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URL:  http://boards.fool.com/2-at-the-end-of-the-year-the-municipality-buys-30769271.aspx

Subject:  Re: Proposal to end public pensions Date:  7/10/2013  11:53 AM
Author:  jerryab Number:  428360 of 459768

2) At the end of the year, the municipality buys a fixed annuity for that one year of service from a PRIVATE insurance company. Say it is MetLife or AIG or Prudential.

I am the one who kept saying the cash needs to be paid to employee and let him/her decide what to do with the money. Thus, the municipality does not get involved with the buying anything--because that opens the municipality to future liability of unpaid benefits if the purchased policy fails to deliver for ANY reason.

Giving the cash to the employee means the problem now belongs to the employee. It costs the govt MORE now because the relatively high cost of managing each individual retirements account must be paid by the municipality as part of the "total compensation package". The savings of group management PLUS higher future risk to the municipality are offset by the higher current cash cost of individual retirement risk management PLUS elimination of future risk to the municipality. Pay one way--or pay another.
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