Re:The State Pension Funding Gap
by LanceH on Friday April 13, 2018 @08:58AM
(#16829519)
Not when you're taking small data samples. If you look at past years of investment, you'll either have a sample size too small to be meaningful, or your start lumping years that don't reflect today's realities into the mix.
These investments are basically saying, "the market will always get 10% return", so we're going to put future tax payers on the hook for 10% returns. The average guy investing his 401k doesn't get guaranteed results at the expense of other people's work.
Even if there is a historical 10% return that holds, that's still going to produce underfunded (and overfunded) pensions based upon fluctuation in yearly returns and population dynamics (like if an unusually large number retire in a down year).
Then there is the pension spiking, and maybe even no consideration that people are paying into the pension at low rates but tend to retire at high pay rates.
Re:The State Pension Funding Gap
by maxxxxx on Friday April 13, 2018 @02:23PM
(#16832588)
As individual you can't really compensate for the update and downs of the market but a pension system with an eye on the long term could do this. Sometimes it's overfunded, sometimes underfunded but in the end it will converge to the average.
These investments are basically saying, "the market will always get 10% return", so we're going to put future tax payers on the hook for 10% returns. The average guy investing his 401k doesn't get guaranteed results at the expense of other people's work.
Even if there is a historical 10% return that holds, that's still going to produce underfunded (and overfunded) pensions based upon fluctuation in yearly returns and population dynamics (like if an unusually large number retire in a down year).
Then there is the pension spiking, and maybe even no consideration that people are paying into the pension at low rates but tend to retire at high pay rates.