[quote=pri_dk][quote=UCGal]SS is a defined benefit retirement program. Does everyone here who argues against defined benefit plans want to give up their SS?
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Although SS has many things in common with a defined-benefit retirement plan, it is not really a retirement program. In reality, it is an insurance program.
It’s even called that: Old-Age, Survivors, and Disability Insurance (OASDI)
What SS is today, and what it is was originally meant to be are quite different. SS was meant to protect against poverty due to disability and old age. It was never meant to be a retirement program, although as people grew older and more of the population expected to receive it, it became more and more perceived as a supplement to retirement income.
Defined benefit pensions really haven’t been around that long, and I beleive it can be argued that they are an idea that has failed. Pensions are not really the “norm” – they’ve only been around for one, or perhaps two generations. Some have succeeded, some have failed. There are two reasons that the trend is moving away from the use of defined benefit plans. One, it turns out they are far more risky than many beleived they would be (just ask a retired Continental Airlines pilot) and second, it’s just not a good idea for employers to be in the investment business. Companies (and government agencies) should focus on their core business and not run a side business investing their employees’ compensation.
[quote=”SK in CV”]A DB plan isn’t just risk. There is, and has been, pretty substantial reward.[/quote]
Exactly. You may lose, you may win. Why are governments playing “casino” with someone else’s money? Sounds a lot like Wall Street, no?
But back to Social Security:
I am very much in favor of keeping the existing Social Security system in place, provided we make the necessary and very feasible tweaks to keep it sustainable. These “tweaks” include increasing retirement age and decreasing benefits (which will certainly impact me, btw.)
Why am I in favor of SS but not public-sector pensions? Because they serve very different purposes. Like I said above, SS is insurance – it protects against poverty and is part of the safety net that government should be providing.
Pensions, on the other hand, are a form of compensation. In particular, as deferred compensation, pension compensation is often used irresponsibly in such a way that the costs are hidden and big problems grow unseen (sound familiar?)
Government employee compensation should be equitable and transparent. The only way to ensure that it remains transparent is to avoid the use of deferred compensation. Pay employees at the time of service, just like anyone else receiving a paycheck with benefits and 401K. If people want a defined benefit, they can buy an annuity. There’s simply, no reason that public and private sector compensation cannot be “apples-to-apples.”[/quote]
I think you’re trying to play with words to get the outcome you want. Social Security was a retirement pension from the beginning. Some pensions are compensatory. Some are government retirements. Disability pensions are also pensions. And maybe they’ve been around longer than you thought. The teamsters pension funds have been around since at least the very early 50’s, probably longer.
You got me stumped on the last paragraph. Government pensions are transparent. They are deferred compensation (just like every employer retirement plan, INCLUDING 401Ks.) And the only reason it doesn’t seem like apples to apples is that the private sector moved away from defined benefit plans.
