The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Macro Economic Trends and Risks

URL:  http://boards.fool.com/large-corporations-used-to-have-pensions-until-30770688.aspx

Subject:  Re: Proposal to end public pensions Date:  7/11/2013  9:57 AM
Author:  JLC Number:  428463 of 465269

Large corporations used to have pensions until they decided to cut costs and put their employees at the mercy of Wall Street by putting them into 401(K)s and IRAs instead.

Maybe we should go ahead and destroy public pensions and Social Security and put everybody under the thumb of Wall Street.


The falicy of that argument is that one assumes you are investing in stocks. No where is it written that you have to invest in stocks in a 401k, IRA, etc. You could leave the money in cash, CDs, bonds, t-bills. Long term, being 100% fixed income might not be the brightest idea, but it is an option.

So that takes that fear factor out of the way.

But go back to defined benefits. Where do you think that money is invested now? Unicorn rainbows and Leprichain gold pots? Look at any of those pension plans, the majority of the money is invested where? Stocks?

So those employees are already at the mercy of Wallstreet.

Defined contribution the employee has the say and control of where their money goes. Defined benefit the employee has no control, is at the mercy of numerous faceless entities and in the end hopes the taxpayer will bail them out when things fail.

JLC
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us