Government granted pensions work well in other places, like Sweden for example.
I'm sincerely wondering why they aren't working in the US?
I'm sincerely wondering why they aren't working in the US?
People keep using the word "corruption" but I think this situation arose simply because pension funding was continuously deferred. Is the deceptive? Yes, because the state is making promises it can't keep but it's not an example of corruption.
If that doesn't scream corruption, I don't know what does.
https://www.aei.org/wp-content/uploads/2018/03/Automatic-Adj...
Sweden actually just made some great changes to their pension system, and in fact it's no longer a defined benefit plan in the traditional sense, so your benefit is not guaranteed (aka defined). Sweden went ahead and said we're not giving you any promises, and pension payments will be adjusted on an ongoing basis due to demographic and investment return changes.
On the other hand, you have state level and local governments in the United States that have traditional defined benefit pensions (you get at least $x based on this formula, frequently with a built in cost of living increase). Not only that, but some governments baked this into their constitution, so there's no way for these to be reduced. And state and local US governments can't print money, so they only have two options: cut costs and raise taxes.
On top of the above, there are perverse incentives for the people who set the pension benefits. Obviously, the union workers want the most they can get. The politicians need union votes to get elected (everyone in the union votes, but most Americans don't vote in local/state elections). So politicians can choose whichever actuary uses the most liberal assumptions to make the costs seem lower than they are, the unions vote for them, but of course the contributions to the pension fund to ensure these benefits is NOT required. So politicians can also choose to forego them, which they did and leave it for future generations.
Sweden can't run out of money. How many resources they decide to use in their old people is a political decision (taking into account economic factors like inflation and real resources available).
At the end of the day, this is decided by the current generation, so, this narrative of "jeopardizing the future" make not sense. The quality of life of the old people of the future will be determined by the real resources available in the future and the political will of the voters then.
Illinois can run out of money, so, it's not only if they have the will to give a good quality of life to their old people: they could be unable to do that. The reason the federal government could choose to solve the problem it's not because it has more money but because it can issue money.
I strongly suspect that union leaders negotiating big pensions generally do not care much for the welfare of the people they claim to negotiate for (e.g., union workers). Negotiators almost certainly know that what they ask for is unsustainable and that a more sustainable schema will be better for the workers (their benefits wound not have to be trimmed), but negotiating for bigger future payouts brings bigger career benefits and plenty of time to not be associated with this when the system finally fails.
Here's a great example of the way things work in Illinois. The most powerful man is a man named Mike Madigan, speaker of the Illinois House and Chair of the Illinois Democratic Party. He has a fun little trick that he likes to play on the people he serves by essentially stealing money from us via property tax assessments. The first assessment on any property's taxes in Chicago is generally outrageous. It's like this because he wants you to appeal, because Madigan & Getzendanner is Cook County's largest firm in the commercial and industrial appeals process[1]. And rumor has it, they're also the largest in residential property tax appeals, too.
I doubt Sweden's government has such egregious types of government scams. And I'm sure Sweden's government is designed to serve its people, not bleed the powerless dry.
[1] https://www.illinoispolicy.org/investigation-madigan-firm-th...
. It would take approximately 40 years of full contribution to get about 50 % of salary upon retirement in the Swedish pension system( is the rough estimate correct)?
Compare to, e.g., the city of SF, where you only need to work 23 years, and can retire before 60.
Its more accurate to compare America to the EU than to one wealthy EU member state (Sweden)