Risk and Pensions

There is no requirement that productivity gains have to go for benefits.

In my case, our gains went to support more important departments.

There is no requirement that productivity gains have to go for benefits.

In my case, our gains went to support more important departments.

There is no requirement. Competition makes it so. Albeit not immediately.

I can see how some people can think the government is more reliable than the market. For political reasons, government may be willing to go into debt to pay pensions to retirees.

Or, put another way, social security is risk pooling *among all Americans*, using all Americans' assets to pay pensions. If the government makes a credible promise to tax 300 million people to pay your pension, I can see how you might consider that more reliable than even a diversified portfolio.

My private retirement fund is long the market. Government is long millions of people's incomes.

Fixed private pensions are in trouble. But not from productivity or growth. Those factors can ease or worsen the problem, they do not cause it.

Pension planning and funding assumed people would die according to actuarial tables. But they are living far longer. And most pension plans were never fully funded anyway so there still wouldn't be enough money unless the company continued to prosper.

The situation is far worse for companies who promised health benefits to retirees. The cost of health care continues to rise faster than inflation. And again, pensioners are drawing that unexpectedly expensive care for years longer.

So we have a situation where a fixed amount of money, which wasn't fully provided anyway, is to pay out for an unknown period at an unknown rate. It was/is a pyramid scheme.

The public pension situation is far, far worse. It is also a different topic.

Thank you for pointing this out about GM's problems. I've heard others claim this before and it didn't sit right. Now I know why.

Obviously Dr. Kling does not rely on health benfits as a retired Federal Worker. Federal health benefits have decreased and premiums yearly exceed any COLA that my husband might get. He gets $1143 a month and pays $400 per month for health benefits. Not much to show for 30 years with the Feds huh? What Dr. Kling is purposing is that Federal employees live like those in a third world country. Obviously out of touch with the rank and file employees.