Comment by criley2 | Hacker News Reader

Comment by criley2 | Hacker News Reader

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It's absurd to say this and honestly I don't know how anyone who understands the scale of the numbers here and the impact these programs have on society could think this.

Pensions are funded by the next generation, just like Social Security and Welfare.

You pay for the previous generation in exchange for the next generation paying for you.

Without this kind of offset, you end up with as much as 10-15% of your population as indigent elderly, homeless and starving, who become MAJOR financial burdens on their children (and I mean MAJOR -- ask someone from China or a similar country about it) or who become homeless or die.

It's unfeasible to set aside the money all at once, and in fact hoovering that much money out of the economy and into investments would have a noticable effect on the economy. You're basically suggesting something outrageous like 5% of GDP stop being transfer payments to poor people who spend it immediately and start being investments into government treasuries and corporate bonds.

Actually, pensions are paid for by returns to investing funds, not the next generation-- at least that was the idea. The problem is that:

1. Governments don't put even the actuarially required amounts into pension funds that assume 7-9% rates of return on fund investments. 2. Governments have been slow to adjust their expectations on returns, since 7-9% is far less achievable than it was in the 80s and 90s when interest rates were much higher.

Permanent low interest rates, economic downturns, and underfunding pension funds together have created an untenable environment. The cash isn't there in many municipal and state pension funds, and earning that much in returns is laughably difficult or requires an inordinate amount of payments now.

Now, it's absolutely true that the USPS is being held to a ridiculous and overcorrected standard in this case. But it's not the case that our current pension obligations, in many of these local and state retirement funds, can be paid for through current employee cash receipts.

It's ironic that you cite social security, which is a giant unfunded liability. Pensions don't actually have to be funded by the next generation. That's just the asinine way we have it set up here in the US. It relies on a never ending baby boom and economic expansion. Surprise surprise, it doesn't really work all that well. Hence social security funded at 70% and many city and state pensions funded at less than 50%.

What we should actually be doing is pay as you go. You pay into the pension and you get out what you paid, plus growth. We could have switched to this model at any point over the last 70 years if American society wasn't so addicted to endlessly kicking shit down the road and punting on problems.

> It's ironic that you cite social security, which is a giant unfunded liability.

Social security is not an unfunded liability. If you look at your paycheck you will see a line that explicitly goes toward funding social security. It is currently underfunded due to (1) Congressional malfeasance; and (2) the $120K cap on paying into the fund.

Even the underfunding is nowhere near as bad as advertised - current funding is sufficient to pay full benefits through 2035 and about 80% of benefits from 2035-2094. If we pay back the borrowed money and remove the income cap the funding issue would resolve.

Yes, but how are we going to prevent further congressional malfeasance between now and 2094? One of the two parties is not going to stop trying to undermine social security every chance it gets in over the next 75 years...

We either take responsibility for it as citizens or we get what we deserve.

Social security is not underfunded.

It is only underfunded due to these two reasons.

Well, which is it? If it were simple to make social security solvent at full promised benefits then surely we would?

You claimed it was unfunded, not underfunded. Please read more carefully.

And no, surely we wouldn't. The Republican Party wants to destroy Social Security, they aren't interested in anything that would make it stronger.

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