So why are pensions to current retirees funded by current employees?

First of all, I want to thank Alexy, for his amazing contributions on helping us understand pensions a little better.
Pensions are very complicated to account for and comprehend. They are
not simply retirement accounts setup like an IRA or a 401K, in which the investor/employee allocates a portion of his/her money to invest in a broad array of investment classes, such as stocks (foreign and/or domestic), bonds (high-yield, government, international, corporate, etc.), and cash. Over the course of several decades of employment and contributions, the investor/employee retires, and he/she lives on the investments and capital gains. THIS IS SO SIMPLE TO UNDERSTAND, and there is nothing abstract about this concept at all. Moreover, this scheme cannot ever be bankrupt, since no liability is incurred. , On the other hand, pensions are different: Today's wage-earners pay for today's retirees. Therefore, demographic pressures such as aging of a population, which is occurring in Western countries, can put great strains on pension schemes such as Social Security since fewer employees' contributions are funding their pensions. Moreover, this setup has the ability to become insolvent.
From what I understand, one benefit of pensions as opposed to a retirement savings system is that: " a government-run 401(k) would have [meant that employees approaching retirement in the near future would see] next to no benefits. So US Government created a social insurance program that provides a rolling income shift between generations of workers."
I believe, based on this assertion, that pensions seem to allow a generational income shift. What problem does this solve? From my vantage point, this creates so much disadvantages and complexities in the system.
I took a finance course regarding pension and health benefits of American employees at some of the most recognizable names in industry. Because their pension obligations were so high, that this actually created a huge liability which made the company have a NEGATIVE book value. However, if the company simply implemented a 401K idea like I proposed, that problem wouldn't have happened.
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2.7182818284590... wrote:

Nope, there are just some variations on how they operate.

Some of them are just that. In fact many of them are just that.

Yes it can, most obviously when it invests in some operation that becomes worthless. That does happen with some company pension schemes that invest in that company. Happened with Enron etc.

Thats not what bankruptcy is about.

Plenty of them arent.

That isnt how all pension schemes work, most obviously with defined benefit schemes so common with govt employees.

Yes, but thats easy to handle just by increasing the contribution rate required.

Nope, because the detail can always be varied, most obviously with the contribution rate required.

Its not an assertion, its a fact.

Yes, there is certainly an effect like that, particularly as the scheme starts.

It solves the problem with those who are destitute or dont have enough to live on in retirement.

Its only a short term effect as the scheme starts up.

Yes, and thats why there has been a move to what you call savings schemes.
And you dont get that negative book value effect with govt employees who are the main ones that still have defined benefit pensions now.
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wrote:

The difference between a pension plan and a 401(k) plan (or similar) is NOT that an "inter-generational" liability is not created for the 401(k), but rather the domain of the liability. In both cases, the current working generation must pay money for the non-working retirees, but in the 401(k) the liability is diffused across the entire workforce AT THEIR WILL (their willingness to liquidate 401(k) asset holders as an "investment"), compared to the LEGALLY-MANDATED liability of a specific company for a pension plan.
Please don't make that mistake again. It sickens me...
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Bill Reid wrote

Nope.
Nope.
Nope.
Nope. It only depends on the retiree's willingness to do that.

Pension plans arent necessarily a legally mandated liability for any particular company. Plenty are run by financial institutions outside the company whose employees they provide the pension plan for, and there is no legally mandated liability whatever except in the sense that what is earnt on the money in the plan does have to be returned to those who are part of the plan, less any overhead costs the institution chooses to deduct etc.

Your problem.

That is supposed ot have just -- on it, you have one too many.

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It's true except in your pig-ignorant fantasy world.

It's true except in your pig-ignorant fantasy world.

It's true except in your pig-ignorant fantasy world.

It's true except in your pig-ignorant fantasy world.

It's true except in your pig-ignorant fantasy world.

Yes, being exposed to your pig-ignorant fantasy world is a problem for a thoughtful intelligent person.

There was more important information on the topic in my sig, and asking me to make it automatically snipped just shows how pig-ignorant you are.

See, there it is, what I predicted over a decade ago (more like 16 years ago), there hasn't been a capital gains increase in 401(k) plans invested in the stock market for 10 years now, money markets have lost to inflation, and you're so pig-ignorant you can't figure out why this happened, you'd believe in a "free lunch" if it was financed from stock market "gains" through a "55943.14(b)(1a) plan"...
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Bill Reid wrote

Cant even manage its own lines, or anything else at all either.

Cant even manage its own lines, or anything else at all either.

Cant even manage its own lines, or anything else at all either.

Cant even manage its own lines, or anything else at all either.

Cant even manage its own lines, or anything else at all either.

You wouldnt know what one of those was if one of them bit you on your lard arse.

Everyone can see for themselves that that is a lie.

Then why did you have --- there, fuckwit ?

Odd that it never happened.

Another pig ignorant lie.

Another pig ignorant lie.

It never did happen. Its just more of your lies.
<reams of your puerile shit any 2 year old could leave for dead flushed where it belongs>
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Can dish it out but can't take it.

Can dish it out but can't take it.

Can dish it out but can't take it.

Can dish it out but can't take it.

Can dish it out but can't take it.

Thoughtful intelligent people don't bite other people on their arse except in your gay-pig-ignorant fantasy world.

Only in your pig-ignorant fantasy world.

To keep pig-ignorant newsreaders from snipping it as I said, you pig-ignorant arse-biting fantasizer.

Only in your pig-ignorant fantasy world.

Your pig-ignorant lie bounces off my rubber and sticks to your arse-biting fantasizing glue.

Another pig-ignorant lie stuck to you.

Only in your pig-ignorant fantasy world.

I wonder if this is how the Fed discusses policy decisions...probably...
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead.
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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Yes, as you said (or actually "typed", but I'm sure you were moving your lips when you typed it)...the only real fun question is: how many times can we get you to type it again and again and again and again and again and again and again...
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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Well, we're up to three...he's kind of like a vulgar "Speak'n'Say", press a button, he types out one of the seven sentences he knows how to type, composed of his average 1.2 syllable 23-word vocabulary...
(I'm betting he'll type the same thing again, and only a fool would fade me...)
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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"He"'s the ultimate horror of modern technology: a 'bot in an infinite loop with loose bowel movements and lots of loose wrinkly skin on "his" elbows...
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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OK, let's try this: "Rod Speed" is obviously very well thought-out with many valuable opinions and most certainly a handsome fellow.
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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Bill Reid wrote:

BWHAHAHAHAHAHAHAHAHAHA!!!!
Ur funnee meester...almost as much fun to goof on as a Tenenbaum...
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Some terminal fuckwit claiming to be Bill Reid wrote just the puerile shit that any 2 year old could leave for dead, as I said.
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Oh yeah, well, you're just a big wussenfuss!!!
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