3 ms·
Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others. P
by marvin 7y ago
Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others.
Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
- benj111 7y agoIt depends on what country you live in, in the UK at least you have a small state pension and private pensions can be saved on top. These can optionally be used to buy an annuity. 'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings. But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.