No "Employer Provided" Pensions

How many of you have never broken a promise? Com'on... best intentions and all that... how many of you have never failed to meet a commitment - whether to yourself or someone else?

One of my favorite American colloquialisms is... "Shit Happens!"

How true... right? This is indeed one of life's realities, is it not?

Good people don't make promises they don't intend to keep, but due to the vagary's of life, even the best laid plans end up in tatters now and then.

Think of the concept of the pension. Your employer puts money aside for you every pay period. You may contribute out of your salary... or you may not. In any case you can be sure that this pension "contribution" is coming out of your wallet either on the front end or the back end. (In other words, your employer looks upon its contribution as part of your total compensation - money you'd otherwise be making in salary.)

These "contributions" are "invested." In the early days of private pensions "contributions" were plowed back into the businesses, the pension funds invested in company stock. By the 1940's firms such as GM were diversifying their pension plans by investing pension funds into a myriad of outside investment vehicles... (Hey! Look at that! "GM." "Vehicles." I made a punny!)

Anyway... you get the idea. Google "pensions" if you're interested in exploring the details - if you feel like brushing up on the differences between defined contribution plans and defined benefit plans; if you want to review the history of private as well as government pensions. No doubt you could spend days immersed in the minutia.

(*WINK*)

Bottom line... here's the problem with the concept of the pension: It relies upon infallibility.

(*SHRUG*)

Unfortunately... in the real world... even in the land of the free and the home of the brave... their ain't no such thing.

What I mean is... in the real world there are no 100% concrete guarantees - except for death and taxes of course - and as anyone familiar with the info you'll often find within my "newsbites" is aware, by and large both private and public pension set-ups in America are... er... f##ked. ("Underfunded." Speeding towards the cliff of insolvency.)

There have been "bad" investments. (But isn't that the nature of the beast...??? Earth to readers: Again... there's no such thing as a "sure thing." The flip side of "the winners" is... er... "the losers.")

There have been - and continue to be - "under-contributions." (Yeah... imagine that...)

(*SMIRK*)

Over the decades the link between the actuarial component of pension calculations with regard to "input vs. output" has been frayed to the point of breaking by the substitution of "hope" (i.e. huge gambles, irresponsible actions) and raw political power as the arbiter of the "pension bargain."

Sorry, folks... but to throw out another great American colloquialism... "There ain't no free lunch." (Well... at least not for most of the people most of the time...)

Laying aside the question of what to do with regard to the folks already "in the system" let me make on thing perfectly clear: There should be no new pensions offered.

There should be no new pensions offered because the concept of pensions is fatally flawed and we're going to have enough trouble as it is working our way out of the mess we're already in as a society.

No new frigg'n pensions commitments from this point on... that's what I say!

What would this mean in the real world? Easy! Let's say that an employer currently offers a new employee a pension with an employer kick-in of say 5% of gross salary...

(Note: I'm just pulling a number out of thin air in order to make the point...)

Let's say the starting salary is $30K. Five percent of that $30K is $1,500 - right? So... no pension leads to an employee "raise" to a new salary of $31,500.

As to the employee's "pension"... well... let the employee - the individual... the citizen... the adult - invest whatever portion of his or her income into whatever investment vehicle he or she chooses.

(*SHRUG*) (*WIPING MY HANDS*)

Here's the deal, folks: A business... even a government entity... can effectively budget for a short period of time. Revenue goes up... revenue goes down; profits go up... profits go down. With a minimum of long term obligations a business or government entity can logically and gainfully react to real time events and act accordingly.

More profits... perhaps greater pay along with great R&D and other internal investments.

Less profits... lower the sails and batten down the hatches.

(*SHRUG*)

Folks... we've got to return this nation to a land where fiscal sanity again rules! We can't keep on signing off on debt we reasonably have no hope of paying off absent massive tax increases and/or horrendous inflation.

As for the private sector... same thing! Except instead of talking "raising taxes" and/or "monetizing the debt" we're talking pensions squeezing out profits and eventually leading to bankruptcy where no one is employed and no retired workers are receiving their pensions because there's simply no money left to pay the pensions!

Hey... last colloquialism... "Reality bites."

Yeah. Harsh reality I'm pointing out here. Many of you simply don't want to hear it. I "get" that. Too frigg'n bad.

(Oops... I guess that will have to be the last colloquialism.)

(*WINK*)