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A pension is a debt that the company owes you. Betting your retirement that the company will pay you back is comparable to investing your whole 401k in the comp
by closeparen 6y ago
A pension is a debt that the company owes you. Betting your retirement that the company will pay you back is comparable to investing your whole 401k in the company’s bonds. Yes, responsible companies plan ahead and save for their debts. But sometimes they don’t. Sometimes they fail. That’s why there is interest: compensation for risk. Responsible investors don’t take on such enormous counterparty risks with individual counterparties.
- StillBored 6y agoPensions in the US are backed by the pension benefit guaranty corporation https://www.pbgc.gov/ https://www.pbgc.gov/. Which despite the "corporation" in the name, is just another government agency tasked with dealing with failed pensions. Sort of the pension version of the FDIC. edit: And to add to this, the funding of the pension is required to be a separate pot of cash from the operation of the business. There were a number of companies in the 1990's/etc that got in a lot of legal trouble for using their pensions as financing for the business.