F. George McDuffee wrote:
On Fri, 16 Apr 2010 10:26:47 -0800, "John R. Carroll"
wrote:

snip
Defined benefit pension plans outside of the government ought to
just be illegal.
The basic flaw is in the belief or assumption that just because a
corporation CAN be around to fulfill it's pension obligations that
it will be. Corporations evolve, are bought and sold and are
sometimes subsumed to the benefit of the shareholders, not employees.
Government, OTOH, is the reverse. That's the theory anyway, and the
interests of government in our own society are whatever the
interests of the people are. That's by definition.

Defined contribution certainly has it's flaws but those flaws don't
include the expectation by the contributors of invincibility.
Conversations such as these are the beginings of a discussion of
government run pension plans that anyone, or everyone, participates
in.
That's the only way to do defined benefit.
snip

It continues to amaze me that corporations and government units
contend they can do a better job of money management with
part-time amateur help, political appointees, and minimal to no
[use of] actuarial capabilities/techniques, than the dedicated
insurance companies can do with their professional staffs,
economies of scale, and generations of experience.

There is no shortage of excellent actuaries in government.


One possible way around these problems is to eliminate the
employer controlled pension plans by mandating the purchase of an
annuity policy to cover the defined benefits from a well rated
insurance company when a pension vests, with annual updates to
the policy as additional benefits accrue. Historically,
well-rated insurance companies have been closely regulated, with
minimal losses. This also allows easy pension portability when
changing employers, i.e. the annuity policy is owned by the
covered employee, not the employer.

I don't care for the necessity of purchasing such things from an insurance
company.
Once you reach a certain threshold, it makes sense to hire a staff and do
everything yourself.
I think I'd probably advocate for a government old age pension benefit if
the benefit were defined.
No matter what happens, the government will end up directly participating
anyway.
Just look at the financial services business today.


As this removes control of the money from the
employer/governmental unit, eliminates large numbers of
patronage/sinecure positions, reduces skimming opportunities, and
obliterates the fantasy of low cost financing, this will never
occur.

This will all depend on how the health-care reform works out.
Should America end up with a good, affordable single payer system, the next
up will be pensions.


--
John R. Carroll