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I don't share the same view. Pensions, public and private, were supposed to take care of people after many years of work and contributions. Some now are nothi

by ra1n85 7y ago

I don't share the same view. Pensions, public and private, were supposed to take care of people after many years of work and contributions. Some now are nothing more than Ponzi schemes. I don't see how this (and the inevitable failures of this), combined with the structural problems in the economy, will inspire faith in the governments ability to properly allocate resources, acquired by people, to people.

ptero 7y ago
I agree with you and I see the main problem with the current US pension system is the lack of clarity. This allows bureaucrats and politicians to spend money collected to support old folks in the future for unrelated pet projects now. Social Security and similar schemes are valuable (even if trust fund is completely spent SS would still provide good benefits from current contributions), but I personally trust my 401k more. My 2c.
barry-cotter 7y ago
Defined benefit pensions have always been Ponzi schemes. When there’s an expanding economy and population that works fine. As soon as it stops the writing’s on the wall. That’s why defined benefit pension schemes have pretty much disappeared in the private sector. In the public sector there’s no one to say “We can’t afford this.” except politicians and regulators appointed by politicians. It’s not their money so they have no real incentive to stop it and promising public servants a great retirement wins votes now whereas the people who’ll have to pay for those pensions mostly can’t vote yet as they’re too young. This is a disaster that’s been a long time coming but it’s also been clearly signposted the entire time. Actuaries have known this for a long time.
- jonahbenton 7y ago
  Good god, this is an awful opinion. Every economic system and model depends on future expansion of both capital and human resources. There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. The repeated failures of unplanned models get lost down the memory hole. We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager.
  - leetcrew 7y ago
    I'm curious, what would your objection be to having the government switch to defined contribution plans? as in, take the same amount of money used to fund the pensions, and use it to fund employees retirement accounts instead. if I were the employee, I would greatly prefer the second option. would you prefer the pension?
  - deftnerd 7y ago
    I agree, but I think this highlights a structural problem with our economic system, specifically when it comes to population growth. There are plausible reasons to decrease populations in regions or entire countries. With climate change getting more serious, we'll soon start having to move populations away from flood prone areas or areas with increasing desertification. Many of those towns and cities started their own infrastructure projects paid with bonds that assume a certain population, and thus tax base, growth. Younger generations, for several reasons from despair about ecological future to high costs of living to stagnant wages, are opting to not have children. Other countries, like Japan, have struggled economically because of declining birth rates. If we (the US) had a more open borders policy with an easier path to citizenship, we could use immigrants to boulster our population and tax base. With migrating and shrinking populations, I can't think of other economic instruments to pay for local infrastructure projects that have routinely been paid with long-term municipal bonds.
    - raxxorrax 7y ago
      To be honest, your plan sounds similar to a cocaine party where drugs got scarce and everybody tries to call their dealer in despair to keep the party going for a few more hours. There is zero incentive for younger people to engage in that if not for complete dependence within such a system. If that is the outlook, no economic instrument can be the solution since the way the economy is driven is the problem itself. If you generalize your strategy to a global level you will end up in the exact same spot.
  - barry-cotter 7y ago
    > Every economic system and model depends on future expansion of both capital and human resources. Sustained economic growth is a product of the Industrial Revolution so this is only true if you ignore almost all of human history. > There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. On at least one interpretation this is how total war usually works in industrial societies. The Roman Empire abandoned long settled territory full of Roman citizens on more than one occasion, Britain, Dacia, so dealing with economic contraction is also far from unknown historically, even for well developed states with a literate culture and bureaucracy. > The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. You radically underestimate the proportion of the population who would be basically ok in a world without defined benefit pensions or one where they don’t exist at all. The professional classes would be just fine if they had to arrange their own retirements instead of having financial intermediaries do it. > The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. Nothing has been dismantled yet. I’m not aware of a single developed country without a non-contributory old age pension. More generally people I respect, like Noel Maurer, have said that the US’ Social Security system can be made sound with quite feasible increases in taxation. This does not apply, to the best of my knowledge to the large public sector pensions though. They were based on assumptions of economic and population growth that just don’t hold and without politically impossible levels of taxation they’re doomed. > The repeated failures of unplanned models get lost down the memory hole. Well no one planned those unplanned models. Extremely generous public sector pensions have been known to be actuarially unsound for decades. The planners know very well a reckoning is coming. They just hope it doesn’t happen while they’re in office. > We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager. At least investment funds don’t saddle the taxpayer with obligations run up by long gone politicians. There are well run government pension systems, or there’s one, Singapore’s.
jonahbenton 7y ago
This view is, forgive me, amazingly wrong. The absence of a pension is a Ponzi scheme, because the only source of funds for people no longer working is that of people currently working. The "pensions were supposed to" should be reframed- pensions "would have fully taken care of people...." had they been properly defended rather than attacked and dismantled. That pensions still exist, that they have been funded even to 35%, after the unrelenting assault on them by private capital, is an incredible achievement. The equivalent funding level for alternatives to pensions is something like 10%- taking real estate into consideration. Without real estate, the funding level is probably less than 1%. It is a difficult, difficult problem to organize humans to fund the future at scale. Pensions were/are an incredible success, even if that success is partial and insufficient.
- turk73 7y ago
  I'm 46 and I've never worked anywhere that had a pension plan, so I guess they're not all that successful. I have worked at companies where some employees were in a defined benefit plan, but I always came too late and got in the 401K pool. There is a distinct difference in those two groups of employees: One group were lifers who were fiercely loyal to the company, and the second group, my group, was like WTF ever, we don't care. Then what happened is that the corporation merged with another and they fucked all those pension plan people out of their pensions. So you see? It did them no good to be such assholes to everyone, including to me. In the end, they got nothing (or very little) for their loyalty. Thus endeth that lesson. You can't trust corporations, they stab you in the back. It also happened to my mother at MetLife in the early '90s. MetLife had a pension plan until UnitedHealth took them over and then it got reduced to pennies on the dollar. She still gets like $100 a month from whatever settlement, but it's not what was originally promised, not even close. 20 years of work right there. My Dad has a union pension which he still collects and it is halfway decent owing to the fact that the union went out of its way to run off as many people as they could before they were eligible to retire. It's hazing--they fuck with anyone getting close to retirement age, trying to force them to leave the union. Unfortunately for them, my Dad is an extremely mean SOB and fought them right back, physically, at times. In fact, so few people collected on that pension that the union was legally required to up the payouts. Think about that. My whole take on pensions is that they are bullshit. They promised the world and the unwise were far too trusting and then they all got screwed one way or another and someone else raided that pension fund, banksters of a certain ethnic relation, probably.

by ra1n85 7y ago

ptero 7y ago

I agree with you and I see the main problem with the current US pension system is the lack of clarity. This allows bureaucrats and politicians to spend money collected to support old folks in the future for unrelated pet projects now. Social Security and similar schemes are valuable (even if trust fund is completely spent SS would still provide good benefits from current contributions), but I personally trust my 401k more. My 2c.

barry-cotter 7y ago

Defined benefit pensions have always been Ponzi schemes. When there’s an expanding economy and population that works fine. As soon as it stops the writing’s on the wall. That’s why defined benefit pension schemes have pretty much disappeared in the private sector. In the public sector there’s no one to say “We can’t afford this.” except politicians and regulators appointed by politicians. It’s not their money so they have no real incentive to stop it and promising public servants a great retirement wins votes now whereas the people who’ll have to pay for those pensions mostly can’t vote yet as they’re too young. This is a disaster that’s been a long time coming but it’s also been clearly signposted the entire time. Actuaries have known this for a long time.

jonahbenton 7y ago
Good god, this is an awful opinion. Every economic system and model depends on future expansion of both capital and human resources. There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. The repeated failures of unplanned models get lost down the memory hole. We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager.
- leetcrew 7y ago
  I'm curious, what would your objection be to having the government switch to defined contribution plans? as in, take the same amount of money used to fund the pensions, and use it to fund employees retirement accounts instead. if I were the employee, I would greatly prefer the second option. would you prefer the pension?
- deftnerd 7y ago
  I agree, but I think this highlights a structural problem with our economic system, specifically when it comes to population growth. There are plausible reasons to decrease populations in regions or entire countries. With climate change getting more serious, we'll soon start having to move populations away from flood prone areas or areas with increasing desertification. Many of those towns and cities started their own infrastructure projects paid with bonds that assume a certain population, and thus tax base, growth. Younger generations, for several reasons from despair about ecological future to high costs of living to stagnant wages, are opting to not have children. Other countries, like Japan, have struggled economically because of declining birth rates. If we (the US) had a more open borders policy with an easier path to citizenship, we could use immigrants to boulster our population and tax base. With migrating and shrinking populations, I can't think of other economic instruments to pay for local infrastructure projects that have routinely been paid with long-term municipal bonds.
  - raxxorrax 7y ago
    To be honest, your plan sounds similar to a cocaine party where drugs got scarce and everybody tries to call their dealer in despair to keep the party going for a few more hours. There is zero incentive for younger people to engage in that if not for complete dependence within such a system. If that is the outlook, no economic instrument can be the solution since the way the economy is driven is the problem itself. If you generalize your strategy to a global level you will end up in the exact same spot.
- barry-cotter 7y ago
  > Every economic system and model depends on future expansion of both capital and human resources. Sustained economic growth is a product of the Industrial Revolution so this is only true if you ignore almost all of human history. > There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. On at least one interpretation this is how total war usually works in industrial societies. The Roman Empire abandoned long settled territory full of Roman citizens on more than one occasion, Britain, Dacia, so dealing with economic contraction is also far from unknown historically, even for well developed states with a literate culture and bureaucracy. > The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. You radically underestimate the proportion of the population who would be basically ok in a world without defined benefit pensions or one where they don’t exist at all. The professional classes would be just fine if they had to arrange their own retirements instead of having financial intermediaries do it. > The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. Nothing has been dismantled yet. I’m not aware of a single developed country without a non-contributory old age pension. More generally people I respect, like Noel Maurer, have said that the US’ Social Security system can be made sound with quite feasible increases in taxation. This does not apply, to the best of my knowledge to the large public sector pensions though. They were based on assumptions of economic and population growth that just don’t hold and without politically impossible levels of taxation they’re doomed. > The repeated failures of unplanned models get lost down the memory hole. Well no one planned those unplanned models. Extremely generous public sector pensions have been known to be actuarially unsound for decades. The planners know very well a reckoning is coming. They just hope it doesn’t happen while they’re in office. > We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager. At least investment funds don’t saddle the taxpayer with obligations run up by long gone politicians. There are well run government pension systems, or there’s one, Singapore’s.

jonahbenton 7y ago

This view is, forgive me, amazingly wrong. The absence of a pension is a Ponzi scheme, because the only source of funds for people no longer working is that of people currently working. The "pensions were supposed to" should be reframed- pensions "would have fully taken care of people...." had they been properly defended rather than attacked and dismantled. That pensions still exist, that they have been funded even to 35%, after the unrelenting assault on them by private capital, is an incredible achievement. The equivalent funding level for alternatives to pensions is something like 10%- taking real estate into consideration. Without real estate, the funding level is probably less than 1%. It is a difficult, difficult problem to organize humans to fund the future at scale. Pensions were/are an incredible success, even if that success is partial and insufficient.

turk73 7y ago
I'm 46 and I've never worked anywhere that had a pension plan, so I guess they're not all that successful. I have worked at companies where some employees were in a defined benefit plan, but I always came too late and got in the 401K pool. There is a distinct difference in those two groups of employees: One group were lifers who were fiercely loyal to the company, and the second group, my group, was like WTF ever, we don't care. Then what happened is that the corporation merged with another and they fucked all those pension plan people out of their pensions. So you see? It did them no good to be such assholes to everyone, including to me. In the end, they got nothing (or very little) for their loyalty. Thus endeth that lesson. You can't trust corporations, they stab you in the back. It also happened to my mother at MetLife in the early '90s. MetLife had a pension plan until UnitedHealth took them over and then it got reduced to pennies on the dollar. She still gets like $100 a month from whatever settlement, but it's not what was originally promised, not even close. 20 years of work right there. My Dad has a union pension which he still collects and it is halfway decent owing to the fact that the union went out of its way to run off as many people as they could before they were eligible to retire. It's hazing--they fuck with anyone getting close to retirement age, trying to force them to leave the union. Unfortunately for them, my Dad is an extremely mean SOB and fought them right back, physically, at times. In fact, so few people collected on that pension that the union was legally required to up the payouts. Think about that. My whole take on pensions is that they are bullshit. They promised the world and the unwise were far too trusting and then they all got screwed one way or another and someone else raided that pension fund, banksters of a certain ethnic relation, probably.