33087, Not Exactly|
Posted by M2, Tue Mar-29-05 08:30 PM
>Most of us, on each paycheck, pay tax payments towards some
>type of national pension plan. What's been going on over the
>last couple decades, is that national governments -who collect
>these payments- have been taking all the money and lending it
>to investors who then play that money on the market. Scary
>shit huh? What's worse is that the loss of these monies on the
>market is apparently the prime reason why there have been
>apparent shortages in pension funds available. At least, this
>is what has been described to me. Correct me on any
>innaccuracies because I am quite interested in this topic.
First of all, this has to do with Private Pension funds which operate completely differently from social security and the problems with the two of them have nothing to do with each other.
As far as the Govt. Goes, the surplus money isn't be lent to Investors - the surplus money has been loaned to the Govt. in the form of special issue bonds, meaning that it's a loan that the Govt. has to pay back with interest.
Private Pension funds are "lent" to Investors, they're directly invested into the markets with the idea of growing the size of the fund, so that the people who are vested in it can benefit financially. It's supposed to be done in a conservative manner so that capital is preserved but the pensioners still see some return.
Some companies are able to do this rather successfully and have extra money from Pensions that they have to report as profit, or find ways to get around reporting it as profit (Like GE) since it's really money that's for the benefit of the pensioners, not the company anyway.
Private Pension funds are in trouble for various reasons whether it's the company raiding it to make up for revenue shortfalls, making financial problems that exceed contributions to the plan, bad planning, etc.
Private Pensions and Social Security are two entirely unrelated issues that have nothing to do with each other.