Pension Meltdown
No One Is Safe: The Dangers of Defined-Benefit Pensions
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  • Fred Chittenden

    When, not so much if, defined pension benefit plans fail and require the gubermint to bail them out, seems like the bill for any bailout ought to be sent to anyone with, and/or receiving, the ‘benefits’ of a defined pension.

    If these marketplace insenstive defined benefit plans haven’t been collecting enough to make them solvent, the responsibility to fix those deficits generally belong to those who benefit from those sorts of plans, not the general taxpayer. Perhaps an option ought to be offered to convert the prorated actual value of any defined pension into defined contribution plan to reduce the degree of these problems?

    It should also noted that defined pension benefit plans have little skin in the game when it comes to having a check and balance against promoting politics of high tax, spend and regulations that restrict the general growth of the private sector prosperity that is essential for solvent vibrant pension plans of any sort.

    If all defined benefit pension were converted to defined contribution pensions of equal value, there would be a huge and quick shift in support from high tax, spend and regulate policies towards more balanced approaches that promote the general welfare of all, not just the special interests of one political side.

    • Boritz

      “If all defined benefit pension were converted to defined contribution pensions of equal value…”

      If the defined benefit is $10 trillion present value in the aggregate then you would have to pony up that much to do the conversion. There is no instant fix.

      • rheddles

        The party doing the ponying up could issue debt payable in the future. It’s not like nobody knows the liability is there. And rates are low.

  • Boritz


  • charlesrwilliams

    A multi-employer pension plan that has an unfunded liability or invests in risky assets in inherently unstable. The problem is not with defined benefit plans per se. Public sector plans are shaky because the liability is calculated using estimated returns on the portfolio rather than a risk-free return. Corporate defined benefit plans are in relatively good shape.

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