reasonable. That's a pretty reasonable, even conservative, assumption for the long-run nominal total return of the stock market. I wish I could find the version that had figures in it (rather than simply 3% wide buckets, but all of the 25 and 30-year long periods in the heatmap have real returns in excess of 6% (meaning the nominal would be over 7%) https://portfoliocharts.com/portfolio/total-stock-market/ https://portfoliocharts.com/portfolio/total-stock-market/ I think 7% nominal over a long period (such as a pension fund could expect) is quite reasonable and would expect a pension so funded to be quite stable.
rdl 9y ago
There are a few problems with pensions -- all basically forms of underfunding: 1) Underfunding due to shrinking business or region -- it's a lot easier to make your pension numbers work if people who retired 20 years ago are a tiny fraction of your current workforce. 2) Underfunding due to overly-generous plans (the retirement pay a lot of public sector employees get is disproportionately generous vs. their pay while working. Especially when contracts do "highest 3 years" or "last 3 years" and employees collude to give lots of overtime or other special pay to let people about to retire juice the pension 3) Underfunding due to bad math -- really easy to just make the "expected investment return" the dependent variable
- sokoloff 9y ago
  > the retirement pay a lot of public sector employees get is disproportionately generous vs. their pay while working Perhaps the other way to look at it is "these government workers sacrificed current income throughout their career in exchange for a secure retirement via their pension agreement".
  - aerotwelve 9y ago
    This is, of course, the point. The beauty is when you pull their pensions out from under them after they've worked for 30 years. Then they took the pay cut and have nothing to retire on. That'll teach the next generation of kids to work for the government (and compete with the benefits I provide my employees at my oil company).
  - mythrwy 9y ago
    Yet another way to look at it is lower expectations for work performance along with more security of employment along with lower pay and guaranteed pensions. Seriously, many public pension schemes are absolutely ridiculous. People shouldn't retire after 20-25 years of work and be defacto millionaires with lifetime pensions on the backs of tax payers. The system really can't support that scheme as is becoming painfully clear.
  - srtjstjsj 9y ago
    https://www.seattletimes.com/seattle-news/times-watchdog/ed-murrays-time-as-seattle-mayor-boosted-his-pension-past-100000-a-year-for-life/ https://www.seattletimes.com/seattle-news/times-watchdog/ed-... "Ed Murray’s time as Seattle mayor boosted his pension past $100,000 a year for life"
whack 9y ago
I feel like the author is mixing together some important differences between 401ks and pensions. ------ Pensions: - "Your" money and everyone else's money is lumped into a single pool. If previous retirees were given too much money because of poor planning, "your" money will evaporate - Your future benefits are fixed, regardless of market conditions. Unless the pension can't afford to do so because of a market crash, and declares bankruptcy. In which case, anyone left holding the bag will be screwed - Zero financial literacy/discipline required. Your contributions are pre-determined, and the pension managers will take care of all investment decisions ------ 401ks: - Your 401k is 100% yours. There is no risk of your 401k account "going bankrupt" because too much of it was given to others. - Your future benefits are dependent on market conditions - unless you choose to buy an annuity. - Financial literacy and discipline is required. If you don't contribute enough, or make bad investment choices, you're screwed ----------------- The article completely ignores the 1st and 2nd differences, which is why many people like myself are uneasy with pensions. The 3rd point is what the article mostly focuses on, and that's a valid point. I'd love to see "full-service" 401k plans, where employees are forced to contribute at least X% of their income, and all of it is managed by the equivalent of a pension-fund-manager (ideally, invested into low-cost diversified index funds) Too many people lack the financial discipline to make sufficient contributions, and the financial literacy to make good investment decisions. So full-service 401ks as described above, could be a net positive for society, without all the baggage that come with pension funds.
- dragontamer 9y ago
  > - "Your" money and everyone else's money is lumped into a single pool. If previous retirees were given too much money because of poor planning, "your" money will evaporate There are more benefits to this than you might think. In particular, its easier to spread death statistics across larger populations than against individuals. We can reasonably expect 50% of men to die before they're 78.74 (life expectancy in the USA). A Pension Fund (since it is pooled across many individuals) can plan for this very well. True, life-expectancy changes from year to year, but this slow-moving change can be corrected over time. An individual 401k however, has no real way of planning for the event. Realistically, individuals need to have a plan for death at age 60 and death at age 100. On the one hand, you may die before you have a chance to even crack your retirement fund, but on the other, you may die in extreme poverty, with all your money wasted away years before you die. Planning for your age of death is damn near impossible on an individual basis. A 401k would be innately less efficient than a pension fund as we all have to plan far more conservatively. IE: A Pension Fund can plan for an age-of-death at ~80 years old (for males), while an individual male may need to plan for 85 or maybe 90 years old.
Aunche 9y ago
It seems like the "investor class" should love pensions. I'm not expert on accounting or law, but pensions sound a lot like a free loan and a borderline scam: A young company wants to hire 100 people, but from the market rate of salaries, they can only afford to pay hire 80 people. They also don't want to dilute their stock holdings so they opt for pensions instead. The extra 20 employees increase company profits and stock prices explode. The company's balance sheet looks good because they don't have to pay any pensions yet. The original investors can sell their stock long before pensions get paid out, and don't suffer any negative consequences.
- nostromo95 9y ago
  >The company's balance sheet looks good because they don't have to pay any pensions yet. Companies under GAAP accounting actually do have to carry their pension liabilities/assets on their balance sheet and have to report on the status of their pension fund. So investors can see if the pension is underfunded. Edit: for example, check GM’s last 10-K, note 16. [0] [0] http://phx.corporate-ir.net/phoenix.zhtml?c=231169&p=irol-secTextTest&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTEyMDI2NTgwJkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3 http://phx.corporate-ir.net/phoenix.zhtml?c=231169&p=irol-se...
mathiasben 9y ago
these failing pensions are largely due to mismanagement, properly managed these retirement vehicles work as intended. unfortunately in the current climate a large company or even a state government can't resist the temptation to use a massive pension fund for something other than it's intended purpose. One lean quarter and they start eyeing up the 7 billion sitting in the pension fund. I read a book a couple years back that changed my thinking on pensions, before I was of the mind that they never worked, were a massive Ponzi scheme, stealing from young workers, etc... no, pensions work provided they are left alone. http://www.retirementheist.com/ http://www.retirementheist.com/
- jerf 9y ago
  "in the current climate" One of the reasons I'm not a big fan of pensions is precisely that it's not "in the current climate", but a persistent problem over the span of decades. Many of the bills that are now compounding to an unignorable size are trainwrecks decades in the making. It isn't just that they were mismanaged today; they were mismanaged in the 200xs, and the 1990s (much harder to see because the stock market was doing really well up until it wasn't), and the 1980s... it's not hard to think that maybe the fact they worked at all was simply another historical accident of the bizarre just-after-WW2 period, rather than any sort of good idea. We seem to lack angels virtuous enough to be honest about the numbers and to resist dipping into the Honkin' Big Pile o' Money.
  - mathiasben 9y ago
    I'm convinced it's the changes in the tax laws at the root cause of this. When income over $400k/yr (5 mil in todays money) was taxed at 90% there wasn't the incentive to screw over retirees. The "bizarre just-after-WW2 period" wasn't some fluke it was the result of purposely crafted policies.
RhysU 9y ago
Suppose someone effectively pools together investors' money and makes outsize returns due to actively managing away the complacency the author purports. Well, then, any 401k holder is free to share in those superior returns by purchasing the security while the pensioner cannot. Caveat emptor, because ain't nobody looking out for you but you.
adrianmonk 9y ago
> We 401(k) holders are the world’s ideal source of capital. ... alone and devoid of leverage to negotiate. It's really best if leverage goes all the way through from me to the end, though. With a 401(k), if a fund is being managed poorly, I can "fire" the manager by selling it and buying another fund in the plan. (And at next job change, I can roll over to a new 401(k) plan or an IRA.) If my pension is being managed poorly, as far as I know, I'm just out of luck. I have a pension from an old job, and to my knowledge, I cannot touch it until I'm 65. Of course there is no choice of pension "funds" to switch between within the plan like mutual funds in a 401(k). Even though I've changed jobs, I can't roll it over to anything. So as far as I can tell, the pension trustees (managers) may have leverage over whatever they invest in, but I have no useful leverage over the pension trustees. And it's not like pensions are never mismanaged. For example, in recent years there has been a scandal where the Dallas Police and Fire Pension System (DPFP) had a high guaranteed payout that their investment returns couldn't match, and instead of trying to fix it properly (whatever that means), they just kept it a secret and went wild with risky investments. See https://interactives.dallasnews.com/2017/dallas-police-fire-pension-fund-explainer/ https://interactives.dallasnews.com/2017/dallas-police-fire-... . Thankfully my own pension is better managed. At least, I assume so, but it's hard to research since it's a private fund thing.
sjg007 9y ago
We should have a portable national pension scheme. That's the only way to make this work. If that means expanding social security then so be it.

100 points by tysone 9y ago

With respect to the activism/pushing for improved corporate governance near the end of the article, I like to think it is happening on the 401K and individual side and that the reason it is behind the curve is because 401Ks are a more recent invention than pensions. Here's an example of it happening on the 401K front. https://www.morganstanley.com/articles/audrey-choi-ted-talk-sustainability https://www.morganstanley.com/articles/audrey-choi-ted-talk-... “Today we have more choices and more opportunity to make our voices heard than ever before,” says Audrey Choi, head of Morgan Stanley’s Institute for Sustainable Investing. And collectively, we have the power to change the way companies and other institutions approach environmental, social and governance (ESG) issues. Finance, she says, “can be one of the most powerful forces for positive social change at our disposal – if we ask it to be. We have the power to make sustainable investing the new normal,” says Choi. Choi calls out the fable that many of us carry in our heads that if you care about environmental or social issues when you invest, you probably aren’t going to make as much money. To bust those myths, she cites studies showing that investing in companies with strong sustainability strategies can result in the same if not better returns than investing in those that don’t.

jpao79 9y ago
Another example is Larry Fink's letter to CEOs: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter https://www.blackrock.com/corporate/investor-relations/larry... As we enter 2018, BlackRock is eager to participate in discussions about long-term value creation and work to build a better framework for serving all your stakeholders. Today, our clients – who are your company’s owners – are asking you to demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens.

poster123 9y ago

When a state puts matching funds in workers 401(k) plans each year, that is an easily quantified expense. A state that makes pension promises can minimize the stated expense by using unrealistic investment assumptions. Government workers' unions and politicians have collaborated to make promises that are ruinous in the long run. If politicians had been more honest and unions less greedy, I would be ok with public pensions. But both groups have shown that they are not to be trusted.

alwaysdoit 9y ago

The author just kind of brushes by this, but my main problem with pensions in general is their tendency to be underfunded. It's just one more way for current voters to externalize the costs of their benefits onto future generations. 401(k)s by design can't extract funding as future liabilities. Are there proposals for ways to do this for pensions? I know there are pushes to "fully-fund" them, but the temptation to use overly optimistic projections seems like it will never really go away.

hackermailman 9y ago
Indeed nothing was written about city/state pensions that do not make projected returns year after year and require significant funding which most cities can't afford.
- boomboomsubban 9y ago
  It's in the second paragraph, and the collective shareholders voice isn't really part of the underfunding issue.
dalbasal 9y ago
I think that to some extent it's a case of 'who takes the risk' or 'what happens if things don't work out'. Anyway, consider that this is all quite new to us. A highly financialized pension setup is not something multiple generations have done and the pension demographics have never really been what they are now, or will be soon. I'm not sure the macroeconomics of that many pensioners, living for 30-40 years on savings... it goes beyond just financial math, or even political-financial math.
boomboomsubban 9y ago
The article isn't promoting the absolute return of pensions. They're arguing that whatever system ends up replacing it should have some collective shareholders voice for dealing with the financial industry.
Spooky23 9y ago
Some states, like New York mandate public pension funding and do pretty well. There are issues with pension spiking for public safety positions, and some municipalities have had to bond to make payments, but as a whole the system works. The formula is simple, don’t allow skipping out on liabilities and have an independent entity administer the plan. In New York, the state comptroller controls the pension funds as well as 529 plans. This avoids the issues in many states and the private sector where executives raid the funds. The other issue with the anti-pension crowd is that people need to live. So no matter what you do, the public ends up paying for things like subsidized housing, healthcare and other entitlements that impoverished elderly people end up needing without adequate income. I think will start to appreciate this phenomenon when the wave of 50-somethings purged by the Fortune 1000 start qualifing for Medicaid.

darawk 9y ago

It's disgusting to me that something like this could even be published in the NYT. Pensions are absurd financial instruments. Paying someone a percentage of their salary in perpetuity is financial nonsense, and creates all kinds of perverse incentives for the recipients. The only reason these things ever got popular in the first place is because they were a way of borrowing from the future to pay the present. Creating a massive latent risk that allows you to get cheap labor in the short term and exposes you to catastrophic failure on the backend. Corporations realized this decades ago and stopped using them. If the problem is that 401k fees are too high, let's make 401k's more mobile. Let's create a liquid market in 401k managers so that fees get pushed towards zero - as they should be.

deleted 9y ago
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poster123 9y ago
"Pensions are absurd financial instruments." I don't agree. Retirees do need money as long as they live, which is what pensions (including Social Security) provide. Pensions needed to be properly funded, as the income annuities offered by insurance companies are.
- acchow 9y ago
  > as the income annuities offered by insurance companies are To which kind of insurance are you referring?
  - poster123 9y ago
    Life insurance companies commonly sell various kinds of annuities as well, since they are experienced with pricing life expectancy. Google "immediate annuity" or "income annuity" to get quotes.
  - colinsidoti 9y ago
    Deferred income annuities. They're insurance against your risk of longevity. Here's an example from New York Life: https://www.nylinvestments.com/annuities/products/New-York-Life-Guaranteed-Future-Income-Annuity-II https://www.nylinvestments.com/annuities/products/New-York-L...

rayiner 9y ago

Pension funds are some the biggest investors in underperforming asset classes like VC, and have been epically fleeced in recent years by professional asset managers (pension bond debacles). Pension funds are desperate and easily manipulated because many of the big ones, especially public ones, are basically insolvent. Governments overpromised and under saved and now pension funds are counting on 8% returns that they’re not going to get.

kcorbitt 9y ago

I feel like private annuities should be more popular than they currently are. Like a pension, an annuity pays a defined benefit until the day you die. They can also afford to pay out a slightly higher annual benefit than you could safely take from your own 401(k), because it's a statistical certainty that X% of the risk pool will die early, whereas with your own savings you can never be sure how long you'll have to make it last. Unlike a pension, an annuity isn't tied to a specific employer, so it doesn't have career-immobilizing vesting requirements or weird payout rules tied to how much money you make in the last N years of your career. And you can select an annuity provider based on its fees and how solid its financials are, factors that aren't necessarily high on the list while selecting an employer. So, why aren't annuities more popular as a retirement savings vehicle?

gowld 9y ago
It's too easy to write an annuity as a scam, and there's huge counterparty risk of insolvency over 10-40 years. So we only see annuities where's there's no meaningful choice whether to opt in (Social Security and pensions)
- kcorbitt 9y ago
  So maybe we just need to invent the Vanguard of annuities? An annuity provider with a governance model designed to work in the interest of its customers that can build trust as a reliable player? EDIT: it appears that Vanguard itself offers annuities, but they're not particularly transparent so I'm unsure if they're "good enough" for general-purpose retirement savings.
  - whitepoplar 9y ago
    Social security is an annuity, and a damn good one--it's guaranteed by the US Government. What we need is for supplemental annuities (above SS amounts) to be offered by the federal government at cost, or to guarantee annuities sold by insurance companies (a la FDIC).
    - 9y ago

DanielBMarkham 9y ago

Stream-of-consciousness - The Investor Class hates pensions? Really? I know a lot of investors. None of them hate pensions. Quite the opposite, actually. And since when did they become a class of people? I have some friends who are politically-involved in California and quite concerned about public sector unions and the fiscal sustainability of the pension promises that were made. This couldn't be about that, could it? On HN? "...his relentless, well-funded attack has taken every form of political advocacy available. It ranges from campaign contributions to ballot initiatives to model legislation to lobbying to lawsuits to financing academic and judicial conferences...The justification is that these pensions are in crisis. The familiar claim is that states and municipalities face unsustainable pension obligations that will crowd out other government spending and lead to higher taxes. Therefore, traditional pensions, which guarantee retirement payments to workers — leaving states and cities on the hook — must be replaced by 401(k)s, which offer no such guarantee...Though the mainstream media has mostly taken the crisis claim at face value, economists and actuaries debate its extent and even its existence..." Well fuck me. There it is. This isn't an analysis of pension funding. It's not a survey of financial managers. It's political cover-your-ass. Some folks think pension funds are in trouble. We're going to attack and say their claims are politically-motivated. Everything is politics now, including, it seems, figuring out whether you have enough to retire on or not. I know plenty of people who are serious investors who are concerned about public pensions, but it's got jack squat to do with politics. All of the folks I know are huge union supporters. It has to do with the numbers not adding up. We gotta stop this thing we do where we form up into teams and throw crap at one another. It's certainly possible that these two things are unrelated. It's also certainly possible, highly-likely even, that this essay is a desire to politicize something for the purpose of obfuscating the real issues involved. That's a shame, especially for both the citizens and workers who are not expecting a crisis.

phil21 9y ago
> economists and actuaries debate its extent and even its existence I mean... I'd ask for a citation right here. Maybe it's due to my "bubble" but I've never once heard an actuary state that most public pensions are perfectly fine. The opposite is almost universally true with a few notable exceptions. Heck, a high schooler with a napkin and basic math skills can figure out how utterly unsustainable so many of these plans are - and how they've only sustained so far by being what amounts to a pyramid scheme. Illinois in no way is even a sustainable state long-term at this point, almost solely due to insane unfunded pension debt coming due. You can be pro-pension or anti-pension, but either way the math is pretty clear.

ng12 9y ago

> We let ourselves be charged high fees that we do not understand, we accept poor returns quarter after quarter, we never sue to enforce our rights, we never vote as shareholders and we never tell our investment managers how we think they ought to vote. Is this satire? How is a pension better than a 401k in any of these dimensions? If my retirement is invested in overpriced, underperforming funds it's 100% my own fault. If my pension is chronically mismanaged (as they tend to be) there is literally nothing I can do about it.

ydt 9y ago
Although I agree with you that many pension funds have been mismanaged, it's not 100% your fault if your 401k plan only offers poorly-performing, high fee funds as many do. I'm not sure either model is a good solution going forward.
- dragontamer 9y ago
  > it's not 100% your fault if your 401k plan only offers poorly-performing, high fee funds as many do. Well, IRAs and Roth IRAs are the competitor in that realm. I don't trust most people to handle their own funds in an "automatic" 401k plan however. How many "normal" people do you know who has a Roth IRA for example? Not a lot. A ton of people I know even pull money from their 401k early for luxurious reasons. (It makes sense to do so in an emergency. But not for like... a Euro-trip or Cruise Vacation like some people in my circle...) Honestly, each time I hear about stupid personal finance stories like that, I wish that those people were on a pension instead. There's a lot of stupid out there.
  - emodendroket 9y ago
    That's exactly the problem. We've moved to a system where the individual bears all the risks and is supposed to know what he's doing. But what if the individual doesn't? Are we going to just accept an explosion of old-age destitution? Are we going to pay to mitigate it some other way?
- hkmurakami 9y ago

Lev1a 9y ago

> turning retirement savers into passive investors I.e. stealing money from pension accounts so you can satisfy your urge to gamble with money you don't have for money you'll inevitably lose in the next bubble or blow on unnecessarily expensive shit noone needs? Cool, so when I rob someone on the street, I could tell the judge I just turned the victim into a passive investor for that new phone I want to buy...

gascan 9y ago

This doesn't seem to even try to explain by what measure 401(k)'s have failed (if the problem is low contributions, that is not the fault of the 401(k)), or back up the suggestion that pensions are not bankrupting municipalities. It seems to mostly invoke the Koch brothers and paint a target on The Investor Class, and hope that is proof enough. If the Koch brothers favor pension reform, then by definition pensions are not failing! (I'm sure it is for some)

mfringel 9y ago
You assert "if the problem is low contributions, that is not the fault of the 401(k)", but that conjunction doesn't hold. To wit: is it possible that the requirements for participation in a 401(k) are such that fewer and fewer people can actually contribute to one for a significant period of time? In that case, low contributions would be a result of the 401(k)'s structure, and your conjunction's consequent would be false.

williamscales 9y ago

I've never quite understood how pensions are supposed to work when one changes jobs every 1-5 years. With 401(k) I can roll my account into a Vanguard IRA and keep all the control. I'd hate for my retirement to be beholden to 5-10 different sets of pension fund managers.

srtjstjsj 9y ago
Correct, it's a huge pain to juggle pensions if you job-hop.

adolph 9y ago

Would pensions be needed in a world with Universal Basic Income?

gwright 9y ago
Do you mean would "saving for your retirement" be needed? Or were you specifically asking about pensions? In any case I don't think any basic income plan works if you imagine that everyone stops saving their earnings and relies on the basic income for their working years and retirement. It is called universal basic income after all and not universal "luxurious" income.
sokoloff 9y ago
Some type of retirement system would be needed (whether pension, 401K, IRA, or simply "money you saved and invested"). I did some back of envelope calculations that suggest to me that UBI for Americans would be no more than $650/mo - 0 Realistically, it might be $600/adult and $200/minor 5-18 or something like that. Basic indeed. In that type of a world, people who chose to work during what we today call "working years" would likely feel the need to put some money aside for their "post-working years" so they didn't slip back to the $1200/mo as a couple standard of living. [0] - https://news.ycombinator.com/item?id=13595493 https://news.ycombinator.com/item?id=13595493

forapurpose 9y ago

Many comments blame 'politicians'. I agree that some particular politicians exacerbate the problem of underfunded pensions. But it's easy to blame someone else. The problem is the people posting here, including me, and the people posting on every other forum on the Internet and people who don't use the Internet. People don't vote, they don't hold politicians accountable, they create perverse incentives for politicians to kick the can down the road by voting against those who are fiscally responsible, and people oppose paying their share to fund the pensions. I know it's more complicated than blaming the voter, but on the other hand, it's also much more complicated than blaming the politician. There's also a systemic problem, but that's also on the voter IMHO. Trivia question: Name your local elected representatives (e.g., state legislators, or the equivalent wherever you live. Can you? Those are the people dealing with the pension issue to a large extent.

lopmotr 9y ago
This is an underappreciated point when people see voting as just a way to keep the evil enemy party out of power and forget to use it for what it's really powerful at - getting the government to do what you want. I think it would be a great idea if when people on the internet complain about the government, they also identify who they voted for. Then they're forced to face responsibility for whatever that guy does when the next blame-the-politicians new story comes up.

leroy_masochist 9y ago

This op-ed is a dog's breakfast of Big Labor talking points, and pretty much what one would expect from a law professor flogging his latest book, entitled, "The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon" (see author bio at bottom of piece). TLDR: The Kochs are trying to kill pensions because they don't like Calpers' political activism. The author doesn't get into specifics, preferring to make sweeping accusations such as, "This relentless, well-funded attack has taken every form of political advocacy available. It ranges from campaign contributions to ballot initiatives to model legislation to lobbying to lawsuits to financing academic and judicial conferences." Sounds pretty scary. And as a former investment banker I can confirm that, in fact, F500 CEOs and boards are afraid of Calpers and Ontario Teachers and a few others who have gone the activist route. So maybe there is something to the thesis that all these fat cats want to stymie the ability of the working class to effect meaningful change through its collective ability to influence corporate governance. But as someone currently involved in the government of a small town, I can also tell you that pensions are, legitimately, a major problem. Especially when they pertain to unionized public employees whose unions are allowed to force every member of that group of public servants (cops, teachers, garbage collectors, etc) to pay union dues regardless of whether they want to be part of the union. The tenacity of union leaders, coupled with the universally bad optics of management not giving labor the future financial security that labor wants, often results in management making pension promises that they won't be able to deliver in a decade's time -- especially if the discussions happen during a good market run when modeling a perennial 7% YoY return on the pension portfolio seems reasonable. This is ultimately much more of a public sector problem than a private sector one. Unfunded pension liabilities can kill companies, giving union leadership a strong incentive to compromise in cases where the pension is going to bankrupt the company. On the public sector side, what you see instead is hiring freezes that benefit tenured union members, tax hikes that prompt wealthy residents to move to Florida, and cutbacks in other areas (e.g., paving roads). It's not a pretty picture, and this op-ed is a good example of the rhetoric that can be deployed against people trying to make sources of funds equal uses of funds. Please DO NOT take that as an implicit defense of anything the Kochs are doing, btw.

sokoloff 9y ago
> especially if the discussions happen during a good market run when modeling a perennial 7% YoY return on the pension portfolio seems reasonable. That's a pretty reasonable, even conservative, assumption for the long-run nominal total return of the stock market. I wish I could find the version that had figures in it (rather than simply 3% wide buckets, but all of the 25 and 30-year long periods in the heatmap have real returns in excess of 6% (meaning the nominal would be over 7%) https://portfoliocharts.com/portfolio/total-stock-market/ https://portfoliocharts.com/portfolio/total-stock-market/ I think 7% nominal over a long period (such as a pension fund could expect) is quite reasonable and would expect a pension so funded to be quite stable.

rdl 9y ago

There are a few problems with pensions -- all basically forms of underfunding: 1) Underfunding due to shrinking business or region -- it's a lot easier to make your pension numbers work if people who retired 20 years ago are a tiny fraction of your current workforce. 2) Underfunding due to overly-generous plans (the retirement pay a lot of public sector employees get is disproportionately generous vs. their pay while working. Especially when contracts do "highest 3 years" or "last 3 years" and employees collude to give lots of overtime or other special pay to let people about to retire juice the pension 3) Underfunding due to bad math -- really easy to just make the "expected investment return" the dependent variable

sokoloff 9y ago
> the retirement pay a lot of public sector employees get is disproportionately generous vs. their pay while working Perhaps the other way to look at it is "these government workers sacrificed current income throughout their career in exchange for a secure retirement via their pension agreement".
- aerotwelve 9y ago
  This is, of course, the point. The beauty is when you pull their pensions out from under them after they've worked for 30 years. Then they took the pay cut and have nothing to retire on. That'll teach the next generation of kids to work for the government (and compete with the benefits I provide my employees at my oil company).
- mythrwy 9y ago
  Yet another way to look at it is lower expectations for work performance along with more security of employment along with lower pay and guaranteed pensions. Seriously, many public pension schemes are absolutely ridiculous. People shouldn't retire after 20-25 years of work and be defacto millionaires with lifetime pensions on the backs of tax payers. The system really can't support that scheme as is becoming painfully clear.
- srtjstjsj 9y ago
  https://www.seattletimes.com/seattle-news/times-watchdog/ed-murrays-time-as-seattle-mayor-boosted-his-pension-past-100000-a-year-for-life/ https://www.seattletimes.com/seattle-news/times-watchdog/ed-... "Ed Murray’s time as Seattle mayor boosted his pension past $100,000 a year for life"

whack 9y ago

I feel like the author is mixing together some important differences between 401ks and pensions. ------ Pensions: - "Your" money and everyone else's money is lumped into a single pool. If previous retirees were given too much money because of poor planning, "your" money will evaporate - Your future benefits are fixed, regardless of market conditions. Unless the pension can't afford to do so because of a market crash, and declares bankruptcy. In which case, anyone left holding the bag will be screwed - Zero financial literacy/discipline required. Your contributions are pre-determined, and the pension managers will take care of all investment decisions ------ 401ks: - Your 401k is 100% yours. There is no risk of your 401k account "going bankrupt" because too much of it was given to others. - Your future benefits are dependent on market conditions - unless you choose to buy an annuity. - Financial literacy and discipline is required. If you don't contribute enough, or make bad investment choices, you're screwed ----------------- The article completely ignores the 1st and 2nd differences, which is why many people like myself are uneasy with pensions. The 3rd point is what the article mostly focuses on, and that's a valid point. I'd love to see "full-service" 401k plans, where employees are forced to contribute at least X% of their income, and all of it is managed by the equivalent of a pension-fund-manager (ideally, invested into low-cost diversified index funds) Too many people lack the financial discipline to make sufficient contributions, and the financial literacy to make good investment decisions. So full-service 401ks as described above, could be a net positive for society, without all the baggage that come with pension funds.

dragontamer 9y ago
> - "Your" money and everyone else's money is lumped into a single pool. If previous retirees were given too much money because of poor planning, "your" money will evaporate There are more benefits to this than you might think. In particular, its easier to spread death statistics across larger populations than against individuals. We can reasonably expect 50% of men to die before they're 78.74 (life expectancy in the USA). A Pension Fund (since it is pooled across many individuals) can plan for this very well. True, life-expectancy changes from year to year, but this slow-moving change can be corrected over time. An individual 401k however, has no real way of planning for the event. Realistically, individuals need to have a plan for death at age 60 and death at age 100. On the one hand, you may die before you have a chance to even crack your retirement fund, but on the other, you may die in extreme poverty, with all your money wasted away years before you die. Planning for your age of death is damn near impossible on an individual basis. A 401k would be innately less efficient than a pension fund as we all have to plan far more conservatively. IE: A Pension Fund can plan for an age-of-death at ~80 years old (for males), while an individual male may need to plan for 85 or maybe 90 years old.

Aunche 9y ago

It seems like the "investor class" should love pensions. I'm not expert on accounting or law, but pensions sound a lot like a free loan and a borderline scam: A young company wants to hire 100 people, but from the market rate of salaries, they can only afford to pay hire 80 people. They also don't want to dilute their stock holdings so they opt for pensions instead. The extra 20 employees increase company profits and stock prices explode. The company's balance sheet looks good because they don't have to pay any pensions yet. The original investors can sell their stock long before pensions get paid out, and don't suffer any negative consequences.

nostromo95 9y ago
>The company's balance sheet looks good because they don't have to pay any pensions yet. Companies under GAAP accounting actually do have to carry their pension liabilities/assets on their balance sheet and have to report on the status of their pension fund. So investors can see if the pension is underfunded. Edit: for example, check GM’s last 10-K, note 16. [0] [0] http://phx.corporate-ir.net/phoenix.zhtml?c=231169&p=irol-secTextTest&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTEyMDI2NTgwJkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3 http://phx.corporate-ir.net/phoenix.zhtml?c=231169&p=irol-se...

mathiasben 9y ago

these failing pensions are largely due to mismanagement, properly managed these retirement vehicles work as intended. unfortunately in the current climate a large company or even a state government can't resist the temptation to use a massive pension fund for something other than it's intended purpose. One lean quarter and they start eyeing up the 7 billion sitting in the pension fund. I read a book a couple years back that changed my thinking on pensions, before I was of the mind that they never worked, were a massive Ponzi scheme, stealing from young workers, etc... no, pensions work provided they are left alone. http://www.retirementheist.com/ http://www.retirementheist.com/

jerf 9y ago
"in the current climate" One of the reasons I'm not a big fan of pensions is precisely that it's not "in the current climate", but a persistent problem over the span of decades. Many of the bills that are now compounding to an unignorable size are trainwrecks decades in the making. It isn't just that they were mismanaged today; they were mismanaged in the 200xs, and the 1990s (much harder to see because the stock market was doing really well up until it wasn't), and the 1980s... it's not hard to think that maybe the fact they worked at all was simply another historical accident of the bizarre just-after-WW2 period, rather than any sort of good idea. We seem to lack angels virtuous enough to be honest about the numbers and to resist dipping into the Honkin' Big Pile o' Money.
- mathiasben 9y ago
  I'm convinced it's the changes in the tax laws at the root cause of this. When income over $400k/yr (5 mil in todays money) was taxed at 90% there wasn't the incentive to screw over retirees. The "bizarre just-after-WW2 period" wasn't some fluke it was the result of purposely crafted policies.

RhysU 9y ago

Suppose someone effectively pools together investors' money and makes outsize returns due to actively managing away the complacency the author purports. Well, then, any 401k holder is free to share in those superior returns by purchasing the security while the pensioner cannot. Caveat emptor, because ain't nobody looking out for you but you.

adrianmonk 9y ago

> We 401(k) holders are the world’s ideal source of capital. ... alone and devoid of leverage to negotiate. It's really best if leverage goes all the way through from me to the end, though. With a 401(k), if a fund is being managed poorly, I can "fire" the manager by selling it and buying another fund in the plan. (And at next job change, I can roll over to a new 401(k) plan or an IRA.) If my pension is being managed poorly, as far as I know, I'm just out of luck. I have a pension from an old job, and to my knowledge, I cannot touch it until I'm 65. Of course there is no choice of pension "funds" to switch between within the plan like mutual funds in a 401(k). Even though I've changed jobs, I can't roll it over to anything. So as far as I can tell, the pension trustees (managers) may have leverage over whatever they invest in, but I have no useful leverage over the pension trustees. And it's not like pensions are never mismanaged. For example, in recent years there has been a scandal where the Dallas Police and Fire Pension System (DPFP) had a high guaranteed payout that their investment returns couldn't match, and instead of trying to fix it properly (whatever that means), they just kept it a secret and went wild with risky investments. See https://interactives.dallasnews.com/2017/dallas-police-fire-pension-fund-explainer/ https://interactives.dallasnews.com/2017/dallas-police-fire-... . Thankfully my own pension is better managed. At least, I assume so, but it's hard to research since it's a private fund thing.

sjg007 9y ago

We should have a portable national pension scheme. That's the only way to make this work. If that means expanding social security then so be it.