3 ms·
Pensions are fine if you actually pay for them by purchasing guaranteed annuities to offload the liability. Except nobody wants to do that because they’re insan
by koolba 2y ago
Pensions are fine if you actually pay for them by purchasing guaranteed annuities to offload the liability. Except nobody wants to do that because they’re insanely expensive. Even more so if they’re going to be inflation adjusted.
In reality if workers want pensions, the company should give them a fix annual amount that the worker can use to purchase an annuity.
- Manuel_D 2y agoGuaranteed annuities have the same problem: who's paying workers in their old age, and what happens when that entity becomes insolvent? Nothing is truly guaranteed in finance, especially when life expectancies rise faster than the pension scheme assumed.
- michael1999 2y agoLongevity is not what did them in. It was regulators allowing them to PAYGO on medical costs. Only cash pensions were required to be actuarially sound. Medical benefits were yolo.
- Manuel_D 2y agoLongevity is absolutely a big factor in underfunded pensions. "Actuarially sound" is based on projections of how long retirees will draw from pension funds. When retirees start consistently outliving those projections, a sound pension rapidly becomes unsound.