37 ms·

Being a good guy boss left me £1.2m in debt

370 points by dustinmoris 7y ago

notus 7y ago
I have luckily never been caught in one of these kakfa-esque bureaucratic traps before, but I don't know how people hold it together when they do get caught in it. It seems like there isn't any thought being put into possible edge cases for policy and here seems to be little recourse for people to get out of it. Everything about governments just feels like this wall of indifference, from interactions at the DMV to policy being created. Just thinking about it makes me a little crazy. It is so inhuman.
- dmreedy 7y ago
  Indeed so; and not just government, any bureaucracy of sufficient size. To take a bit of a pop-sci angle, then as soon as you pass Dunbar's Number. A video essayist I follow on youtube had a bit of a discussion about this, about being on the receiving end, after his car had been stolen, joy-ridden, and then set on fire. He was required to pay impound fees for the wreck, using proof of ownership that had been in the glove box. When he told this to the clerk at the impound lot, the response came, "Well, that's going to be a bit of a problem, isn't it?". And followed the red haze and the realization that these lots don't have bullet-proof glass in front of the counter to protect from robbery. But I'd argue that it's borderline impossible to genuinely account for even the second tier of possible edge cases, even in the best of faith; law is too complex, and world changes at different rates in different places in too many ways to make that kind of considered extrapolation anything but speculative in the best case, and hopeful, well-intentioned gambling in the worst. Incidentally, this is a typical argument against regulation, though I'm not sure I agree with that, either...
  - loquor 7y ago
    Your point regarding regulation is quite pertinent. How do you refute the idea that strict regulation will create a non-navigable mess?
    - dmreedy 7y ago
      I don't, except by the weak negative; I feel that lack of strict regulation creates a predatory, cruel, socially violent mess, which feels less desirable to me. Not to imply that the banal evil of a bureaucratic mess is not a bad thing.
  - notus 7y ago
    I agree that it is probably impossible to account for a lot of edge cases, but then that means there should be more generalized methods for recourse when people feel that the law hasn't accounted for their situation. It sounds like the courts in this situation were just deferring to existing law rather than realizing there is an issue with it and addressing it.
    - dmreedy 7y ago
      Just for the record, I didn't mean to sound like I was happy about that point :). A more generalized system of recourse is an interesting idea, but I'm having a hard time imagining (and likely the fault of my own imagination) something more general than a court system. Either way, I feel like it'll be an immensely difficult uphill battle no matter what, because it's always easier to take the conservative route and defer to precedence, even if there's an acknowledged issue. How does one rattle an institution out of its comfort zone? It's a pretty old question.
      - ta0987 7y ago
        IIUC Common law courts were supposed to be exactly that - that's where the concept of judicial precedent comes from. When a court hears a case and decides it's different enough from previous cases it makes a new ruling for that scenario which is now a precedent for other cases in that scenario. The collection of rulings built up over time is the law.
        matthewheath 7y ago
        Indeed, although the system of precedent has its own challenges — bad law can be created by a court unilaterally and exist for years or decades before being overturned by a superior court.
    - Bartweiss 7y ago
      Frank Herbert wrote a couple of novels about the Bureau of Sabotage. The setting had a government so powerful that it could cause horrible problems with offhand decisions, and so large that it couldn't be reasoned with or set unified policy. (It rather reminds me computerized stock trading today, with problems like the "flash crash" where decisions outrun the actual intent of any human involved.) It couldn't shrink or slow down and still handle genuinely pressing decisions, so the solution was an agency meant to delay and interrupt whatever actions it thought would cause problems. I certainly don't think modern governments are so efficient they need to be intentionally delayed, but the nature of the department is interesting: powerful and almost unrestricted in oversight, but strictly reactive and unable to make policy. It's not a perfect fix, but regulatory capture and incompetence are less worrying when the people deciding on government procedures aren't the same ones enforcing them. In the real world, that might look like a Department of Exceptions. It would be unable to make or even change policy, but would have broad power to reverse specific government decisions. The point isn't to fix bad governance, that's too hard a problem, but to fix issues like this where the edge cases of a rule produce absurd results. For safety from overreach, it would probably need to be one-sided; able to undo government actions on private entities, but not apply new ones or step into private disputes. (I.e. it can grant you a car registration without the normal papers, but it can't peanlize a non-crime or reverse a civil lawsuit.) And for safety from capture, it can't be unaccountable, but holding it to strict policies would be self-defeating - perhaps the best fix would simply be to record common-sense rationales for each decision, and set a low bar to fire or vote out employees for bad decisions. It's a wild idea, and I can see a host of possible issues. But your point about courts is interesting: we already have a system which can't make law, but has enormous power to review government decisions. This would be much the same idea, aimed at irrational actions instead of illegal ones.
- loquor 7y ago
  Kafkaesque is indeed the right term. I wonder if Governments can be 'optimized' by combing out complexity the way an organization can. To other HN readers, what recourse do the people in the article have?
  - tonyedgecombe 7y ago
    Not much, he ran the business as a sole trader rather than limited company so its debts are his debts.
- dsfyu404ed 7y ago
  >It seems like there isn't any thought being put into possible edge cases for policy and here seems to be little recourse for people to get out of it There's often someone who wants to fix the bug when it comes up but unless it's mission critical over time it drops in priority and fades into the nothingness of the backlog and in the rare instances when the bug comes up it still keeps getting dealt with manually. This isn't unique to government but the fact that government has a monopoly on many of the services it provides and the onus is often on the citizen to take action to avoid some sort of default action against them certainly does not help them find motivation to fix the edge cases quickly.
- pjc50 7y ago
  It's not specific to governments, any sufficiently large organisation behaves like this. Think of the people who've had Google accounts vanished without explanation. Or the RBS small business scandal: https://www.theguardian.com/business/2018/feb/12/confidential-report-into-rbs-small-business-scandal-to-be-published https://www.theguardian.com/business/2018/feb/12/confidentia... At least with governments you get a representative.
  - blotter_paper 7y ago
    > At least with governments you get a representative ...if you live in a republic. Bonus points if it's a democratic republic; then your representative will actually listen to you... if you can outbid the competition and get said representative elected via advertising money. At least with a corporation, they can't impose arbitrary fines on you and lock you in a concrete box if you don't pay said fines... unless the government says they can.
    - anoncake 7y ago
      >> At least with governments you get a representative > ...if you live in a republic. The Parliament of the United Kingdom doesn't actually exist? That explains a lot about Brexit.
      - blotter_paper 7y ago
        The quote said governments, not "this one specific government."
      - yellowapple 7y ago
        The House of Lords kinda throws a wrench in calling the UK a republic, IMO. I know they're technically representatives (of... someone), but the Life Peers within the Lords Temporal are Crown-appointed ("on the advice of" the PM, which sounds like Her Majesty can tell the PM to bugger off and ignore that advice, but maybe there are specific restrictions there that I ain't aware of on account of not being British), which to me sounds like monarchy with extra steps.
- tomatotomato37 7y ago
  Sometimes they don't https://en.wikipedia.org/wiki/Marvin_Heemeyer https://en.wikipedia.org/wiki/Marvin_Heemeyer
- Carpetsmoker 7y ago
  A lot of these problems seem to stem from people unwilling (not unable, unwilling) to exercise judgement, and apply the rules in an ever-so-slightly flexible fashion. With the right attitude, a lot is possible, but as you said there is often this "wall of indifference". I think a big reason for this is that it can feel good to exercise power over other people by saying "no". This is doubly the case if you live in a society where everyone is always doing this to everyone else: you feel "small" and pushed around, so when you actually get the chance to push others around you'll instinctively grab it.
- downerending 7y ago
  This reminds me a lot of my most recent divorce negotiations, and indeed, I don't understand how so many people deal so well with these catastrophes. Take it from me: Don't get overly attached to money, things, or really even people. Think of it all more as a ride that you get to enjoy for a while, and then you get off. If you're killing yourself at your job with the thought that you'll someday retire happily or otherwise get to start a happier phase of life (or even just be thanked for your hard work), disabuse yourself of that notion. The money you're piling up can be taken from you in a flash, or become worthless to you due to more overwhelming developments. I saw a homeless man the other day with two dogs. The dogs were obviously happy, and had no concern that they were poor and might have had a much richer life. They had their health, weren't starving, and there were interesting things to do that day. I strive to live like those dogs.
  - taberiand 7y ago
    The Greek and Roman philosophers had these concerns solved ages ago with the Stoics and others. Happiness comes from within, whatever situation we might find ourselves in.
    - voxl 7y ago
      Ah stoicism, toxic masculinity lite
      - taberiand 7y ago
        That doesn't gel with my understanding and experience of Stoicism. What makes you think of it that way?
        glouwbug 7y ago
        Hollywood popularized Han Solo, Clint Eastwood, and the likes as the Stoic Male archetype which recently became the poster boy for toxic masculinity. Shame though, because Stoic derives from Latin for porch. The Stoics sat and shared their ways of a happy life on porches. Stoicism does not subscribe itself to the male gender - it is a pursuit, much like Taoism or Buddism, to reach peace within the Logos, or rather the grand chaos that is the universe itself. Anyone of any descent or gender may become one with the Logos.
- ajross 7y ago
  > Everything about governments This is a private pension plan which ran out of money. The only "government" involved is that the law about who holds the bag is unfair.
  - buckminster 7y ago
    The fund has plenty of money. That's part of the absurdity.
    - ajross 7y ago
      Per the article, he's being "pursued for a shortfall" under Section 75. Obviously I don't know any more details of the case than that, and it's certainly possible that this is all shenanigans driven by a corrupt pension administration. But I don't see that that changes the point much: this is entirely private people arguing in court over 100% private money. There's literally no bureaucracy to be offended by. In theory this kind of dispute could happen with any 401k plan in the US too.
      - twic 7y ago
        Your assumptions are basically all wrong. The pension administrator is not corrupt. Their current assets are 101% of what they need to be to cover their liabilities, assuming they can use returns on the assets to pay for the liabilities, given some standard set of assumptions about investment returns [1]. The "shortfall" is about a "wind-up basis", or "buy-out basis", which means assuming that the scheme sells its assets and uses the proceeds to buy annuities. Buying annuities is a really expensive way to provide a pension, so their current assets aren't enough to cover their liabilities this way. But they're not going to do this! Neither the administrator nor the members want to do this! The private people are not arguing over the private money, they're all perfectly happy with each other. But the law requires that a pension fund has enough assets to do this! Why does the law require this? I have no idea. I'd have to dig out Hansard or white papers from the mid-'90s to find out, and that is a bridge too far. But it seems clear that the problem here is entirely derived from government regulations which don't align with what the private people involved want. [1] https://www.theyworkforyou.com/debates/?id=2018-01-11a.578.5 https://www.theyworkforyou.com/debates/?id=2018-01-11a.578.5
- tluyben2 7y ago
  What I find the most amazing, is that you do not get more desperate vengeance cases. I mean ; you worked your whole life, you tried to do the right thing, you basically have nothing to lose and yet you do not go out and hurt the people that screwed up your life out of nowhere. That always gives me new confidence in humanity as it feels like that could so easily happen, every time when someone (or a loved one) is screwed over by something they or you cannot, legally, get justice for. Not only governments; big companies that just 'do things' because, like you say, no-one seems to have given any consideration to the edge cases. When you put that to them (Google, MS etc), the answer is always (possibly with some rancid dress-up) 'we cannot account for every case; that would not be commercial'. Governments probably have the same reasons but they cannot say that out loud (usually) because re-election (of their political party). A friend changed her last name two months ago; she got a letter that it succeeded and it would take 3-6 months to take effect. So today, while she was traveling, she got a letter from the gov that it was finished and that all her papers are per direct expired. Passport, ID, driver's license etc. This was an edge case in that: 0) it rarely happens (first name happens more often, last name is rare here) 1) it usually takes much longer 2) they usually send a letter with enough room to request new papers 3) most people don't travel much. But the end result was; those docs expired and 'we are sorry not warning you on time, but sorry we cannot do anything, you have to come to NL to request new ones'. No valid documents to travel, so how does that work? Anyway; not quite the same thing as the article, but it happens weekly at least. No-one thinks things through, ever.
yumraj 7y ago
This is exactly why everyone needs to know about jury nullification, at least in the US where it is allowed, so that if and when such cases come in a court the juries can help make common sense judgements rather than the ones mandated by narrow interpretation of the applicable laws.
- Jestar342 7y ago
  That's just interpreted as "not guilty". I still don't understand why it is so hard for people to understand this. The jury are just asked "are they guilty?" and if they don't give an answer it is, by simple virtue, not a guilty verdict. Voila, verdict of "not guilty." UK law has precedence for defendants who did do the deed being given a not guilty verdict by the jury already. We even gave it the name "perverse verdict." The wiki page on jury nullification has details.
  - gizmo686 7y ago
    Juries are given specific instructions which includes something to the effect of "it is your duty to determine if the defendent violated the law, regardless of if you agree with the law". The possibility of jury nullification is not included in those instructions. Before being selected for a jury, jururs are asked (under penalty of perjury) if they can apply the law regardless of there personal feelings about it. Anyone who seriously considers nullification would be lying if they said yes, and would likely be excluded for saying no. At least in the US, all jury nullification is, is the fact that the jury's decision making is above review. It is not so much that jury nullification is legal, it is that any ban on nullification is unenforcable. The courts therefore do whatever they can to avoid nullification.
    - Jestar342 7y ago
      > Juries are given specific instructions which includes something to the effect of "it is your duty to determine if the defendent violated the law, regardless of if you agree with the law". The possibility of jury nullification is not included in those instructions. No, they aren't[1]. And from my own experience of serving on a large fraud case, the Judge even went into detail about "You are to return a guilty verdict if you think they are guilty of the crime charged, paying special note that you must believe beyond reasonable doubt, that their actions constitute a crime." Later in the case this became apparent when the evidence from the defence suggested one of the defendants was under coercion. i.e. they did commit the act of fraud, but not criminally so. > Before being selected for a jury, jururs are asked (under penalty of perjury) if they can apply the law regardless of there personal feelings about it. Anyone who seriously considers nullification would be lying if they said yes, and would likely be excluded for saying no. No, they aren't[1]. In fact the opposite. We were asked to use our "worldly experience" to help us reach a verdict. [1] Full instructions (to judges) about Jury management in the UK is here: https://www.judiciary.uk/wp-content/uploads/2016/05/crown-court-compendium-part-i-jury-and-trial-management-and-summing-up.pdf https://www.judiciary.uk/wp-content/uploads/2016/05/crown-co....
marcus_holmes 7y ago
The whole pension situation is going to blow up completely. As a GenX, I fully expect to have to work well into my 70's and then finally get a state pension (if I get one at all) completely inadequate to support me. Boomers are the major political force, and so pensions are good now. But as soon as enough of them die off, GenY/Millenials will be the dominant demographic and all the remaining pension funds will get ransacked for benefits to the young. A bit like Student Loans all over again (Boomers got their education for free, GenX had to pay, Millenials got shafted), except it'll just be GenX getting the finger this time.
- castlecrasher2 7y ago
  >Boomers got their education for free I've never heard this before. Got a link that explains it? All I've heard from the few boomers I've talked to is that they generally worked during school and had some loans as well.
  - smcl 7y ago
    This is what happened in the UK, tuition was free until fees were introduced at the tail end of GenX (quickly abolished in Scotland, more or less). I don’t think it was ever “free” in the US but until recently (GenX again?) it could be covered by a summer job in many cases. Obviously now it is absolutely bonkers in the US, and as it stands the more elite universities in England, Wales and NI are rapidly headed in that direction.
    - marcus_holmes 7y ago
      not only tuition. In the UK, students got a grant to cover living expenses as well as free tuition. This ended in 1988 (incidentally the year I went to university), to be replaced with student loans. Boomers are the generation born from 1940-1965, so the youngest boomers turned 23 when the student grant system finished in '88. Exactly the age when a person in a four-year course (and a gap year) finishes university. It's not a coincidence.
      - 7y ago
throwaway5752 7y ago
This article is about a group pension plan and a legally mandated way of calculating liabilities that isn't working in a particular case. It's a simple law change. It's not some crazy bureaucratic maze or malevolent government - it's actually a private pension administrator, and it is based on a strict way of calculating future liabilities for group plans being applied to individual members when they leave the group in a fairly dumb way. The law in question came around for a good reason: Section 75 came about as a result of a sweeping review of pension regulation in the wake of the Robert Maxwell scandal in the 1990s. Following the media tycoon's death it emerged he had plundered millions from the Mirror Group pension scheme. The Pensions Act 1995 introduced a series of reforms including a "minimum funding requirement" for pension funds. It also introduced something called "Section 75 pension debt", which meant if an employer "departed" a scheme, they could still be pursued for any shortfall. It is just a poor match with this type of shared pension scheme (not British, so forgive problems matching this to other types of defined benefits plans I'm more familiar with). This seems to be a clear case to revise this Section 75 for these types of group plans/schemes. There is no actual fiscal problem here, just a legal one. The biggest obstacle to amending the existing law, based on the article, is an inability to enact legislation because of distraction by Brexit.
- jermaustin1 7y ago
  It seems like the governments officials overseeing the scheme don't see anything wrong with Section 75: > The Department for Work and Pensions spokesman said the rules were in place to ensure schemes were adequately funded. > He said: "We have a duty to protect members in their retirement, ensure schemes are properly funded and work with those employers who remain in a multi-employer scheme. It seems like a giant clusterf*ck was introduced in 2005. 1. It wasn't properly communicated to anyone 2. There was a loophole that allowed a company to exit the pension for £1 3. The remaining businesses to cover the share of the deficit for everyone who had exited the scheme. 4. Most of these businesses didn't learn of the deficit until 2016, a decade after the the new math went into effect. If the pension didn't do their duty to warn businesses of the deficit in 2005, it should be on their heads to fund the deficit, and they should not be allowed to pull from the pension fund, they have to pull from their own money. Had these businesses known 10 years ago, they could have been paying all along an increased pension rate for their employees.
Bartweiss 7y ago
> Plumbing Pensions scheme, one of the few schemes in the UK to be multi-employer, meaning it could be accessed by different, unconnected, employers and their employees... because it was a "last man standing scheme", those still in it had to pick up the liabilities of those who had already left - even though they had no connection with those businesses. > The Pensions Act 1995 introduced a series of reforms including a "minimum funding requirement" for pension funds. It also introduced something called "Section 75 pension debt", which meant if an employer "departed" a scheme, they could still be pursued for any shortfall... Since 2005 far more stringent rules have been in force - and, by this new yardstick, Plumbing Pensions was deemed to be under-funded. So pension systems were set up with an element of shared liability. That's a bit of a risk for employers, but also insurance for pensioners if their individual small employers failed. The worst case was that the scheme as a whole collapsed if many members dropped out. Then the government applied a minimum funding requirement to payment structures which had been running for years without planning for that value. Then, it converted shared risk from an insurance model to a legal obligation, which could apply to individuals if their businesses were small enough. Then, it raised the minimum on plans which had been running for 40+ years, and couldn't possibly be backfilled. It's hard to overstate just how badly Menzies was treated by these regulations. His pension enrollment was not only moral but financially responsible - it only became a problem when the terms he'd agreed to were repeatedly, retroactively altered. Nor should he be blamed for being slow to react to the changes - the last-man-standing scheme meant someone was getting stuck with that bill. Large, incorporated companies, by contrast, could be bankrupted but would at least face no personal debts. Meanwhile, what about the Mirror Group, which motivated of these changes? Well, Robert Maxwell died before seeing any liability for his theft. His sons and other company directors were acquitted of all charges. And the government bailed out 50% of the uncovered pensions. It's one small case of the usual dynamic, I suppose: some large businesses and multimillionaires behaved badly, so they faced no significant consequences , but a bunch of unrelated people who'd behaved just fine had their lives upended by a clumsy response.
kd3 7y ago
Believe in government and you will get hurt. Extortion and robbery, business as usual.
- nexuist 7y ago
  What then is left to believe in? Individual businesses that would extort and rob to their heart's content if not for the government getting in their way?
  - kd3 7y ago
    I don't think replacing individual business that might rob people with one gigantic one that does rob people is an improvement. As for alternatives, check this free ebook: https://www.dropbox.com/s/yd18waixbva1jae/WhatAnarchyIsnt-FREEBIE.pdf?dl=0 https://www.dropbox.com/s/yd18waixbva1jae/WhatAnarchyIsnt-FR...
- qntty 7y ago
  Seems like the lack of a livable government pension is the real issue here. Why should an employer have to worry about "paying" employees after they stop working for you? There should be social programs under democratic control that deal with stuff like that.
  - tonyedgecombe 7y ago
    Just like health care there are many problems with having your employer provide your pension. The UK is gradually moving away from that now with workplace pensions that are provided by a 3rd party and can move with you from job to job.
    - walshemj 7y ago
      Um moving from a DB scheme to a DC one is not an improvement
      - tonyedgecombe 7y ago
lacker 7y ago
I don't quite get why this article sides with the boss. He promised his workers a certain amount of money through a pension, and now he's having trouble living up to that promise. I wouldn't say it's "being a good guy boss" that is the problem here, it's making financial promises that he wasn't able to keep. The article also acts like changing to a different accounting system in order to get a different result would be the perfect solution. Well, that's how you get underfunded pensions in the first place. I think the error was in making these pension promises in the first place. It is far better to make promises that you understand how to keep, like the defined contribution of a 401k, than to make promises to your employees that are implicitly assuming a certain rate of investment return for decades.
- gambiting 7y ago
  It sounds like you haven't read the article at all. He has been paying into a scheme for many decades, even though there was no requirement for him to do so. Then as a result of literal theft from a pension scheme, a law was introduced that established a minimum funding requirement on pension schemes, even ones which have been running like this one - for 40 years and completely solvent, meaning that the fund is able to pay out the promised money. No promises were ever broken here. But because the law made an unrealistic minimum funding requirement(probably based on the number of years * some amount) this scheme is now suddenly magically underfunded and he is personally liable to pull £1.2M out of his ass. This doesn't make any sense. He has never lied to anyone, never done something that he shouldn't have, all the promises that he made can and will be kept - but the law fucked him over for literally no reason. It's like walking along on a street, happy and healthy, and being hit by a stray bullet - it can mess up your entire life at no fault of your own.
  - microtherion 7y ago
    > He has been paying into a scheme for many decades, even though there was no requirement for him to do so. Yes, that's true, and to his credit. However, the people whom he hired during that time negotiated their salary and chose their place of employment knowing about the pension scheme, so the whole thing is not quite the act of pure, disinterested benevolence the article makes it out to be.
gumby 7y ago
This reminds me of how congress mandated an absurd pension calculation for the post office as a way of trying to kill it.
- SilasX 7y ago
  Being required to contribute the present discounted value of the benefit, as private corporations do, is not absurd; the absence of that preparation is what's absurd, and has led to numerous pensioners getting stiffed when it turns out that megacorps are not perpetual fonts of wealth.
  - gumby 7y ago
    I agree, though the US postal service in particular is subject to specific IMHO abusive constraints: https://www.bloomberg.com/opinion/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service https://www.bloomberg.com/opinion/articles/2018-04-04/congre... and https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-world-more-rules-worse-funding/ https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-worl... In this case the evolution of the rules was not properly handled and the risk assigned post facto to a population (these tiny businesses) not set up to handle the new rules. With regards to the megacorps: they have often treated the future obligation and the current obligation as uncoupled on their balance sheets which is great in the short term and disastrous in the long. A bit of "apres moi le deluge". Not just the megacorps; the US state of Illinois made the same terrible decision.
cryptica 7y ago
The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own retirement. Big centralized retirement funds are scams and they always will be. Wherever there is a giant pile of other people's money managed by a bunch of bureaucrats, some suits will come along and find a way to profit from that pile of money in the most wasteful way possible. Now all these retirement funds invest straight into low-yielding corporate stocks; so the money essentially ends up going into the pockets of corporate executives. And the worst part is that the government makes this compulsory. I know superannuation is a scam but I'm forced to pay it anyway and I can't take the money out until I'm 65... I wouldn't be surprised if by that time, the retirement fund stock bubble will probably have popped and my retirement account will be worth $0... And all the fund managers and corporate executives will be rich.
- pjmorris 7y ago
  It seems likely that US social security is linked with this: "Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939." [0] [0] - https://www.nber.org/aginghealth/summer04/w10466.html https://www.nber.org/aginghealth/summer04/w10466.html
  - Spooky23 7y ago
    Elderly poverty was once a massive a tragic problem that both impacted the elderly as their ability to work waned, the families of the elderly who attempted to provide care, and the employment market as elderly employees tried to hang on as long as possible. The conservative and libertarian trains of thought value individual agency above public welfare, which is a convenient point of view for people with the means to sustain themselves.
  - Richard_East 7y ago
    At the same time as we have seen decreases in income, wealth and home ownership for younger cohorts when measured at the same age. Its just a transfer of wealth from young to old.
Havoc 7y ago
At my last promotion panel interview that actually came up as a point of concern. That I'm too much of a good guy. well uhm yeah I'll try to be more of an asshole? I get what they meant but still seemed a little surreal.
wolco 7y ago
For the guy who said his family business is worthless. Why not create a new business in sons name and sell all assets to the new company including the name. Put the first in bankrupcy?
- ThrustVectoring 7y ago
  If that helps out at all, it's a fraudulent transfer that would get reversed by the bankruptcy court. The business's creditors are entitled to up to 100% of the value of the assets that the business owns, you can't just sell them off before declaring bankruptcy.
  - eigenvalue 7y ago
    That applies to hard assets, like a truck, inventory of hardware, power tools, etc. The real value in a business such as this is in the local brand recognition (usually applied to the name of the proprietor), a reputation for honesty and good service, and a list of customers with their contact information. So in that sense, a father probably could reasonably transfer or transition ownership to his son, it would just have to be done in a multi-step, gradual manner.
    - ThrustVectoring 7y ago
      Probably the easiest way of going about it is just to operate "Plumber Bob's Plumbing" and "Plumber Bob Jr's Plumbing" as separate entities for a bit, and start referring business to the son's firm.
      - eigenvalue 7y ago
        Exactly. Very hard to argue in court that this constitutes a fraudulent conveyance.
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jsmith99 7y ago
The National Institute of Economic and Social Research, a UK think-tank, produced an amusing (by pensions standards) video explaining the recent shifts in pension schemes, especially for government workers like teachers and nurses, and how some groups benefit while many lose. https://youtube.com/watch?v=wXz85VuFMcU https://youtube.com/watch?v=wXz85VuFMcU Unfortunately pensions are an intrinsically boring topic. I recently met a professor of economics who lamented the £23bn deficit in the UK University pension scheme but admitted he was unable to get even his fellow affected economics academics to care.
rdiddly 7y ago
The central problem with this is the presumption of guilt, contained in this Section 75.
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throwmeaway90 7y ago
Case where lawmakers fail and fuck up everyone due to their incompetency to do math.
d_burfoot 7y ago
In addition to their many other practical problems, defined-benefit pension schemes are profoundly racist and sexist. This is because different demographic groups have wildly different life expectancies, and these differences aren't taken into account when calculating benefits. Let's look at Social Security. Consider Alice, an Asian-American woman, and Bob, and African-American man. They are exactly identical in every way that is visible to the SSA: they begin working at the same time, they make the same payments on the same dates, and they retire at the same age. Suppose further they both retire at the standard age of 67, and they both have made enough in-payments that they will get the maximum amount of $2,900/month or $34,800/yr. When she retires at age 67, Alice has a long life to look forward to. Asian-American life expectancy is 87 years, and women get a life bonus on top of that, bringing her expectancy to just under 90 years. So on average she'll receive about 23 years of payments, for a total of $786K. Bob's situation is quite different. The African-American life expectancy is 75.4 years, and men get a life penalty, bringing Bob's expectancy to about 73 years. So in expectation he'll receive just about 6 years of payments before passing away, for a total payout of $205K. So these two people make the exact same contributions over the same period of time, but one of them gets almost 4x more of a benefit, on account of her race and gender. The system is literally forcing one group of people to subsidize the retirements of another group that lives longer than them (and, as a separate point, makes much more money).
- maphar 7y ago
  You're citing life expectancy at birth, which can be very different than life expectancy at 67.

370 points by dustinmoris 7y ago

I have luckily never been caught in one of these kakfa-esque bureaucratic traps before, but I don't know how people hold it together when they do get caught in it. It seems like there isn't any thought being put into possible edge cases for policy and here seems to be little recourse for people to get out of it. Everything about governments just feels like this wall of indifference, from interactions at the DMV to policy being created. Just thinking about it makes me a little crazy. It is so inhuman.

dmreedy 7y ago
Indeed so; and not just government, any bureaucracy of sufficient size. To take a bit of a pop-sci angle, then as soon as you pass Dunbar's Number. A video essayist I follow on youtube had a bit of a discussion about this, about being on the receiving end, after his car had been stolen, joy-ridden, and then set on fire. He was required to pay impound fees for the wreck, using proof of ownership that had been in the glove box. When he told this to the clerk at the impound lot, the response came, "Well, that's going to be a bit of a problem, isn't it?". And followed the red haze and the realization that these lots don't have bullet-proof glass in front of the counter to protect from robbery. But I'd argue that it's borderline impossible to genuinely account for even the second tier of possible edge cases, even in the best of faith; law is too complex, and world changes at different rates in different places in too many ways to make that kind of considered extrapolation anything but speculative in the best case, and hopeful, well-intentioned gambling in the worst. Incidentally, this is a typical argument against regulation, though I'm not sure I agree with that, either...
- loquor 7y ago
  Your point regarding regulation is quite pertinent. How do you refute the idea that strict regulation will create a non-navigable mess?
  - dmreedy 7y ago
    I don't, except by the weak negative; I feel that lack of strict regulation creates a predatory, cruel, socially violent mess, which feels less desirable to me. Not to imply that the banal evil of a bureaucratic mess is not a bad thing.
- notus 7y ago
  I agree that it is probably impossible to account for a lot of edge cases, but then that means there should be more generalized methods for recourse when people feel that the law hasn't accounted for their situation. It sounds like the courts in this situation were just deferring to existing law rather than realizing there is an issue with it and addressing it.
  - dmreedy 7y ago
    Just for the record, I didn't mean to sound like I was happy about that point :). A more generalized system of recourse is an interesting idea, but I'm having a hard time imagining (and likely the fault of my own imagination) something more general than a court system. Either way, I feel like it'll be an immensely difficult uphill battle no matter what, because it's always easier to take the conservative route and defer to precedence, even if there's an acknowledged issue. How does one rattle an institution out of its comfort zone? It's a pretty old question.
    - ta0987 7y ago
      IIUC Common law courts were supposed to be exactly that - that's where the concept of judicial precedent comes from. When a court hears a case and decides it's different enough from previous cases it makes a new ruling for that scenario which is now a precedent for other cases in that scenario. The collection of rulings built up over time is the law.
      - matthewheath 7y ago
        Indeed, although the system of precedent has its own challenges — bad law can be created by a court unilaterally and exist for years or decades before being overturned by a superior court.
  - Bartweiss 7y ago
    Frank Herbert wrote a couple of novels about the Bureau of Sabotage. The setting had a government so powerful that it could cause horrible problems with offhand decisions, and so large that it couldn't be reasoned with or set unified policy. (It rather reminds me computerized stock trading today, with problems like the "flash crash" where decisions outrun the actual intent of any human involved.) It couldn't shrink or slow down and still handle genuinely pressing decisions, so the solution was an agency meant to delay and interrupt whatever actions it thought would cause problems. I certainly don't think modern governments are so efficient they need to be intentionally delayed, but the nature of the department is interesting: powerful and almost unrestricted in oversight, but strictly reactive and unable to make policy. It's not a perfect fix, but regulatory capture and incompetence are less worrying when the people deciding on government procedures aren't the same ones enforcing them. In the real world, that might look like a Department of Exceptions. It would be unable to make or even change policy, but would have broad power to reverse specific government decisions. The point isn't to fix bad governance, that's too hard a problem, but to fix issues like this where the edge cases of a rule produce absurd results. For safety from overreach, it would probably need to be one-sided; able to undo government actions on private entities, but not apply new ones or step into private disputes. (I.e. it can grant you a car registration without the normal papers, but it can't peanlize a non-crime or reverse a civil lawsuit.) And for safety from capture, it can't be unaccountable, but holding it to strict policies would be self-defeating - perhaps the best fix would simply be to record common-sense rationales for each decision, and set a low bar to fire or vote out employees for bad decisions. It's a wild idea, and I can see a host of possible issues. But your point about courts is interesting: we already have a system which can't make law, but has enormous power to review government decisions. This would be much the same idea, aimed at irrational actions instead of illegal ones.
loquor 7y ago
Kafkaesque is indeed the right term. I wonder if Governments can be 'optimized' by combing out complexity the way an organization can. To other HN readers, what recourse do the people in the article have?
- tonyedgecombe 7y ago
  Not much, he ran the business as a sole trader rather than limited company so its debts are his debts.
dsfyu404ed 7y ago
>It seems like there isn't any thought being put into possible edge cases for policy and here seems to be little recourse for people to get out of it There's often someone who wants to fix the bug when it comes up but unless it's mission critical over time it drops in priority and fades into the nothingness of the backlog and in the rare instances when the bug comes up it still keeps getting dealt with manually. This isn't unique to government but the fact that government has a monopoly on many of the services it provides and the onus is often on the citizen to take action to avoid some sort of default action against them certainly does not help them find motivation to fix the edge cases quickly.
pjc50 7y ago
It's not specific to governments, any sufficiently large organisation behaves like this. Think of the people who've had Google accounts vanished without explanation. Or the RBS small business scandal: https://www.theguardian.com/business/2018/feb/12/confidential-report-into-rbs-small-business-scandal-to-be-published https://www.theguardian.com/business/2018/feb/12/confidentia... At least with governments you get a representative.
- blotter_paper 7y ago
  > At least with governments you get a representative ...if you live in a republic. Bonus points if it's a democratic republic; then your representative will actually listen to you... if you can outbid the competition and get said representative elected via advertising money. At least with a corporation, they can't impose arbitrary fines on you and lock you in a concrete box if you don't pay said fines... unless the government says they can.
  - anoncake 7y ago
    >> At least with governments you get a representative > ...if you live in a republic. The Parliament of the United Kingdom doesn't actually exist? That explains a lot about Brexit.
    - blotter_paper 7y ago
      The quote said governments, not "this one specific government."
    - yellowapple 7y ago
      The House of Lords kinda throws a wrench in calling the UK a republic, IMO. I know they're technically representatives (of... someone), but the Life Peers within the Lords Temporal are Crown-appointed ("on the advice of" the PM, which sounds like Her Majesty can tell the PM to bugger off and ignore that advice, but maybe there are specific restrictions there that I ain't aware of on account of not being British), which to me sounds like monarchy with extra steps.
tomatotomato37 7y ago
Sometimes they don't https://en.wikipedia.org/wiki/Marvin_Heemeyer https://en.wikipedia.org/wiki/Marvin_Heemeyer
Carpetsmoker 7y ago
A lot of these problems seem to stem from people unwilling (not unable, unwilling) to exercise judgement, and apply the rules in an ever-so-slightly flexible fashion. With the right attitude, a lot is possible, but as you said there is often this "wall of indifference". I think a big reason for this is that it can feel good to exercise power over other people by saying "no". This is doubly the case if you live in a society where everyone is always doing this to everyone else: you feel "small" and pushed around, so when you actually get the chance to push others around you'll instinctively grab it.
downerending 7y ago
This reminds me a lot of my most recent divorce negotiations, and indeed, I don't understand how so many people deal so well with these catastrophes. Take it from me: Don't get overly attached to money, things, or really even people. Think of it all more as a ride that you get to enjoy for a while, and then you get off. If you're killing yourself at your job with the thought that you'll someday retire happily or otherwise get to start a happier phase of life (or even just be thanked for your hard work), disabuse yourself of that notion. The money you're piling up can be taken from you in a flash, or become worthless to you due to more overwhelming developments. I saw a homeless man the other day with two dogs. The dogs were obviously happy, and had no concern that they were poor and might have had a much richer life. They had their health, weren't starving, and there were interesting things to do that day. I strive to live like those dogs.
- taberiand 7y ago
  The Greek and Roman philosophers had these concerns solved ages ago with the Stoics and others. Happiness comes from within, whatever situation we might find ourselves in.
  - voxl 7y ago
    Ah stoicism, toxic masculinity lite
    - taberiand 7y ago
      That doesn't gel with my understanding and experience of Stoicism. What makes you think of it that way?
      - glouwbug 7y ago
        Hollywood popularized Han Solo, Clint Eastwood, and the likes as the Stoic Male archetype which recently became the poster boy for toxic masculinity. Shame though, because Stoic derives from Latin for porch. The Stoics sat and shared their ways of a happy life on porches. Stoicism does not subscribe itself to the male gender - it is a pursuit, much like Taoism or Buddism, to reach peace within the Logos, or rather the grand chaos that is the universe itself. Anyone of any descent or gender may become one with the Logos.
ajross 7y ago
> Everything about governments This is a private pension plan which ran out of money. The only "government" involved is that the law about who holds the bag is unfair.
- buckminster 7y ago
  The fund has plenty of money. That's part of the absurdity.
  - ajross 7y ago
    Per the article, he's being "pursued for a shortfall" under Section 75. Obviously I don't know any more details of the case than that, and it's certainly possible that this is all shenanigans driven by a corrupt pension administration. But I don't see that that changes the point much: this is entirely private people arguing in court over 100% private money. There's literally no bureaucracy to be offended by. In theory this kind of dispute could happen with any 401k plan in the US too.
    - twic 7y ago
      Your assumptions are basically all wrong. The pension administrator is not corrupt. Their current assets are 101% of what they need to be to cover their liabilities, assuming they can use returns on the assets to pay for the liabilities, given some standard set of assumptions about investment returns [1]. The "shortfall" is about a "wind-up basis", or "buy-out basis", which means assuming that the scheme sells its assets and uses the proceeds to buy annuities. Buying annuities is a really expensive way to provide a pension, so their current assets aren't enough to cover their liabilities this way. But they're not going to do this! Neither the administrator nor the members want to do this! The private people are not arguing over the private money, they're all perfectly happy with each other. But the law requires that a pension fund has enough assets to do this! Why does the law require this? I have no idea. I'd have to dig out Hansard or white papers from the mid-'90s to find out, and that is a bridge too far. But it seems clear that the problem here is entirely derived from government regulations which don't align with what the private people involved want. [1] https://www.theyworkforyou.com/debates/?id=2018-01-11a.578.5 https://www.theyworkforyou.com/debates/?id=2018-01-11a.578.5
tluyben2 7y ago
What I find the most amazing, is that you do not get more desperate vengeance cases. I mean ; you worked your whole life, you tried to do the right thing, you basically have nothing to lose and yet you do not go out and hurt the people that screwed up your life out of nowhere. That always gives me new confidence in humanity as it feels like that could so easily happen, every time when someone (or a loved one) is screwed over by something they or you cannot, legally, get justice for. Not only governments; big companies that just 'do things' because, like you say, no-one seems to have given any consideration to the edge cases. When you put that to them (Google, MS etc), the answer is always (possibly with some rancid dress-up) 'we cannot account for every case; that would not be commercial'. Governments probably have the same reasons but they cannot say that out loud (usually) because re-election (of their political party). A friend changed her last name two months ago; she got a letter that it succeeded and it would take 3-6 months to take effect. So today, while she was traveling, she got a letter from the gov that it was finished and that all her papers are per direct expired. Passport, ID, driver's license etc. This was an edge case in that: 0) it rarely happens (first name happens more often, last name is rare here) 1) it usually takes much longer 2) they usually send a letter with enough room to request new papers 3) most people don't travel much. But the end result was; those docs expired and 'we are sorry not warning you on time, but sorry we cannot do anything, you have to come to NL to request new ones'. No valid documents to travel, so how does that work? Anyway; not quite the same thing as the article, but it happens weekly at least. No-one thinks things through, ever.

yumraj 7y ago

This is exactly why everyone needs to know about jury nullification, at least in the US where it is allowed, so that if and when such cases come in a court the juries can help make common sense judgements rather than the ones mandated by narrow interpretation of the applicable laws.

Jestar342 7y ago
That's just interpreted as "not guilty". I still don't understand why it is so hard for people to understand this. The jury are just asked "are they guilty?" and if they don't give an answer it is, by simple virtue, not a guilty verdict. Voila, verdict of "not guilty." UK law has precedence for defendants who did do the deed being given a not guilty verdict by the jury already. We even gave it the name "perverse verdict." The wiki page on jury nullification has details.
- gizmo686 7y ago
  Juries are given specific instructions which includes something to the effect of "it is your duty to determine if the defendent violated the law, regardless of if you agree with the law". The possibility of jury nullification is not included in those instructions. Before being selected for a jury, jururs are asked (under penalty of perjury) if they can apply the law regardless of there personal feelings about it. Anyone who seriously considers nullification would be lying if they said yes, and would likely be excluded for saying no. At least in the US, all jury nullification is, is the fact that the jury's decision making is above review. It is not so much that jury nullification is legal, it is that any ban on nullification is unenforcable. The courts therefore do whatever they can to avoid nullification.
  - Jestar342 7y ago
    > Juries are given specific instructions which includes something to the effect of "it is your duty to determine if the defendent violated the law, regardless of if you agree with the law". The possibility of jury nullification is not included in those instructions. No, they aren't[1]. And from my own experience of serving on a large fraud case, the Judge even went into detail about "You are to return a guilty verdict if you think they are guilty of the crime charged, paying special note that you must believe beyond reasonable doubt, that their actions constitute a crime." Later in the case this became apparent when the evidence from the defence suggested one of the defendants was under coercion. i.e. they did commit the act of fraud, but not criminally so. > Before being selected for a jury, jururs are asked (under penalty of perjury) if they can apply the law regardless of there personal feelings about it. Anyone who seriously considers nullification would be lying if they said yes, and would likely be excluded for saying no. No, they aren't[1]. In fact the opposite. We were asked to use our "worldly experience" to help us reach a verdict. [1] Full instructions (to judges) about Jury management in the UK is here: https://www.judiciary.uk/wp-content/uploads/2016/05/crown-court-compendium-part-i-jury-and-trial-management-and-summing-up.pdf https://www.judiciary.uk/wp-content/uploads/2016/05/crown-co....

marcus_holmes 7y ago

The whole pension situation is going to blow up completely. As a GenX, I fully expect to have to work well into my 70's and then finally get a state pension (if I get one at all) completely inadequate to support me. Boomers are the major political force, and so pensions are good now. But as soon as enough of them die off, GenY/Millenials will be the dominant demographic and all the remaining pension funds will get ransacked for benefits to the young. A bit like Student Loans all over again (Boomers got their education for free, GenX had to pay, Millenials got shafted), except it'll just be GenX getting the finger this time.

castlecrasher2 7y ago
>Boomers got their education for free I've never heard this before. Got a link that explains it? All I've heard from the few boomers I've talked to is that they generally worked during school and had some loans as well.
- smcl 7y ago
  This is what happened in the UK, tuition was free until fees were introduced at the tail end of GenX (quickly abolished in Scotland, more or less). I don’t think it was ever “free” in the US but until recently (GenX again?) it could be covered by a summer job in many cases. Obviously now it is absolutely bonkers in the US, and as it stands the more elite universities in England, Wales and NI are rapidly headed in that direction.
  - marcus_holmes 7y ago
    not only tuition. In the UK, students got a grant to cover living expenses as well as free tuition. This ended in 1988 (incidentally the year I went to university), to be replaced with student loans. Boomers are the generation born from 1940-1965, so the youngest boomers turned 23 when the student grant system finished in '88. Exactly the age when a person in a four-year course (and a gap year) finishes university. It's not a coincidence.
    - 7y ago

throwaway5752 7y ago

This article is about a group pension plan and a legally mandated way of calculating liabilities that isn't working in a particular case. It's a simple law change. It's not some crazy bureaucratic maze or malevolent government - it's actually a private pension administrator, and it is based on a strict way of calculating future liabilities for group plans being applied to individual members when they leave the group in a fairly dumb way. The law in question came around for a good reason: Section 75 came about as a result of a sweeping review of pension regulation in the wake of the Robert Maxwell scandal in the 1990s. Following the media tycoon's death it emerged he had plundered millions from the Mirror Group pension scheme. The Pensions Act 1995 introduced a series of reforms including a "minimum funding requirement" for pension funds. It also introduced something called "Section 75 pension debt", which meant if an employer "departed" a scheme, they could still be pursued for any shortfall. It is just a poor match with this type of shared pension scheme (not British, so forgive problems matching this to other types of defined benefits plans I'm more familiar with). This seems to be a clear case to revise this Section 75 for these types of group plans/schemes. There is no actual fiscal problem here, just a legal one. The biggest obstacle to amending the existing law, based on the article, is an inability to enact legislation because of distraction by Brexit.

jermaustin1 7y ago
It seems like the governments officials overseeing the scheme don't see anything wrong with Section 75: > The Department for Work and Pensions spokesman said the rules were in place to ensure schemes were adequately funded. > He said: "We have a duty to protect members in their retirement, ensure schemes are properly funded and work with those employers who remain in a multi-employer scheme. It seems like a giant clusterf*ck was introduced in 2005. 1. It wasn't properly communicated to anyone 2. There was a loophole that allowed a company to exit the pension for £1 3. The remaining businesses to cover the share of the deficit for everyone who had exited the scheme. 4. Most of these businesses didn't learn of the deficit until 2016, a decade after the the new math went into effect. If the pension didn't do their duty to warn businesses of the deficit in 2005, it should be on their heads to fund the deficit, and they should not be allowed to pull from the pension fund, they have to pull from their own money. Had these businesses known 10 years ago, they could have been paying all along an increased pension rate for their employees.

Bartweiss 7y ago

> Plumbing Pensions scheme, one of the few schemes in the UK to be multi-employer, meaning it could be accessed by different, unconnected, employers and their employees... because it was a "last man standing scheme", those still in it had to pick up the liabilities of those who had already left - even though they had no connection with those businesses. > The Pensions Act 1995 introduced a series of reforms including a "minimum funding requirement" for pension funds. It also introduced something called "Section 75 pension debt", which meant if an employer "departed" a scheme, they could still be pursued for any shortfall... Since 2005 far more stringent rules have been in force - and, by this new yardstick, Plumbing Pensions was deemed to be under-funded. So pension systems were set up with an element of shared liability. That's a bit of a risk for employers, but also insurance for pensioners if their individual small employers failed. The worst case was that the scheme as a whole collapsed if many members dropped out. Then the government applied a minimum funding requirement to payment structures which had been running for years without planning for that value. Then, it converted shared risk from an insurance model to a legal obligation, which could apply to individuals if their businesses were small enough. Then, it raised the minimum on plans which had been running for 40+ years, and couldn't possibly be backfilled. It's hard to overstate just how badly Menzies was treated by these regulations. His pension enrollment was not only moral but financially responsible - it only became a problem when the terms he'd agreed to were repeatedly, retroactively altered. Nor should he be blamed for being slow to react to the changes - the last-man-standing scheme meant someone was getting stuck with that bill. Large, incorporated companies, by contrast, could be bankrupted but would at least face no personal debts. Meanwhile, what about the Mirror Group, which motivated of these changes? Well, Robert Maxwell died before seeing any liability for his theft. His sons and other company directors were acquitted of all charges. And the government bailed out 50% of the uncovered pensions. It's one small case of the usual dynamic, I suppose: some large businesses and multimillionaires behaved badly, so they faced no significant consequences , but a bunch of unrelated people who'd behaved just fine had their lives upended by a clumsy response.

kd3 7y ago

Believe in government and you will get hurt. Extortion and robbery, business as usual.

nexuist 7y ago
What then is left to believe in? Individual businesses that would extort and rob to their heart's content if not for the government getting in their way?
- kd3 7y ago
  I don't think replacing individual business that might rob people with one gigantic one that does rob people is an improvement. As for alternatives, check this free ebook: https://www.dropbox.com/s/yd18waixbva1jae/WhatAnarchyIsnt-FREEBIE.pdf?dl=0 https://www.dropbox.com/s/yd18waixbva1jae/WhatAnarchyIsnt-FR...
qntty 7y ago
Seems like the lack of a livable government pension is the real issue here. Why should an employer have to worry about "paying" employees after they stop working for you? There should be social programs under democratic control that deal with stuff like that.
- tonyedgecombe 7y ago
  Just like health care there are many problems with having your employer provide your pension. The UK is gradually moving away from that now with workplace pensions that are provided by a 3rd party and can move with you from job to job.
  - walshemj 7y ago
    Um moving from a DB scheme to a DC one is not an improvement
    - tonyedgecombe 7y ago

lacker 7y ago

I don't quite get why this article sides with the boss. He promised his workers a certain amount of money through a pension, and now he's having trouble living up to that promise. I wouldn't say it's "being a good guy boss" that is the problem here, it's making financial promises that he wasn't able to keep. The article also acts like changing to a different accounting system in order to get a different result would be the perfect solution. Well, that's how you get underfunded pensions in the first place. I think the error was in making these pension promises in the first place. It is far better to make promises that you understand how to keep, like the defined contribution of a 401k, than to make promises to your employees that are implicitly assuming a certain rate of investment return for decades.

gambiting 7y ago
It sounds like you haven't read the article at all. He has been paying into a scheme for many decades, even though there was no requirement for him to do so. Then as a result of literal theft from a pension scheme, a law was introduced that established a minimum funding requirement on pension schemes, even ones which have been running like this one - for 40 years and completely solvent, meaning that the fund is able to pay out the promised money. No promises were ever broken here. But because the law made an unrealistic minimum funding requirement(probably based on the number of years * some amount) this scheme is now suddenly magically underfunded and he is personally liable to pull £1.2M out of his ass. This doesn't make any sense. He has never lied to anyone, never done something that he shouldn't have, all the promises that he made can and will be kept - but the law fucked him over for literally no reason. It's like walking along on a street, happy and healthy, and being hit by a stray bullet - it can mess up your entire life at no fault of your own.
- microtherion 7y ago
  > He has been paying into a scheme for many decades, even though there was no requirement for him to do so. Yes, that's true, and to his credit. However, the people whom he hired during that time negotiated their salary and chose their place of employment knowing about the pension scheme, so the whole thing is not quite the act of pure, disinterested benevolence the article makes it out to be.

gumby 7y ago

This reminds me of how congress mandated an absurd pension calculation for the post office as a way of trying to kill it.

SilasX 7y ago
Being required to contribute the present discounted value of the benefit, as private corporations do, is not absurd; the absence of that preparation is what's absurd, and has led to numerous pensioners getting stiffed when it turns out that megacorps are not perpetual fonts of wealth.
- gumby 7y ago
  I agree, though the US postal service in particular is subject to specific IMHO abusive constraints: https://www.bloomberg.com/opinion/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service https://www.bloomberg.com/opinion/articles/2018-04-04/congre... and https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-world-more-rules-worse-funding/ https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-worl... In this case the evolution of the rules was not properly handled and the risk assigned post facto to a population (these tiny businesses) not set up to handle the new rules. With regards to the megacorps: they have often treated the future obligation and the current obligation as uncoupled on their balance sheets which is great in the short term and disastrous in the long. A bit of "apres moi le deluge". Not just the megacorps; the US state of Illinois made the same terrible decision.

cryptica 7y ago

The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own retirement. Big centralized retirement funds are scams and they always will be. Wherever there is a giant pile of other people's money managed by a bunch of bureaucrats, some suits will come along and find a way to profit from that pile of money in the most wasteful way possible. Now all these retirement funds invest straight into low-yielding corporate stocks; so the money essentially ends up going into the pockets of corporate executives. And the worst part is that the government makes this compulsory. I know superannuation is a scam but I'm forced to pay it anyway and I can't take the money out until I'm 65... I wouldn't be surprised if by that time, the retirement fund stock bubble will probably have popped and my retirement account will be worth $0... And all the fund managers and corporate executives will be rich.

pjmorris 7y ago
It seems likely that US social security is linked with this: "Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939." [0] [0] - https://www.nber.org/aginghealth/summer04/w10466.html https://www.nber.org/aginghealth/summer04/w10466.html
- Spooky23 7y ago
  Elderly poverty was once a massive a tragic problem that both impacted the elderly as their ability to work waned, the families of the elderly who attempted to provide care, and the employment market as elderly employees tried to hang on as long as possible. The conservative and libertarian trains of thought value individual agency above public welfare, which is a convenient point of view for people with the means to sustain themselves.
- Richard_East 7y ago
  At the same time as we have seen decreases in income, wealth and home ownership for younger cohorts when measured at the same age. Its just a transfer of wealth from young to old.

Havoc 7y ago

At my last promotion panel interview that actually came up as a point of concern. That I'm too much of a good guy. well uhm yeah I'll try to be more of an asshole? I get what they meant but still seemed a little surreal.

wolco 7y ago

For the guy who said his family business is worthless. Why not create a new business in sons name and sell all assets to the new company including the name. Put the first in bankrupcy?

ThrustVectoring 7y ago
If that helps out at all, it's a fraudulent transfer that would get reversed by the bankruptcy court. The business's creditors are entitled to up to 100% of the value of the assets that the business owns, you can't just sell them off before declaring bankruptcy.
- eigenvalue 7y ago
  That applies to hard assets, like a truck, inventory of hardware, power tools, etc. The real value in a business such as this is in the local brand recognition (usually applied to the name of the proprietor), a reputation for honesty and good service, and a list of customers with their contact information. So in that sense, a father probably could reasonably transfer or transition ownership to his son, it would just have to be done in a multi-step, gradual manner.
  - ThrustVectoring 7y ago
    Probably the easiest way of going about it is just to operate "Plumber Bob's Plumbing" and "Plumber Bob Jr's Plumbing" as separate entities for a bit, and start referring business to the son's firm.
    - eigenvalue 7y ago
      Exactly. Very hard to argue in court that this constitutes a fraudulent conveyance.

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jsmith99 7y ago

The National Institute of Economic and Social Research, a UK think-tank, produced an amusing (by pensions standards) video explaining the recent shifts in pension schemes, especially for government workers like teachers and nurses, and how some groups benefit while many lose. https://youtube.com/watch?v=wXz85VuFMcU https://youtube.com/watch?v=wXz85VuFMcU Unfortunately pensions are an intrinsically boring topic. I recently met a professor of economics who lamented the £23bn deficit in the UK University pension scheme but admitted he was unable to get even his fellow affected economics academics to care.

rdiddly 7y ago

The central problem with this is the presumption of guilt, contained in this Section 75.

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throwmeaway90 7y ago

Case where lawmakers fail and fuck up everyone due to their incompetency to do math.

d_burfoot 7y ago

In addition to their many other practical problems, defined-benefit pension schemes are profoundly racist and sexist. This is because different demographic groups have wildly different life expectancies, and these differences aren't taken into account when calculating benefits. Let's look at Social Security. Consider Alice, an Asian-American woman, and Bob, and African-American man. They are exactly identical in every way that is visible to the SSA: they begin working at the same time, they make the same payments on the same dates, and they retire at the same age. Suppose further they both retire at the standard age of 67, and they both have made enough in-payments that they will get the maximum amount of $2,900/month or $34,800/yr. When she retires at age 67, Alice has a long life to look forward to. Asian-American life expectancy is 87 years, and women get a life bonus on top of that, bringing her expectancy to just under 90 years. So on average she'll receive about 23 years of payments, for a total of $786K. Bob's situation is quite different. The African-American life expectancy is 75.4 years, and men get a life penalty, bringing Bob's expectancy to about 73 years. So in expectation he'll receive just about 6 years of payments before passing away, for a total payout of $205K. So these two people make the exact same contributions over the same period of time, but one of them gets almost 4x more of a benefit, on account of her race and gender. The system is literally forcing one group of people to subsidize the retirements of another group that lives longer than them (and, as a separate point, makes much more money).

maphar 7y ago
You're citing life expectancy at birth, which can be very different than life expectancy at 67.