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I think we made a huge mistake going from pension to 401k for retirement. Pensions have a strong incentive to maintain solvency and so will be risk-averse, whil

I think we made a huge mistake going from pension to 401k for retirement. Pensions have a strong incentive to maintain solvency and so will be risk-averse, while with a 401k you are expected to be sophisticated enough to know how risk-averse you are given your retirement time horizon. A lot of people are not sophisticated at all with investing. So the upshot of that is that the 401k becomes a lever to encourage people to get angry when the stock market doesn't do so well. And then you have this artificial propping up of something that's supposed to be an equity market for sophisticated investors. It's great if you're a financial services company because you can hold peoples' retirements hostage with your stupid decisions.

lotsofpulp 6y ago
> Pensions have a strong incentive to maintain solvency and so will be risk-averse, If this was true, then pretty much every government in the US (and around the world) wouldn’t be saddled with enormous debt for labor performed in previous decades. Government defined benefit pension plans assume 7%+ return on investment, that doesn’t scream risk averse. Nor does the fact that pensions regularly place their bets with VC funds, PE firms, REITs, and other risky investments. The only thing defined benefit pensions do is give control of a huge pot of money to a small group of people with no transparency, inevitably resulting in corruption. With taxpayer funded pensions, you get the added bonus of today’s voters and workers and politicians pushing all the costs onto future generations of taxpayers. Source: https://www.data-z.org/pension_database/ https://www.data-z.org/pension_database/