[quote=CA renter]
Many of those private pension funds went bust because of reasons completely unrelated to the pension funds’ ability to pay out the promised benefits. Funds were mismanaged and used as piggy-banks for corporations, bloated executive pensions, and the way they intermingled funds between the funds of regular employees and executives blew many of them out of the water. UCGal has recommended a book a few times here:
[/quote]
Just like politician used those funds as piggy banks for various project. That’s the problem. It’s the risk factor for people to misuse those funds. When you have a big pot of money over there that isn’t needed for 20 years into the future it’s very tempting to borrow from it especially when you won’t be on the hook when it goes bust.
Retention might in an issue in some areas of the city work force but clearly a defined benefit pension (the police still have one) isn’t solving the problem is it. If that was the solution then we wouldn’t be having retention issues.
The problem is that if you saved 10% of you income over the past 30 years and invested it safely i.e. treasuries and then relied on income from an annuity you would have nothing close to the defined benefit that public sector employees currently receive. People love defined benefit contribution plans because they are too good to be true.
