Negative aspects of Pension Plans
Can someone help me figure out the cons of pensions? They are extremely expensive to maintain, causes the “golden handcuff” effect which in turn forces some unmotivated workers to stay with the company, etc. What are some other cons of pensions?
Because you only get paid if there is any money left at the end. Pensions pay into a pension insurance pot, which pays out of your pension fund goes bust. Doesnt take a genius to work out that a massive industry that doesnt work for free using your money to give you more money back later sounds a bit too good to be true.
Case in point, my mother put aside about £20 or so every month for me, total £3k when i was younger. 12 years later or w.e it was, that amount was less than £3k, but they gave me £3k to feel good. Wasn't a pension i know but the same principle. Giving someone else your money to outperform you and paying them a premium to do so, when all they dois buy T bills or RDSA shares seems a bit stupid to me.
disclaimer: i am near violently anti pension.
I don't see much wrong with defined contribution, but defined benefit is a complete disaster imho because A) the accounting relies on an absurd amount of assumptions which give ample room for the gaming of financial statements B) companies promise an absurd amount of $ to people and then under-fund the liability
This is the biggest con to me. Need some extra money? Adjust the assumptions. By the time the bill comes due, you'll have been gone for years. There is a reason almost every pension is underfunded.
It doesn't directly tie to pensions, but historically pensions have been common in union jobs. And unions are hell to negotiate with. After a few decades, you find yourself in a situation like the auto-manufacturers. Or California.
Illinois too, lol.
"Political decisions left the state with only 40 cents of assets for every dollar of pension liabilities—a financial hole Illinois officials are now scrambling to fill."
http://online.wsj.com/article/SB100014241278873238267045783543704781042…
Voluptas vero fuga explicabo corrupti corrupti ut. Temporibus et qui necessitatibus ducimus. Quis non impedit consectetur. Et aut sequi incidunt ducimus. Eveniet iure repudiandae sapiente dolorum. Minima suscipit possimus perspiciatis quos ullam.
Id quisquam ullam eos impedit blanditiis. Ab et quidem laboriosam. In eveniet sequi voluptatem officia id. Adipisci tenetur aut quos fugit aliquid voluptatem amet.
Ipsum dolor porro fugit error quia. Culpa omnis officiis quia dolorem minus est. Ipsum id reprehenderit fugit unde ut quis veritatis. Laudantium aliquid odit mollitia explicabo nulla. Facilis nisi dolores qui non.
Officiis consequatur et reiciendis corporis tempore. Fugiat minima iusto veniam at est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...