3 ms·

> We need to eliminate all public employee defined benefit pensions and replace them with defined contribution plans How does this solve the problem? 401(k)s i

> We need to eliminate all public employee defined benefit pensions and replace them with defined contribution plans How does this solve the problem? 401(k)s in the private sector have been a complete disaster. Most 401(k)s are also hugely underfunded. As far as I can tell, the only thing defined contribution plans accomplish is shifting the blame for underfunding and poor investment performance to employees, while enriching the financial companies that collect account and transaction fees. [1] https://www.fool.com/retirement/general/2016/01/26/20-retirement-stats-that-will-blow-you-away.aspx https://www.fool.com/retirement/general/2016/01/26/20-retire... [2] https://www.wsj.com/articles/SB10001424052748703959604576152792748707356 https://www.wsj.com/articles/SB10001424052748703959604576152...

WkndTriathlete 9y ago
> Most 401(k)s are also hugely underfunded. That's a disingenious way to state that. Individuals have control over their own IRA/401(k) contributions. They are "fully funded" up to whatever that individual wants them to be, and that amount of money will be available to them when they retire (+/- investment gains/losses). You can argue that people aren't putting enough money in their IRA or 401(k)s to retire, but that's not "hugely underfunded", that's short-sightedness or circumstance. Pensions are hugely underfunded because states haven't been setting aside enough for promised benefits. The equivalent would be me sending a check to my IRA or 401(k) institution and them taking 20-30% of that money intended for my retirement account and putting it somewhere else instead. That's fraud and it's illegal in the private sector (c.f. Bernie Madoff). Makes you wonder whether it should be illegal in the public sector, too?
- Amezarak 9y ago
  > You can argue that people aren't putting enough money in their IRA or 401(k)s to retire, but that's not "hugely underfunded", that's short-sightedness or circumstance. The end result is the same: most people don't have enough money to live comfortably on in retirement. That's what I mean by shifting blame. Sure, it's not the government's fault you don't have a healthy retirement account, they didn't rob your pension fund, you were just "shortsighted". There's no mystery here, we've known since the institution of Social Security that almost nobody saves enough money for retirement if left to their own devices. Shifting to (nominally) employee-controlled defined-contribution plans just means we have only ourselves to blame for what will be the same societal problem: impoverished retirees. And the problem will be just as hard to solve, because it will be seen as an issue of people failing to be responsible, so why should we bail them out?

WkndTriathlete 9y ago

> Most 401(k)s are also hugely underfunded. That's a disingenious way to state that. Individuals have control over their own IRA/401(k) contributions. They are "fully funded" up to whatever that individual wants them to be, and that amount of money will be available to them when they retire (+/- investment gains/losses). You can argue that people aren't putting enough money in their IRA or 401(k)s to retire, but that's not "hugely underfunded", that's short-sightedness or circumstance. Pensions are hugely underfunded because states haven't been setting aside enough for promised benefits. The equivalent would be me sending a check to my IRA or 401(k) institution and them taking 20-30% of that money intended for my retirement account and putting it somewhere else instead. That's fraud and it's illegal in the private sector (c.f. Bernie Madoff). Makes you wonder whether it should be illegal in the public sector, too?

Amezarak 9y ago
> You can argue that people aren't putting enough money in their IRA or 401(k)s to retire, but that's not "hugely underfunded", that's short-sightedness or circumstance. The end result is the same: most people don't have enough money to live comfortably on in retirement. That's what I mean by shifting blame. Sure, it's not the government's fault you don't have a healthy retirement account, they didn't rob your pension fund, you were just "shortsighted". There's no mystery here, we've known since the institution of Social Security that almost nobody saves enough money for retirement if left to their own devices. Shifting to (nominally) employee-controlled defined-contribution plans just means we have only ourselves to blame for what will be the same societal problem: impoverished retirees. And the problem will be just as hard to solve, because it will be seen as an issue of people failing to be responsible, so why should we bail them out?