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pensions and ponzi schemes

  • 14-01-2009 7:41am
    #1
    silverharp
    Registered Users, Registered Users 2 Posts: 18,854 ✭✭✭✭


    Are pensions glorified ponzi schemes? in general terms is it possible with purely "economic physics" to work 30 years and retire for on average another 25/30 years on 2/3 of ones salary. Now not everyone is on these terms but still many are, will contracts be broken? my guess is yes, anyone in their 30's or early 40's would have to seriously consider if they will ever get a chance to take their cut from their fund. I have seen some funds down 30%/40% this year and estimated future performance is 8% pa going forward. This aint going to happen at a minimum one would be lucky to see a new high in the market for 8 to 10 years. Throw in demographic issues in Europe and the US and one would have to conclude that economic growth will be subdued in the future

    thoughts?

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



Comments

  • #2
    cavedave
    Registered Users, Registered Users 2 Posts: 2,164 ✭✭✭cavedave


    Thomas Paine
    "Every age and generation must be as free to act for itself, in all cases, as the ages and generations which preceded it. Man has no property in man, neither has any generation a property in the generations which are to follow."

    Good Math has an article explaining why American social security is not a pyramid scheme. Essentially it is because in a pyramid scheme you get a choice about entering.


  • #3
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    A fully funded, defined contribution system is obviously better. The problem is the transition phase will involve one cohort both saving for their own pensions and paying for the previous generation's. The political cost of initiating that changeover would be huge.


  • #4
    silverharp
    Registered Users, Registered Users 2 Posts: 18,854 ✭✭✭✭silverharp


    cavedave wrote: »
    Good Math has an article explaining why American social security is not a pyramid scheme. Essentially it is because in a pyramid scheme you get a choice about entering.

    I read the article but it seemed to be more to do with the US social security. you would have to ask americans if they think they are paying into a fund or not, I understand it as a pay as you go system. I was more talking about private schemes where if it is a defined benefit the fund is promising to pay in the future

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



  • #5
    superhooper
    Registered Users, Registered Users 2 Posts: 273 ✭✭superhooper


    Over 30/40 years there is definitely a medium risk in terms of economic/political upheaval. I wouldn't be putting my eggs in one basket anyway. Can’t say I’ve ever seen the performance of a pension scheme over 40 years. I guess such stats don’t exist with pension companies merging etc over the years?


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