5 ms·

> People can also invest in their own retirement accounts throughout their careers. It takes an illness and a lifetime of making less than the average wage, to

> People can also invest in their own retirement accounts throughout their careers. It takes an illness and a lifetime of making less than the average wage, to condemn a person to poverty after retirement. Pensions are essential all around the developed world. They are not "stupid", they are one of the pillars of elderly protection.

jdavis703 5y ago
But if you’re on disability and not working you’re not earning a pension either. This doesn’t seem like an argument against retirement savings accounts, it seems like you’re arguing for Social Security, which is totally unrelated.
thehappypm 5y ago
Pensions are a great thing for the retired. For everyone else they’re unsustainable, growing tax burdens. I agree with OP. We need to end new pensions right now, transition everyone to self-funding retirement through tax advantaged accounts, give a good baseline via Social Security and Medicare, and then fill the gaps with things like disability.
lotsofpulp 5y ago
Defined benefit pensions are stupid unless you can print money. So it is fine for the US federal government to offer, such as Social Security, but since no one can see 5, 10, 20, or 30+ years into the future, no city, county, or state should be in the business of promising things that far into the future. Otherwise, as evidenced by basically every data point, politicians will promise the DB pensions, then not fund them, then lay the costs on future generations.
- hnaccount_rng 5y ago
  You really wouldn’t like Europe then xD
- manuelabeledo 5y ago
  You keep using the word "stupid", and I don't think you know what it means. It would be "stupid" to not pay pensions, unless you don't see the risks in leaving a whole generation in their elderly years with no income whatsoever. Most evident of all, it would be a deadly blow agains the economy itself, especially in developed countries with aging populations.
  - thehappypm 5y ago
    Nobody is proposing to just pull the rug out on pensions. We need to transition to a more sustainable option.
    - manuelabeledo 5y ago
      Why aren't pensions sustainable? Honest question. At least in the US, there seems to be more than enough money to keep several branches going. The military just got $20 billion extra this year. Foreign aid is around $45 billion a year. It's not that there isn't enough tax money.
      - maxerickson 5y ago
        They inevitably fall into the trap of promising that benefits will be paid for in the future. At a national level that is probably okay, at a municipal level it means that people that leave a city get services that they don't pay for, and future residents pay for services they didn't benefit from. It's a terrible alignment.
        manuelabeledo 5y ago
        You are describing pensions. That's how pensions work, and have been working for decades now. Would creating a national pension system work better?
        maxerickson 5y ago
        No, I'm making a particular point about public pensions. They should be fully funded during the vesting period or not exist, except maybe at the national level. Note the "paid for" in "paid for in the future".
- throw0101a 5y ago
  > Defined benefit pensions are stupid unless you can print money. Or you look at demographics ahead of time and have the political will to switch away from a pay-as-you-go system. Like Canada did with its CPP in the 1990s: * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor... Every three years the CPP is independently audited to make sure it is solvent 75 years out given certain assumptions: * https://www.cppinvestments.com/the-fund/our-performance/actuary-special-exam-reports https://www.cppinvestments.com/the-fund/our-performance/actu... And that includes audits from foreign auditors/actuaries that don't have a dog in the fight: * https://www.osfi-bsif.gc.ca/Eng/oca-bac/ipr-rip/Pages/gad30.aspx https://www.osfi-bsif.gc.ca/Eng/oca-bac/ipr-rip/Pages/gad30.... > no city, county, or state should be in the business of promising things that far into the future. Health care workers in the province of Ontario would disagree: * https://hoopp.com https://hoopp.com
  - lotsofpulp 5y ago
    Canada can print its own money though. They are effectively solvent no matter what. And sure, there might be some decent people working at decent DB pension funds. But at the end of the day, what are they doing different that a target date fund from Vanguard/Schwab/Fidelity is not? Except the latter avoids agency risk and is super cheap.
    - throw0101a 5y ago
      And yet the health care works who have HOOPP also get it. As well as secondary school teachers (OTP), municipal workers (OMERS), etc. None of these entities can print money. There's no guarantee that pensions will perform well of course (see Alberta). But as someone who spends a decent amount of time in /r/PersonalFinanceCanada, the random person on the street probably does worse. > But at the end of the day, what are they doing different that a target date fund from Vanguard/Schwab/Fidelity is not? 1. Forced savings taken off their pay cheques no matter what, which solves a huge behaviour issue. 2. Run by folks who are better audited than individuals are personally, so results are readily available, and can be easily criticized for non-performance.

jdavis703 5y ago

But if you’re on disability and not working you’re not earning a pension either. This doesn’t seem like an argument against retirement savings accounts, it seems like you’re arguing for Social Security, which is totally unrelated.

thehappypm 5y ago

Pensions are a great thing for the retired. For everyone else they’re unsustainable, growing tax burdens. I agree with OP. We need to end new pensions right now, transition everyone to self-funding retirement through tax advantaged accounts, give a good baseline via Social Security and Medicare, and then fill the gaps with things like disability.

lotsofpulp 5y ago

Defined benefit pensions are stupid unless you can print money. So it is fine for the US federal government to offer, such as Social Security, but since no one can see 5, 10, 20, or 30+ years into the future, no city, county, or state should be in the business of promising things that far into the future. Otherwise, as evidenced by basically every data point, politicians will promise the DB pensions, then not fund them, then lay the costs on future generations.

hnaccount_rng 5y ago
You really wouldn’t like Europe then xD
manuelabeledo 5y ago
You keep using the word "stupid", and I don't think you know what it means. It would be "stupid" to not pay pensions, unless you don't see the risks in leaving a whole generation in their elderly years with no income whatsoever. Most evident of all, it would be a deadly blow agains the economy itself, especially in developed countries with aging populations.
- thehappypm 5y ago
  Nobody is proposing to just pull the rug out on pensions. We need to transition to a more sustainable option.
  - manuelabeledo 5y ago
    Why aren't pensions sustainable? Honest question. At least in the US, there seems to be more than enough money to keep several branches going. The military just got $20 billion extra this year. Foreign aid is around $45 billion a year. It's not that there isn't enough tax money.
    - maxerickson 5y ago
      They inevitably fall into the trap of promising that benefits will be paid for in the future. At a national level that is probably okay, at a municipal level it means that people that leave a city get services that they don't pay for, and future residents pay for services they didn't benefit from. It's a terrible alignment.
      - manuelabeledo 5y ago
        You are describing pensions. That's how pensions work, and have been working for decades now. Would creating a national pension system work better?
        maxerickson 5y ago
        No, I'm making a particular point about public pensions. They should be fully funded during the vesting period or not exist, except maybe at the national level. Note the "paid for" in "paid for in the future".
throw0101a 5y ago
> Defined benefit pensions are stupid unless you can print money. Or you look at demographics ahead of time and have the political will to switch away from a pay-as-you-go system. Like Canada did with its CPP in the 1990s: * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor... Every three years the CPP is independently audited to make sure it is solvent 75 years out given certain assumptions: * https://www.cppinvestments.com/the-fund/our-performance/actuary-special-exam-reports https://www.cppinvestments.com/the-fund/our-performance/actu... And that includes audits from foreign auditors/actuaries that don't have a dog in the fight: * https://www.osfi-bsif.gc.ca/Eng/oca-bac/ipr-rip/Pages/gad30.aspx https://www.osfi-bsif.gc.ca/Eng/oca-bac/ipr-rip/Pages/gad30.... > no city, county, or state should be in the business of promising things that far into the future. Health care workers in the province of Ontario would disagree: * https://hoopp.com https://hoopp.com
- lotsofpulp 5y ago
  Canada can print its own money though. They are effectively solvent no matter what. And sure, there might be some decent people working at decent DB pension funds. But at the end of the day, what are they doing different that a target date fund from Vanguard/Schwab/Fidelity is not? Except the latter avoids agency risk and is super cheap.
  - throw0101a 5y ago
    And yet the health care works who have HOOPP also get it. As well as secondary school teachers (OTP), municipal workers (OMERS), etc. None of these entities can print money. There's no guarantee that pensions will perform well of course (see Alberta). But as someone who spends a decent amount of time in /r/PersonalFinanceCanada, the random person on the street probably does worse. > But at the end of the day, what are they doing different that a target date fund from Vanguard/Schwab/Fidelity is not? 1. Forced savings taken off their pay cheques no matter what, which solves a huge behaviour issue. 2. Run by folks who are better audited than individuals are personally, so results are readily available, and can be easily criticized for non-performance.