There are two problems with defined benefit plans [[and I am a beneficiary of them). The first problem is that every pension granting entity thinks that their business or their governmental unit will keep growing forever and that they will be able to afford those benefits out of current earnings/tax intakes. They do not plan for the retirement by putting away the retirement money in a trust on an actuarily sound basis. The second problem is that the money that they do put into the trust is not protected from inflation while the value of the pension is protected and annual COLAs guaranteed.Well-managed defined-benefit plans have a place. We've gone too far with the idea of only 401k's, which remove 100% of the responsibility for retirement from the government. I'd like to see us encourage a balance between these two ideas. Traditional pension plans have been a major source of stability and equity for American industry -- we need to be careful as well toss it all out.
My military pension now is well more than what I was making in the 1970s as a major in the Army.
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