7 ms·

Pensions should be outlawed. If employees want retirement savings they should be given money for 401k plans, not outdated and inefficient defined benefit plans.

noknownsender 3y ago
That just puts workers' retirement funds on the open market, to be abused by any friend of their fund manager.
Tuna-Fish 3y ago
More importantly, company-ran pension plans should be outlawed because they are a morass of perverse incentives and opportunities for quasi-legal theft. To put it simply, it is often the incentive of the people who make decisions about the pensions to mismanage them.
- jrockway 3y ago
  I suppose pensions take advantage of the time value of money; funding someone's 401k means you can't use the money to expand your business, but if you just pay them what they would have made 30 years later, you already expanded and that money is easy to come by because you're making so much now. But, it's difficult to enforce. The expansion plans could be "yacht for the CEO plans", and when retirement time comes, "oh sorry we don't have any money :(" is the likely excuse. So it doesn't seem to work anymore in practice; being optimistic about doing better than average long-term is not a viable financial strategy.
AlexandrB 3y ago
What's inefficient about pensions? Pension funds can also participate in a wider variety of investments than individual 401k holders. Employer funded 401ks (at least in Canada) are also a free payday for fund managers since they can charge a premium over "normal" funds and the investor is a captive audience since they can't move their investments elsewhere until they change jobs.
- marricks 3y ago
  Sounds like 401ks are very efficient for fund managers. Maybe that’s what they meant?
fomine3 3y ago
I disagree. Pension is an insurance for accidental long life. Unless pension, everyone must hoard their property enough to live until about 90-100yo. It's a big waste for society.

noknownsender 3y ago

That just puts workers' retirement funds on the open market, to be abused by any friend of their fund manager.

Tuna-Fish 3y ago

More importantly, company-ran pension plans should be outlawed because they are a morass of perverse incentives and opportunities for quasi-legal theft. To put it simply, it is often the incentive of the people who make decisions about the pensions to mismanage them.

jrockway 3y ago
I suppose pensions take advantage of the time value of money; funding someone's 401k means you can't use the money to expand your business, but if you just pay them what they would have made 30 years later, you already expanded and that money is easy to come by because you're making so much now. But, it's difficult to enforce. The expansion plans could be "yacht for the CEO plans", and when retirement time comes, "oh sorry we don't have any money :(" is the likely excuse. So it doesn't seem to work anymore in practice; being optimistic about doing better than average long-term is not a viable financial strategy.

AlexandrB 3y ago

What's inefficient about pensions? Pension funds can also participate in a wider variety of investments than individual 401k holders. Employer funded 401ks (at least in Canada) are also a free payday for fund managers since they can charge a premium over "normal" funds and the investor is a captive audience since they can't move their investments elsewhere until they change jobs.

marricks 3y ago
Sounds like 401ks are very efficient for fund managers. Maybe that’s what they meant?

fomine3 3y ago

I disagree. Pension is an insurance for accidental long life. Unless pension, everyone must hoard their property enough to live until about 90-100yo. It's a big waste for society.