Originally Posted by elsolo
pensions are a Ponzi scheme
There are not sustainable, so the people that get in early enough get paid, everybody else is just a payer.
Not true. A true Defined Benefit Pension plan can be a sound way to design retirement benefits and has been used for many many decades by companies to pay retirement benefits to employees. Most are economically sound.
PUBLIC Pensions (ie Government Pensions promised to Government Employees--teachers, firemen, police, Postal Workers etc) are not subject to the funding rules surrounding privately sponsored defined benefit plans. The polticians simply write a new law promising more benefits to get more public sector workers to vote for them but they have no intention of ever funding those promises. They also deliberately underfund those programs as in the CALPERS example above by making unrealistic returns assumptions. This allows them to spend more tax dollars now than they would otherwise be required to set aside to fund all those pensions. FWIW many Unions also have successfully lobbied for different funding rules for Union Pensions and guess what--many Union sponsored pension plans are going broke as well.
The reason Pension Plans and Social Security is going broke is because people are living too long. 30 years ago the average life expectancy for a man was age 68 and 73 for a woman. So it was no big deal to fund a pension that would last no more than 5-10 years. But today, people are living 20 and 30 years into retirement and that makes funding a sound pension for these folks VERY expensive. Which is why only 15% of the Fortune 500 companies still offer Defined Benefit Pension plans when 20 years ago 85% of those companies offered pensions.
The real problem is if you add up all the unfunded liabilities for this nation--between state, local and federal governments--including Social Security, Medicare and Medicaid. Federal pensions, State Pensions, Military Pensions etc etc...we have over $160 TRILLION in unfunded liabilities...$80 Trillion is SS and Medicare/Medicaid alone This was published in the Wall Street Journal about a month ago.
Quite literally, there is not that much wealth on the entire planet. We couldn't tax everyone on the face of the earth 100% of all their income and assets and pay for it. Historically what has happened when governments get into this kind of pickle? They default on their debt and don't pay their obligations. Think that's BS? Who in Washington is seriously making proposals for paying off our $16 Trillion National Debt?
NOBODY... Not a single politician