I become more and more convinced that pensions are an inherently broken system. A recent article in the NYT continues to highlight the problems with such systems.
The bottom line is that pensions plans are not 'owned' by the employees and are essentially big IOUs. This leads to manipulation, poor estimations, over promises, and worse.
What needs to be understood is that most government payment schemes are designed in similar ways...so if you read about the evils of corporate pension plans be sure to apply the same logic to government 'savings' schemes.
Posted by Jeremy Showalter at October 15, 2004 02:59 PMNot only does the public sector suffer from the same problem, but they don't have to show the long term liability, only the current portion due. In other words, most cities, states, and especially the federal government, are already bankrupt. The national level of public unfunded liabilities is overwhelming.
Posted by: Mark at October 16, 2004 10:23 PM
I believe the last time an amount was estimated was last fall and the number thrown around was upwards of 44 trillion...
And I'm not sure if that was counting organizations like the PBGC (Pension Benefit Guarantee Corp) which do not really "owe" anything as they act like an insurance company.
Posted by: KC at October 18, 2004 08:28 AMAlso, Jeremy, you seem to be getting quite a bit of blog spam...
Posted by: KC at October 18, 2004 08:29 AMI think PBGC (once they take over a bankrupt plan) actually does have a legal liability. The point comes when they agree to take on a plan from a company (US Steel, etc).
Posted by: Jeremy at October 18, 2004 08:40 AMOh and I'm using Blacklist but I hadn't updated the list in a while (which I did this morning) so hopefully that'll help,
Posted by: Jeremy at October 18, 2004 08:41 AMI was just saying that PBGC probably doesn't count their *potential* liabilities as actual liabilities until they take on the plan...
You know, if government and our employers just got the *&%^$ out of our way and let us fill our 401k, health savings accounts, etc, we might all be a bit better off.
Posted by: KC at October 19, 2004 08:04 AMYup, this is the same issue regarding Social Insecurity. If they would let us have accounts (of course only partial carve out since we'd still have to pay forever to pay out all the IOUs) we'd be better off than falsely believing we'll ever see a penny.
Lots of ways to adjust SS, but no one seems to be willing to take on the challenge.
Posted by: Jeremy at October 19, 2004 10:16 AM