Ah, so investing in the market is a good idea as long as we can be sure all fund managers are competent and would not involve themselves in criminal activity? Sounds like a good plan.
And what investments involving risk are made with the national social security fund?
Where did I say that? Feel free to quote (the quote you provided does not say that at all). There are regulatory provisions and legal remedies in place to dissuade pension fund managers who act in a fiduciary capacity from entering into risky and criminal behaviour with beneficiaries’ money (the regulations that Republicans are always trying to get rid of), but of course it’s impossible to make sure all fund managers are competent and honest.
As I said above:
It’s all about execution (which should be conservative and not prone to gambling and self-dealing) and scale (which should give institutional level cloud). This in turn usually requires either a strong and competent union or a private corporation so prosperous that it can hire a top-tier pension fund manager and so responsible to its employees that it wants to hire such a person at all. Most workers in America don’t enjoy
Not as many risky investments as the GOP would like. That’s why they’re constantly pushing for privatisation of Social Security, which as an insurance vehicle (rather than the pension substitute it’s become for many Americans) is really only supposed to just keep up with inflation.
So if you get a catestrophic crash like that, they you discover that tax revenue disappears and you don’t get your pension too.
Look at it now, ALL of your pension assets have gone, and you are on the hook for the debts. Negative wealth.
So here’s a question for you. A simple one.
How much does socialist security owe? Past payments only, present value.
You mean like spending all the money?
In other words acting like social security where all the money has been spent, and the liabilities hidden off the books.
Not sure that I understand the question. How much is it behind in paying people out?
GUIDE TO STATE PENSION CHANGES
AGED 55-65
You will retire in your 60s with a generous state pension that will allow you to enjoy a decent standard of living.
AGED 45-55
You will retire in your 70s with a reduced state pension that will allow you to enjoy years of worrying whether you can afford to turn the heating on.
AGED 35-45
You will retire in your 80s with a miserly state pension that will allow you to enjoy dog food and hypothermia.
AGED 25-35
You will retire in your 90s with a state pension so minuscule that it will allow you to make just the one phone call to Dignitas.
Courtesy of private eye.
Well, you said “There’s nothing wrong with the concept of investing pension funds” and later “If entire pension funds are being lost in the market it’s because of rank incompetence or criminal activity on the part of the fund manager.” which would imply to a reader such as myself that my worries about risks are overblown because pensions would only be lost due to incompetence or criminal activity rather than inherent market risk which I believe is the point you have been making. It often helps to rephrase what others say in order to better understand them.
Regulations are great and if someone screws up, I’m sure pensioners will understand that they can’t buy groceries this month but at least they came down hard on the jerk who mismanaged their retirement funds.
Are there any? Any at all? I don’t really care to move the goalpost here or join you in partisanship. I just want to get to the truth of it. From what I can see, you support taking risks with pensions due to inflation and suggest the risk is not that great due to diversification and regulation. But that didn’t help the people who lost everything in the last crash. Regulations didn’t pay their bills and diversification didn’t hedge against poverty for them either. While your ideas may work on paper, the truth and the reality of what we have already seen happen seems to present some objective truths which are counter to your narrative.
All right, who summoned @nickle on a pension thread?
Rich people can afford the bribes campaign donations to preserve the cap.
I’ll assume you mean Social Security. According to their site, asset reserves* in 2015 were $2,812.5-billion in current dollars.
[* that’s what you’re left with after income minus expenditures]
No, I mean like making extremely risky investments, getting kickbacks, and doing other dodgy things as trustees of the beneficiaries’ funds. They’re allowed to pay out actual dividends and other income as they advise and the beneficiary asks.
Citation, please. From a reputable source.
“Socialist security” owes nothing, since there’s no such thing.
What about foreign bond markets? They’re not quite as secure, but do they offer better returns? I mean like Germany or China, not Azerbaijan or someplace.
It’s very simple. Here are the numbers for the UK.
Assets in the welfare state - zero.
From 2005 and 2010, there are estimates of the liabilities from the ONS.
Levy (2012) explains that the last official figure for the state pension schemes’ obligations was
produced by the Government Actuary’s Department (GAD), as at 31 March 2005, at £1.347 trillion,
In summary, the estimates in the new supplementary table indicate a total Government pension
obligation, at the end of December 2010, of £5.01 trillion
============
That’s a 636 bn a year increase in the debts. Currently total taxation is about the same.
The current level of those debts, using their methodology is 10.5 trillion.
Add in the other debts and the state owes 12.5 trillion pounds
That works out at £400,000 per tax payer, plus interest.
That’s 700% of total UK income.
That’s nearly 20 times total taxes.
And its not that you can tax and not provide any services.
It doesn’t take much to see how that ends.
Even the idea [like the slave owners of the past who get accounts and breeding logs of their slaves], of booking people as assets [they already have the breeding log in the UK], doesn’t work. Follow that logic and you would also have to book the expenses. With a deficit, turns out people are liabilities.
So what about the alternative? The alternative is capitalism. You have to invest your own money, and you own the wealth.
Well you can back test that. Mr Median Wage would have had 900K in a fund. Compare that to the state’s offering. 400K of debt, and a 6K a year pension, with average life expectancy if you make 65 of 18 years. 108K back. If you die sooner, nothing. Mr Median is down a million quid.
So why would the UK government [and the US government] hide the numbers?
This thread is now officially derailed forever!
A reader such as yourself wasn’t really reading carefully, then.
If I said “there’s nothng wrong with eating ice cream” and followed up to someone who objected by saying “if someone dies of malnutrition from only eating ice cream than that speaks more to the bad judgement of that person” would your response be that ice cream should be abolished for everyone or that I’m advocating that everyone (the lactose intolerant included) eat ice cream exclusively or as a daily part of their diet?
Coming down hard on the bad actors is what’s supposed to dissuade other bad actors. Also known as a function of law.
As I understand it, whatever investments that exist within Social Security are extremely conservative, meant to smooth out and tweak larger demographic issues. Social Security is not a pension, though.
Yes, that’s fair. I’m all for calculated and considered risk to ensure the pension fund’s payouts match or slightly beat inflation, within regulatory strictures. That’s an uncontroversial view.
I would argue that the extreme and unconsidered risk being taken by and on behalf of those people was not calculated but was driven by greed and criminal behaviour.
That’s because the regulations that could have prevented the crash, Glass-Steagall in particular, had been dismantled more than a decade before. The concurrent dismantling of the social safety net didn’t help, either.
Yeah, I’m sure coffee is the real reason behind younger generations’ financial troubles.
My grandpa’s generation managed just fine with one spouse in a blue-collar job and the other not working. My dad’s did pretty well with one white-collar and one blue-collar spouse. My generation is lucky if it can get two people with white-collar jobs in a household and is unlikely to ever pay off its student loans and medical debts. Millenials are lucky if they can get the three blue-collar jobs it requires just to pay rent. Anyone after them, assuming another generation survives to adulthood, won’t even have jobs because everything will be automated.
It depends, but greater risk translates into greater reward. For example, Germany might not be experiencing Chinese levels of growth, but it does offer less volatility. These days, a German bond might be a safer and thus return less than a comparable U.S. bond. However, U.S. bonds get a lot of added demand in comparison to other countries’ because the USD is the international reserve currency. For now.
Your analogy is kind of mixed. I’m referring to harm caused to pensioners by forces outside of their control. Not something they have chosen to do to themselves.
And yet crime still happens and in this case that means elderly people having to choose between heat and food.
OK. I’ll buy that. My point was never that it was a pension but that the Social Security Administration is very risk averse. That’s why it survived the crash but so many private pensions did not.
Today, among some… sure. But I do remember a lot of screaming when companies moved from in-the-bank pensions to invested ones. People were terrified they would loose their retirement and many of them did as a result of the market downturns.
Which will likely continue as it has before.
Sure, that speaks to the why in this case. But there will always be an answer to ‘why did they fail’. That doesn’t seem to me to be a good argument for continuing to risk the well being of your former employees.
I requested a citation on your claim that the U.S. government was hiding Social Security liabilities off the books. Your jumble-sale and far-from-simple “explanation” of how things work in the UK’s public pension system don’t come close to addressing that, or indeed proving that the UK government is hiding the numbers (not the least of which because you’re trying to use their numbers and what you claim to be their numbers to make your point).
If you count the liabilities of the pension system as “The money expected to be paid out over time,” then it only makes sense to count as an asset “the amount of money expected to be collected for use by the pension system over time.”
Okay, so the amount that the pensions are expected to pay out for current citizens is about twenty years’ worth of tax revenue.
The life expectancy in the UK is slightly north of 80 years.
That would indicate that, if your numbers are correct, the income needed to pay for the pension system would be about 25% of the tax money taken in during a given year to be sustainable.
According to the UK Government, the money put into the pension system is about 15% of government spending, which is only 60% of what you would require to fund the system if your numbers are correct.
That might sound worrying, except your £10.5 trillion and £12.5 trillion numbers (which are the source of the 20 year/25% of tax revenue numbers) have been created out of whole cloth. The only number you have proof of is £5.01 trillion, which is 40% of the value you’re claiming the “liabilities” to be. If the “liabilities” have gone up by 50% in 6 years (about a 6% increase per annum, a rise well over the cost of inflation but not completely unreasonable), the pension is well funded. Your numbers suggest they’ve gone up a ludicrous 125% in the same period of time (a 14% increase per annum), which, frankly, I will require proof for.
