5 ms·

It's not finance, it's your pensions

57 points by kome 8mo ago

edu 8mo ago
Hugged to death?
mikestew 8mo ago
HN hug of death: https://web.archive.org/web/20260207195051/https://theloop.ecpr.eu/its-not-finance-its-your-pensions/ https://web.archive.org/web/20260207195051/https://theloop.e...
betaby 8mo ago
I read the article but can't make any conclusion from it. Someone can explain in simpler terms?
- bluGill 8mo ago
  The more people trust their pension system the less they invest their own money.
  - carefree-bob 8mo ago
    When economists were worried about "savings gluts", to decrease savings demand they advocated for things like government funded pensions. If you read some of the literature out on China and their anomalous savings rate (household consumption is only 40% of national income) studies show that the lack of a social safety net exacerbates the problem and savings rates decline once you have the safety net. One difference they noticed was the dramatic decline in savings rates as you go from rural to urban areas. In urban areas you have a different social safety net -- a government pension, but in rural areas the pension is optional and savings rates are dramatically higher. Because much social spending in China is handled at the provincial or city level and there are differences, it is a natural laboratory for these types of studies. It's also why you need a citizenship document when trying to "emigrate" into a city or different province, and there are internal controls that limit what city you can be registered in, which also affects things like car registration, real estate purchases, and access to local education in the city for people that are considered "migrants" - e.g. they physically live in the city but do not have enough points to be registered there.
  - drewmate 8mo ago
    I feel this in my own life. From well before my working years I had a message ingrained into me: “Do not count on social security to be around when you retire.” It’s probably not all so drastic as that, but for me (and many other American millennials) my financial ethos has been squarely centered on saving and making hay while the sun shines. Compound that over 300M people and multiple generations and you do get overly deep and inflated capital markets.
    - bluGill 8mo ago
      As genX this was my experience too. The numbers have been clear for decades, SS is unlikely to be a great option by the time anyone working today gets it. (including people who retire in a month). Generally I think there will be SS when I'm old - but it will barely be enough to live on. I'm trying to save money so I can not only eat but also do other things I enjoy [that cost money] when I retire.
- jdasdf 8mo ago
  >Public pensions and family benefits may seem old-fashioned compared with asset-based solutions. But they provide security without locking households into markets, without generating trillion-dollar investment pools, and without driving asset inflation that prices younger generations out of housing and wealth. Sometimes, the non-assetising path may simply be better. It's an obvious propaganda post intended to demonize the financial markets, and promote unsustainable social security policies.
  - toomuchtodo 8mo ago
    If the options are pensions or self investment, how is one sustainable and the other isn’t? The investment dollars in scope are similar, with pensions being better managed than your average human would do.
    - bluGill 8mo ago
      > with pensions being better managed than your average human would do. Only if they are. Some pensions are well managed. Some are not. Some seem well managed for years, but in fact they are not. Some have been well managed for a long time, but someone incompetent gets in power. Can you tell the difference. Oh, and if you can tell the difference, can you convince everyone else and thus get this fixed? Or will voters be happy with the mismanagement because it is returning great results now on low investment leaving more money to spend on other things now?
      - ryandrake 8mo ago
        I guess the question is: Will the average person 1. choose to save and 2. invest that savings better than the average pension manager? I know, I know, everyone on HN is an investing genius and consistently beats the S&P 500, but we're talking average joe.
        SpicyLemonZest 8mo ago
        In principle defined contribution plans should be a good way to split the difference, although I recognize that it's a lot harder politically to make them mandatory than it is for pension contributions.
- rawgabbit 8mo ago
  He seems to be saying that Funded Pensions like 401k can lead to asset inflation such as high housing prices. While public pensions which are pay as you such as Social Security do not lead to financialization and asset bubbles. It was a tough read. He should tighten his word choice.
  - megaman821 8mo ago
    This seems like an incomplete analysis since many countries with pay-as-you-go schemes borrow money to fund them sometimes, which contributes to general inflation.
- appplication 8mo ago
  It’s not just you, I also read it and had little idea what the central thesis was. I see there are a number of points made but the author could do better job bringing it all together.
  - someguydave 8mo ago
    The author is using fancy words to say that communism is good
    - hiimkeks 8mo ago
      Parent is using normal words to say they have no idea what communism is
- marcosdumay 8mo ago
  Governments pick the size of their country's financial markets when they decide what parts of society get traded in those markets. Pension and healthcare are the two most obvious pieces governments can decide to "make it themselves" or "let companies solve it", and the later option creates the pieces of paper that get traded in financial markets and "frees" money to buy those papers. And the article ends with the obvious notice that "large markets" is not something good by itself.
oxqbldpxo 8mo ago
It's simple, move to a nordic country if you can, but if you are rich stay put in the US.
- dopamean 8mo ago
  being rich is pretty great almost anywhere in the world including the nordic countries. it's only "better" in america if you value having a huge gap between you and the poorest people in the country.
  - WarmWash 8mo ago
    Being rich in the US has the benefit of giving access to the widest array of utilities meant for rich people.
    - kakacik 8mo ago
      You should travel a bit my friend. Ever been to Monaco? Switzerland? And few others. Tons of americans there/here, but they are mostly not coming back and have strong political opinions to base such decisions on. Once you are not poor, whatever it means, folks get very different priorities. There are no trends of rich people thinking about moving to US from here in Switzerland for example, unless they want really to start some startup and already aim very high (but then Asia offers much more for less money, there is no US moat I could see). US as a country these days is mostly despised, thanks to your current government and its behavior. Of course some US folks see it differently but but thats emotional view of home-is-always-best. Or literally prefer heavily class-based society based on wealth - we don't do that in Europe anymore.
      - WarmWash 8mo ago
        You're confusing rich destinations with rich home bases. The NYC metro area alone has 3x more billionaires than Switzerland and Monaco combined (although Monaco has only two.) This isn't about politics or anything like that. The US simply offers the broadest range of services (vertically and horizontally) for ultra wealthy individuals, and extremely friendly capital environments.
kommunicate 8mo ago
I realize there's only so much you can fit into an article, but this article glosses over a monumental shift in welfare spending in the US: the transition from defined benefit retirement plans to defined contribution. It's not so simple as a split between private and public directed asset allocation: it affects the growth of companies that offer these plans and the wealth of participants in the plans. The US has pushed the burden of retirement onto individuals, hoping that the private sector will offer incentives like 401k matching and generous health care plan subsidies, but this is a fundamental difference in who qualifies, what they receive, and how it's funded. These effects compound wealth and income inequality. If, for whatever reason, you're locked out from a job that would help pay for these programs, there's no coming back. You are dependent on the government at the same time as the government is underfunding the program you rely on. It's not a great situation.
- Marsymars 8mo ago
  There's also the inescable truth at the root of supporting retirees (and others who aren't working) - in the end, people who aren't working are being supported by those who are working. Investments, pensions, etc. are all just an abstraction around that fundamental reality.
  - spwa4 8mo ago
    There's also the inescapable truth about what purpose pensions served. They effectively create a massive amount of debt, "owned by" retirees, owed by regular people, managed by bank bosses and politicians. Surprisingly, they changed the social contract enormously: nobody got a choice. Everyone had to pay the new debt, MASSIVE debt, to take care of the elderly. The then barely existing elderly. Which brings the question ... WHY did they do this? Politicians: to spend the money (and not on retirees, on their own projects), in other words: when it comes to money, ideally you do not own, but do decide what money is spent on. Banks (and the rich in general): to redirect a percentage of the money to themselves in 1000 different ways. They can't really get money unless there is large amounts of socially accepted debt in society, it doesn't work: can't get blood from a stone. Now, when this leads to the problem that either the money disappears, or the social contract behind the debt disappears (ie. either pensions drop to almost nothing, and the spending/social contract (ie. if pensions aren't paid out/aren't livable the willingness of people to pay for pensions disappears, and the debt ... oh dear god the horror ... disappears, and with it the lifeblood of banks and the rich). Then of course panic sets in, and suddenly when THEY get in trouble any law change imaginable is suddenly on the table. The scary part is the obvious solution, the only solution really. You know what would solve the pension crisis without destroying the social contract? If the elderly were to die (a lot) faster. That is the only way the politicians can keep spending and banks can keep their profits. Which is exactly what Trump's doing with the enormous increase in medical costs. For the elderly it's simple: pay ... or die. That's the new social contract here. In other words: in what I'm sure will come as a total surprise to everyone, when democrats get control again, they will see how much it costs, how much of their projects it would kill ... and then will not refund Obamacare to anywhere near the level before Trump and they will in fact vote to keep this new social contract in place. Of course reality is simple: politicians and the rich are promising pensions to everyone, and the really obvious truth is starting to become glaringly fucking obvious: they're lying. One way or another, you're not getting the pension you paid for, you're not getting the medical care you're paying for. You paid the money, and ... you're NOT getting the service you paid for! You also, of course, don't get to stop paying, in fact they're demanding more now. You don't get to stop working. Obviously, politicians don't want to be called to account for that one. Kill the elderly: it's either that ... or take the money from the rich. Easy choice, no?
aeternum 8mo ago
So why have pensions rather than direct ownership and control via a 401k? It's pretty obvious that pension fund managers have ulterior motives. It also seems insane that a bad pension fund or company directors can destroy people's retirement.

57 points by kome 8mo ago

edu 8mo ago

Hugged to death?

HN hug of death: https://web.archive.org/web/20260207195051/https://theloop.ecpr.eu/its-not-finance-its-your-pensions/ https://web.archive.org/web/20260207195051/https://theloop.e...

betaby 8mo ago

I read the article but can't make any conclusion from it. Someone can explain in simpler terms?

bluGill 8mo ago
The more people trust their pension system the less they invest their own money.
- carefree-bob 8mo ago
  When economists were worried about "savings gluts", to decrease savings demand they advocated for things like government funded pensions. If you read some of the literature out on China and their anomalous savings rate (household consumption is only 40% of national income) studies show that the lack of a social safety net exacerbates the problem and savings rates decline once you have the safety net. One difference they noticed was the dramatic decline in savings rates as you go from rural to urban areas. In urban areas you have a different social safety net -- a government pension, but in rural areas the pension is optional and savings rates are dramatically higher. Because much social spending in China is handled at the provincial or city level and there are differences, it is a natural laboratory for these types of studies. It's also why you need a citizenship document when trying to "emigrate" into a city or different province, and there are internal controls that limit what city you can be registered in, which also affects things like car registration, real estate purchases, and access to local education in the city for people that are considered "migrants" - e.g. they physically live in the city but do not have enough points to be registered there.
- drewmate 8mo ago
  I feel this in my own life. From well before my working years I had a message ingrained into me: “Do not count on social security to be around when you retire.” It’s probably not all so drastic as that, but for me (and many other American millennials) my financial ethos has been squarely centered on saving and making hay while the sun shines. Compound that over 300M people and multiple generations and you do get overly deep and inflated capital markets.
  - bluGill 8mo ago
    As genX this was my experience too. The numbers have been clear for decades, SS is unlikely to be a great option by the time anyone working today gets it. (including people who retire in a month). Generally I think there will be SS when I'm old - but it will barely be enough to live on. I'm trying to save money so I can not only eat but also do other things I enjoy [that cost money] when I retire.
jdasdf 8mo ago
>Public pensions and family benefits may seem old-fashioned compared with asset-based solutions. But they provide security without locking households into markets, without generating trillion-dollar investment pools, and without driving asset inflation that prices younger generations out of housing and wealth. Sometimes, the non-assetising path may simply be better. It's an obvious propaganda post intended to demonize the financial markets, and promote unsustainable social security policies.
- toomuchtodo 8mo ago
  If the options are pensions or self investment, how is one sustainable and the other isn’t? The investment dollars in scope are similar, with pensions being better managed than your average human would do.
  - bluGill 8mo ago
    > with pensions being better managed than your average human would do. Only if they are. Some pensions are well managed. Some are not. Some seem well managed for years, but in fact they are not. Some have been well managed for a long time, but someone incompetent gets in power. Can you tell the difference. Oh, and if you can tell the difference, can you convince everyone else and thus get this fixed? Or will voters be happy with the mismanagement because it is returning great results now on low investment leaving more money to spend on other things now?
    - ryandrake 8mo ago
      I guess the question is: Will the average person 1. choose to save and 2. invest that savings better than the average pension manager? I know, I know, everyone on HN is an investing genius and consistently beats the S&P 500, but we're talking average joe.
      - SpicyLemonZest 8mo ago
        In principle defined contribution plans should be a good way to split the difference, although I recognize that it's a lot harder politically to make them mandatory than it is for pension contributions.
rawgabbit 8mo ago
He seems to be saying that Funded Pensions like 401k can lead to asset inflation such as high housing prices. While public pensions which are pay as you such as Social Security do not lead to financialization and asset bubbles. It was a tough read. He should tighten his word choice.
- megaman821 8mo ago
  This seems like an incomplete analysis since many countries with pay-as-you-go schemes borrow money to fund them sometimes, which contributes to general inflation.
appplication 8mo ago
It’s not just you, I also read it and had little idea what the central thesis was. I see there are a number of points made but the author could do better job bringing it all together.
- someguydave 8mo ago
  The author is using fancy words to say that communism is good
  - hiimkeks 8mo ago
    Parent is using normal words to say they have no idea what communism is
marcosdumay 8mo ago
Governments pick the size of their country's financial markets when they decide what parts of society get traded in those markets. Pension and healthcare are the two most obvious pieces governments can decide to "make it themselves" or "let companies solve it", and the later option creates the pieces of paper that get traded in financial markets and "frees" money to buy those papers. And the article ends with the obvious notice that "large markets" is not something good by itself.

oxqbldpxo 8mo ago

It's simple, move to a nordic country if you can, but if you are rich stay put in the US.

dopamean 8mo ago
being rich is pretty great almost anywhere in the world including the nordic countries. it's only "better" in america if you value having a huge gap between you and the poorest people in the country.
- WarmWash 8mo ago
  Being rich in the US has the benefit of giving access to the widest array of utilities meant for rich people.
  - kakacik 8mo ago
    You should travel a bit my friend. Ever been to Monaco? Switzerland? And few others. Tons of americans there/here, but they are mostly not coming back and have strong political opinions to base such decisions on. Once you are not poor, whatever it means, folks get very different priorities. There are no trends of rich people thinking about moving to US from here in Switzerland for example, unless they want really to start some startup and already aim very high (but then Asia offers much more for less money, there is no US moat I could see). US as a country these days is mostly despised, thanks to your current government and its behavior. Of course some US folks see it differently but but thats emotional view of home-is-always-best. Or literally prefer heavily class-based society based on wealth - we don't do that in Europe anymore.
    - WarmWash 8mo ago
      You're confusing rich destinations with rich home bases. The NYC metro area alone has 3x more billionaires than Switzerland and Monaco combined (although Monaco has only two.) This isn't about politics or anything like that. The US simply offers the broadest range of services (vertically and horizontally) for ultra wealthy individuals, and extremely friendly capital environments.

kommunicate 8mo ago

I realize there's only so much you can fit into an article, but this article glosses over a monumental shift in welfare spending in the US: the transition from defined benefit retirement plans to defined contribution. It's not so simple as a split between private and public directed asset allocation: it affects the growth of companies that offer these plans and the wealth of participants in the plans. The US has pushed the burden of retirement onto individuals, hoping that the private sector will offer incentives like 401k matching and generous health care plan subsidies, but this is a fundamental difference in who qualifies, what they receive, and how it's funded. These effects compound wealth and income inequality. If, for whatever reason, you're locked out from a job that would help pay for these programs, there's no coming back. You are dependent on the government at the same time as the government is underfunding the program you rely on. It's not a great situation.

Marsymars 8mo ago
There's also the inescable truth at the root of supporting retirees (and others who aren't working) - in the end, people who aren't working are being supported by those who are working. Investments, pensions, etc. are all just an abstraction around that fundamental reality.
- spwa4 8mo ago
  There's also the inescapable truth about what purpose pensions served. They effectively create a massive amount of debt, "owned by" retirees, owed by regular people, managed by bank bosses and politicians. Surprisingly, they changed the social contract enormously: nobody got a choice. Everyone had to pay the new debt, MASSIVE debt, to take care of the elderly. The then barely existing elderly. Which brings the question ... WHY did they do this? Politicians: to spend the money (and not on retirees, on their own projects), in other words: when it comes to money, ideally you do not own, but do decide what money is spent on. Banks (and the rich in general): to redirect a percentage of the money to themselves in 1000 different ways. They can't really get money unless there is large amounts of socially accepted debt in society, it doesn't work: can't get blood from a stone. Now, when this leads to the problem that either the money disappears, or the social contract behind the debt disappears (ie. either pensions drop to almost nothing, and the spending/social contract (ie. if pensions aren't paid out/aren't livable the willingness of people to pay for pensions disappears, and the debt ... oh dear god the horror ... disappears, and with it the lifeblood of banks and the rich). Then of course panic sets in, and suddenly when THEY get in trouble any law change imaginable is suddenly on the table. The scary part is the obvious solution, the only solution really. You know what would solve the pension crisis without destroying the social contract? If the elderly were to die (a lot) faster. That is the only way the politicians can keep spending and banks can keep their profits. Which is exactly what Trump's doing with the enormous increase in medical costs. For the elderly it's simple: pay ... or die. That's the new social contract here. In other words: in what I'm sure will come as a total surprise to everyone, when democrats get control again, they will see how much it costs, how much of their projects it would kill ... and then will not refund Obamacare to anywhere near the level before Trump and they will in fact vote to keep this new social contract in place. Of course reality is simple: politicians and the rich are promising pensions to everyone, and the really obvious truth is starting to become glaringly fucking obvious: they're lying. One way or another, you're not getting the pension you paid for, you're not getting the medical care you're paying for. You paid the money, and ... you're NOT getting the service you paid for! You also, of course, don't get to stop paying, in fact they're demanding more now. You don't get to stop working. Obviously, politicians don't want to be called to account for that one. Kill the elderly: it's either that ... or take the money from the rich. Easy choice, no?

aeternum 8mo ago

So why have pensions rather than direct ownership and control via a 401k? It's pretty obvious that pension fund managers have ulterior motives. It also seems insane that a bad pension fund or company directors can destroy people's retirement.