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Three Sunday reads

Comments (6)
  • chopchop0
    , contributor
    Comments (3133) | Send Message
     
    Great article on pensions. It should be clear to most that defined contribution plans make a lot more sense than defined benefit ones
    6 Oct 2013, 12:40 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Depends how you run them.

     

    A quote from that article:
    "If you adequately fund the plans it can be an efficient form of risk sharing."

     

    Very true. I'm not sure the answer is simply to dump defined benefit pensions entirely in favor of defined contribution plans, but rather to revisit the flaws of defined benefit plans, specifically as mentioned in the article:
    1) terrible accounting standards
    2) local governments [or corporations] who underfunded their plans
    3) and plan trustees who gave away sweeteners that robbed plans of their assets

     

    The author makes fairly weak arguments, quite frankly.

     

    And she fails to mention the very revealing fact that private sector DB pensions are just about as underfunded as public pensions, and basically for the same reasons -- it's not a problem with the public sector, it's a problem in general with how pensions are allowed to be managed.

     

    Another shallow claim from the article:
    "Private accounts have been demonized for exposing savers to more risk, but at least the assets are yours and the risk is transparent."

     

    They're also demonized for putting the burden of expertise on the individual investor, while at the same time limiting his investing and risk management options (as is the case in 401k plans). This, as opposed to letting people who are smart about money focus on the money, people who are smart about their jobs focus on their jobs, and everyone shares in reasonable gains and is protected from unreasonable risk.

     

    But no, that's not the plan. That's right, John Q. Employee, you've got to be an IT guy by day, and a hamstrung professional fund manager by night -- oh and don't forget to keep up with all those new technologies in your spare time too! :-)
    6 Oct 2013, 03:13 PM Reply Like
  • chopchop0
    , contributor
    Comments (3133) | Send Message
     
    "But no, that's not the plan. That's right, John Q. Employee, you've got to be an IT guy by day, and a hamstrung professional fund manager by night -- oh and don't forget to keep up with all those new technologies in your spare time too! :-)"

     

    Pretty easy to stick things in index funds and call it a day if you don't know any better. Sites like SA and Motley Fool exist to empower people with their own money.
    6 Oct 2013, 05:01 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (15468) | Send Message
     
    Why Gamble When Issues Are Staring You In The Face? $LNCO and $LINE should be avoided!

     

    http://seekingalpha.co...
    6 Oct 2013, 12:56 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Why post meaningful comments when you can just spam-advertise your own articles? Click whores should be banned!
    6 Oct 2013, 03:14 PM Reply Like
  • dieuwer
    , contributor
    Comments (2255) | Send Message
     
    Game Theory is flawed as it cannot take into account black swan events and the irrationality of single human beings.
    6 Oct 2013, 03:55 PM Reply Like
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