Is this story familiar? Chicago sued by pensioners

[hewettbr]

can we all just agree that pensions will never work and they are the root of most issues. Private 401k with employee contribution match is about as good as we will now safely get these days.

[Packman41]

can we all just agree that pensions will never work and they are the root of most issues. Private 401k with employee contribution match is about as good as we will now safely get these days.

Yes, any fair-mined person would agree that pensions [[defined benefit plans) are not sustainable.

And so would the authors of this Forbes magazine article from last January: http://www.forbes.com/sites/realspin...-127-trillion/

“ federal unfunded liabilities are estimated at near $127 Trillion, which is roughly $1.1 million per taxpayer and nearly double 2012’s total world output.”

So, agreed.

[Wesley Mouch]

Yes, any fair-mined person would agree that pensions [[defined benefit plans) are not sustainable.

And so would the authors of this Forbes magazine article from last January: http://www.forbes.com/sites/realspin...-127-trillion/

“ federal unfunded liabilities are estimated at near $127 Trillion, which is roughly $1.1 million per taxpayer and nearly double 2012’s total world output.”

So, agreed.

Disagreed. There's nothing fundamentally wrong with the idea of defined benefit pensions. If funded as earned, and invested responsibly, they can pay out a good pension at reasonable cost. Same with a 401k. You can't underfund contributions, mismanage, and then overpromise benefits.

Defined-benefit pensions don't work when you defer contributions, steal the cash, and then provide full benefits at any age after 8 years of work.

The problem is political, not financial.

[BankruptcyGuy]

Disagreed. There's nothing fundamentally wrong with the idea of defined benefit pensions. If funded as earned, and invested responsibly, they can pay out a good pension at reasonable cost. Same with a 401k. You can't underfund contributions, mismanage, and then overpromise benefits.

Defined-benefit pensions don't work when you defer contributions, steal the cash, and then provide full benefits at any age after 8 years of work.

The problem is political, not financial.

Except that you are fundamentally relying on the credit of the contributor in the future. When a company fails, the payments the company was obligated to make in the future obviously are not, and the pension is short. As long as parties are willing to accept that risk, fine, but that puts a bunch of working people's eggs in the basket of the company they worked for. New 401k rules prohibit required investment in company stock--pensions are effectively the same thing.

In the public sector, there was an assumption that public entities could always raise taxes to cover pension shortfalls. I think that's been soundly disproven.

Poor investments, failure to fund current liabilities, promising now what you can't deliver later--all problems that impacted Detroit pensions. 401ks seem like the better choice because they shift the responsibility for those issues from the company to the investor. I think it does pensioners a disservice to rely on politicians.