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> Employer guaranteed defined-benefit pension schemes are dead What do you think those funds invest(ed) in? If stocks and bonds don't perform well, how do thos
by dehrmann 5y ago
> Employer guaranteed defined-benefit pension schemes are dead
What do you think those funds invest(ed) in? If stocks and bonds don't perform well, how do those funds continue to make their payments? The shift to individual plans shifted responsibility, hurt some efficiencies pensions could get because they can plan for the mean, not the p95, and decoupled retirement from employers, improving the labor market. All in all, it's somewhat mixed, but what hasn't changed is where the money comes from.
- nly 5y agoEmployer run schemes are/were supported by the business. The theory went that yes, they invested the pension funds in the market, but the business itself would always be there to contribute to cover the shortfall. What fucked these schemes is falling bond yields
- dehrmann 5y ago> the business itself would always be there to contribute to cover the shortfall This is problematic because companies aren't eternal, and stock performance is somewhat liked to economic conditions, so if stocks are struggling, the company might be struggling, making the pension obligations a double-whammy, actually putting the health of the company at risk. These days, in the US, there seem to be a lot of romantic notions of pensions, and I'm not against them per se, but having them managed and tied to employers was a really bad idea.
- nly 5y agoYou could argue that having any kind of benecits at all tied to your employment is a bad idea... Yet Americans love to do that with healthcare I'm not convinced having the average person manage their own retirement fund choices is any better. They lack bargaining power and they lack the savvy to make wise choices for the long term