5 ms·

Pension funds going into high-risk company ventures operating in a regulatory grey area is insane.

lotsofpulp 4y ago
Defined benefit pension funds have always been a nice pot of money to enable corruption. That is why IRA/401k is better. Just let people choose what they want from Vanguard/Fidelity/Schwab.
- ATsch 4y ago
  Alternatively, one could imagine a pension system where the state gives one money to ensure one can continue living, paid for by taxes, without inserting a casino in the middle. But perhaps that's a tad radical.
  - deleted 4y ago
    [deleted]
  - lotsofpulp 4y ago
    While it might not be sufficient to ensure one can continue living, in the US, Social Security has been in effect since 1940 or so.
    - ATsch 4y ago
      Indeed, but it's been steadily deliberately undermined as the idea that a government has no responsibility to it's citizens except to keep the line going up and trickle down economics took root. It's easy to see how pension funds play into this. They are a tool that ties up millions of people's future and savings into the stock market, providing the financial sector with a huge number of retail investors who can be made to hold the bag for financial crashes. Under this angle, it is not at all surprising that they would end up investing into incredibly risky ventures.
- rchaud 4y ago
  Defined Benefit pensions went the way of the dodo ages ago because it's too expensive for employers. Everybody is now at the mercy of defined contribution plans.
  - lotsofpulp 4y ago
    Taxpayer funded DB pensions are very alive today. Lots of big pots of money for politicians and government employee union leaders to play with (or influence), and extremely easy way to pay government employees with debt without actually having to admit it is debt due to taxpayer funded DB pensions being exempt from regulations regarding proper accounting such as ERISA 1974 and PPA 2006. See: http://www.data-z.org/pension_database http://www.data-z.org/pension_database
heretogetout 4y ago
It's wild to me that public pensions are allowed to invest in individual companies.
jelling 4y ago
Unfortunately, a lot of pension funds are behind so the started taking more risk. Frontline did a good piece called "The Pension Gamble" on this: https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/ https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/
- strix_varius 4y ago
  Thanks for the great link (just watched it). The whole idea of a "defined benefit" pension seems insane to me. It's essentially a promise that some entity will still exist and be solvent in 40+ years (start teaching around 22, retire around 65...)

Defined benefit pension funds have always been a nice pot of money to enable corruption. That is why IRA/401k is better. Just let people choose what they want from Vanguard/Fidelity/Schwab.

ATsch 4y ago
Alternatively, one could imagine a pension system where the state gives one money to ensure one can continue living, paid for by taxes, without inserting a casino in the middle. But perhaps that's a tad radical.
- deleted 4y ago
  [deleted]
- lotsofpulp 4y ago
  While it might not be sufficient to ensure one can continue living, in the US, Social Security has been in effect since 1940 or so.
  - ATsch 4y ago
    Indeed, but it's been steadily deliberately undermined as the idea that a government has no responsibility to it's citizens except to keep the line going up and trickle down economics took root. It's easy to see how pension funds play into this. They are a tool that ties up millions of people's future and savings into the stock market, providing the financial sector with a huge number of retail investors who can be made to hold the bag for financial crashes. Under this angle, it is not at all surprising that they would end up investing into incredibly risky ventures.
rchaud 4y ago
Defined Benefit pensions went the way of the dodo ages ago because it's too expensive for employers. Everybody is now at the mercy of defined contribution plans.
- lotsofpulp 4y ago
  Taxpayer funded DB pensions are very alive today. Lots of big pots of money for politicians and government employee union leaders to play with (or influence), and extremely easy way to pay government employees with debt without actually having to admit it is debt due to taxpayer funded DB pensions being exempt from regulations regarding proper accounting such as ERISA 1974 and PPA 2006. See: http://www.data-z.org/pension_database http://www.data-z.org/pension_database

heretogetout 4y ago

It's wild to me that public pensions are allowed to invest in individual companies.

jelling 4y ago

Unfortunately, a lot of pension funds are behind so the started taking more risk. Frontline did a good piece called "The Pension Gamble" on this: https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/ https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/

strix_varius 4y ago
Thanks for the great link (just watched it). The whole idea of a "defined benefit" pension seems insane to me. It's essentially a promise that some entity will still exist and be solvent in 40+ years (start teaching around 22, retire around 65...)