Not up for another round of trickle down economics vs sensible taxation policy? You were doing so well though Slava.
Since when have you adopted sensible tax policy? I know I’ve never advocated trickle down economics. But, at the end of the day it’s a pointless discussion where you constantly fire out red herrings and borderline personal attacks.
The math doesn’t work. We have utterly failed as a society to make the painful but necessary adjustments to a relentlessly aging population. It’s the same with health care costs and access. By the time we can no longer kick the can down the road, when it’s time to reconcile our expectations with our needs, it’s going to be ugly. Services being slashed deeper than anything we’ve seen in this country, and people getting 40 cents on the dollar on their pensions. That kind of ugly.
Hopefully the old timers do the honourable thing.
The Following 5 Users Say Thank You to Roughneck For This Useful Post:
I’m confused as to why people believe these funds are not sustainable at current contribution levels.
The unfounded liability was created because teachers/ government funding was 3.5%-5% each and grossly under funding the plan. Combined they now contribute 21-22% to get about 50% of their pretax income.
If anyone of us chose to do this for 30 years we could have the same pension.
Now someone might argue that 11% is too much matching for retirement benefits but we are taking in the 5% max too high range. The idea of gold plated pensions is a lie. It’s responsible savings to fund their and a portion of teachers before 1992s pensions.
The Following 7 Users Say Thank You to GGG For This Useful Post:
I’m confused as to why people believe these funds are not sustainable at current contribution levels.
The unfounded liability was created because teachers/ government funding was 3.5%-5% each and grossly under funding the plan. Combined they now contribute 21-22% to get about 50% of their pretax income.
If anyone of us chose to do this for 30 years we could have the same pension.
Now someone might argue that 11% is too much matching for retirement benefits but we are taking in the 5% max too high range. The idea of gold plated pensions is a lie. It’s responsible savings to fund their and a portion of teachers before 1992s pensions.
Well this is about more than the teachers pension though. The problem for administration of these pensions is that you have to accurately predict the future benefits required, and have the returns and discount rate (which also has to be accurate), at least match up. Getting the benefit required is crucial, and not simple. As people live longer, it adds to that obligation which is entirely on the sponsoring entity. This is a chunk of the issue when it comes to the funded status of a pension fund.
Pension fund management faces a few specific issues as well. Today, after basically twenty years of declining interest rates, bonds gave a good boost to these portfolios, and that meant things like pensions could get decent returns while sticking to a balanced mandate. How does that look going forward with rising interest rates? Those balanced mandates with 35-40% in fixed income probably return closer to 5% than they would’ve say a decade ago where they could get 8-9%. That’s a problem, and again that risk is entirely with the sponsor.
Longevity risk is the main factor though, and there are only a few things a pension can do to deal with this. They can use a couple options to transfer that risk to insurers (some of these depend on whether the pension is closing or remaining open). Or they can increase the risk of their assets and hope their asset allocation will help bridge the gap. None of those “solutions” are free though. You either straight up add risk, or literally pay someone else to take the risk off your plate.
The Following User Says Thank You to Slava For This Useful Post:
Well this is about more than the teachers pension though. The problem for administration of these pensions is that you have to accurately predict the future benefits required, and have the returns and discount rate (which also has to be accurate), at least match up. Getting the benefit required is crucial, and not simple. As people live longer, it adds to that obligation which is entirely on the sponsoring entity. This is a chunk of the issue when it comes to the funded status of a pension fund.
Pension fund management faces a few specific issues as well. Today, after basically twenty years of declining interest rates, bonds gave a good boost to these portfolios, and that meant things like pensions could get decent returns while sticking to a balanced mandate. How does that look going forward with rising interest rates? Those balanced mandates with 35-40% in fixed income probably return closer to 5% than they would’ve say a decade ago where they could get 8-9%. That’s a problem, and again that risk is entirely with the sponsor.
Longevity risk is the main factor though, and there are only a few things a pension can do to deal with this. They can use a couple options to transfer that risk to insurers (some of these depend on whether the pension is closing or remaining open). Or they can increase the risk of their assets and hope their asset allocation will help bridge the gap. None of those “solutions” are free though. You either straight up add risk, or literally pay someone else to take the risk off your plate.
I think you mistate how the longevity risk manifests itself. The longevity risk isn’t people living longer, that is already priced into the plan. It’s the rate of increase in average life increasing faster than predicted by the plan.
People don’t just all of a sudden live longer. It’s a slow and gradual trend. It’s also not the reason why the current plan or any private plan had issues. The problem in all of the old pension plans was relying on future workers to pay for existing retirees rather than having current employees paying for their own futures. These situation aren’t lack of returns or longevity risks. They were fundamental underfunding that was intentional and clear when these plans were funded.
Are there good examples of funds that were not relying on future worker contributions to fund existing retirees that have gone bankrupt?
I would argue the risks you state get priced in as pension contributions are adjusted.
The Following 3 Users Say Thank You to GGG For This Useful Post:
Location: In a land without pants, or war, or want. But mostly we care about the pants.
Exp:
I doubt anyone can predict the effects of automation and other technological efficiencies will have on productivity to accurately decide whether DB pensions are sustainable or not in the long term. Unproductive people live off the surplus created by productive people, you can indefinitely reduce the proportion of the latter so long as the surplus created by their labour keeps growing faster than the proportion of the one to the other.
__________________
Better educated sadness than oblivious joy.
Yeah, it's baffling that people don't seem to think that there are actuaries whose entire job is to ensure that these pensions remain solvent and properly funded given the expected lifespan of the members. The ratio of teachers currently working to the # that are retired is basically meaningless when over 1/4 of their gross salary is going into pension contributions. 30 years of that level of contributions can easily fund the retirement benefits they'll receive.
The Following User Says Thank You to opendoor For This Useful Post:
Demonizing pensions has been part of the conservative/capitalist/corporate playbook for 40 years.
And it worked. Instead of a liveable retirement income for years of service, employees now get stock and paltry RSP matching. All under the guise of the “benefits” of increased employee control, independence and sustainability. Employees were lied to and bullied with fear tactics that they should want crappy 2% RSP matching because the evil socialist DB pension plan admins would piss away all their money and leave them with nothing.
All it really did was allow employers to cut back benefit costs substantially. Same idea in the public sector. Demonize unionized employees so that they don’t give the non union workers something to strive for. We don’t want them getting any ideas about how things could look for them.
The Following 5 Users Say Thank You to Cecil Terwilliger For This Useful Post:
Demonizing pensions has been part of the conservative/capitalist/corporate playbook for 40 years.
And it worked. Instead of a liveable retirement income for years of service, employees now get stock and paltry RSP matching. All under the guise of the “benefits” of increased employee control, independence and sustainability. Employees were lied to and bullied with fear tactics that they should want crappy 2% RSP matching because the evil socialist DB pension plan admins would piss away all their money and leave them with nothing.
All it really did was allow employers to cut back benefit costs substantially. Same idea in the public sector. Demonize unionized employees so that they don’t give the non union workers something to strive for. We don’t want them getting any ideas about how things could look for them.
Uhh...I mean...there is something there, but the fact of the matter is that DB Pensions effectively became impossible for the private sector.
__________________ The Beatings Shall Continue Until Morale Improves!
This Post Has Been Distilled for the Eradication of Seemingly Incurable Sadness.
The World Ends when you're dead. Until then, you've got more punishment in store. - Flames Fans
If you thought this season would have a happy ending, you haven't been paying attention.
The Following User Says Thank You to Locke For This Useful Post:
Demonizing pensions has been part of the conservative/capitalist/corporate playbook for 40 years.
And it worked. Instead of a liveable retirement income for years of service, employees now get stock and paltry RSP matching. All under the guise of the “benefits” of increased employee control, independence and sustainability. Employees were lied to and bullied with fear tactics that they should want crappy 2% RSP matching because the evil socialist DB pension plan admins would piss away all their money and leave them with nothing.
All it really did was allow employers to cut back benefit costs substantially. Same idea in the public sector. Demonize unionized employees so that they don’t give the non union workers something to strive for. We don’t want them getting any ideas about how things could look for them.
If the DB pensions are solvent with average matchings from the employer (governement) then great. If the DBs start to require cash injections from tax payers to keep them solvent then they will be done away with. The fact of the matter is tax payers can not and should not be on the hook to keep DB pensions solvent, which is what the discussion is.
The Following 2 Users Say Thank You to Weitz For This Useful Post:
Maybe instead of blaming the people who are paid fairly in retirement, the people who earn $50k or $60k should start blaming their employers for hoarding profits and underpaying them?
Why do we always want to drag those who get to retire comfortably down? Why aren’t we trying to fight for better retirements for those getting screwed?
Misery loves company I guess.
The money has to come from somewhere. Why do you assume every employer earns so much profit that they can pay DB to all of their employees? Do you think BestBuy or London Drugs can just take on hundreds of millions more in liabilities in a retail climate where former retail giants like Sears are going bankrupt? How about your local pizza joint, liquor store, or landscaping company? Can they just jack up prices by 30 per cent to pay everyone better and provide them with 30 year guaranteed pensions?
Then there’s the skewed notion of who’s wealthy. When I hear someone who earns $90k (likely married to another person who earns $80-120k) say the wealthy should pay more I just have to chuckle. You are the wealthy. You’re one of the winners of the modern economy. Defending your privileges as sticking up for the common man is self-serving.
If we want to sustain our current programs and services (never mind improve them) everyone will have to pay more. So a GST/PST of 15-20 per cent. Higher income taxes across the board. And increased retirement age. For everyone.
__________________
Quote:
Originally Posted by fotze
If this day gets you riled up, you obviously aren't numb to the disappointment yet to be a real fan.
Last edited by CliffFletcher; 04-05-2022 at 08:26 AM.
The Following 2 Users Say Thank You to CliffFletcher For This Useful Post:
Yeah, it's baffling that people don't seem to think that there are actuaries whose entire job is to ensure that these pensions remain solvent and properly funded given the expected lifespan of the members. The ratio of teachers currently working to the # that are retired is basically meaningless when over 1/4 of their gross salary is going into pension contributions. 30 years of that level of contributions can easily fund the retirement benefits they'll receive.
I don't get this line of thought. Of course there are actuaries. But, there were actuaries in cities like Detroit where they had enormous issues surrounding their pensions. It's not just super simple to make sure that these things are properly funded, but that isn't even the main concern. It's that you calculate what is required for proper funding and it's a pile of money...as evidenced in your next sentences!
Quick question on that teachers pension though. That 25% that is contributed...are the employees themselves putting in 25% or is that made up of their contributions and the match from their employers?
Then there’s the skewed notion of who’s wealthy. When I hear someone who earns $90k (likely married to another person who earns $80-120k) say the wealthy should pay more I just have to chuckle. You are the wealthy. You’re one of the winners of the modern economy. Defending your privileges as sticking up for the common man is self-serving.
Why would you chuckle? I know lots of younger professionals making their 100k who believe the wealthy should pay more taxes while recognizing that includes them. I'm one of them.
The Following 3 Users Say Thank You to OptimalTates For This Useful Post:
If we want to sustain our current programs and services (never mind improve them) everyone will have to pay more. So a GST/PST of 15-20 per cent. Higher income taxes across the board. And increased retirement age. For everyone.
So basically in line with the EU?
The Following User Says Thank You to Roughneck For This Useful Post:
I don't get this line of thought. Of course there are actuaries. But, there were actuaries in cities like Detroit where they had enormous issues surrounding their pensions. It's not just super simple to make sure that these things are properly funded, but that isn't even the main concern. It's that you calculate what is required for proper funding and it's a pile of money...as evidenced in your next sentences!
Quick question on that teachers pension though. That 25% that is contributed...are the employees themselves putting in 25% or is that made up of their contributions and the match from their employers?
We’re these pensions every fully funded or we’re they set up as ponzu schemes?
It’s hard to pinpoint the exact date, pretty sure it was a Tuesday though. Careful Slava that statement was dangerously close to being a borderline personal attack, and I’d hate for anyone to think you’re being hypocritical.
Quote:
I know I’ve never advocated trickle down economics.
By my recollection you complain almost anytime tax increases aside from a PST are suggested. Maybe trickle down isn’t the right term because while you want their tax policy you’re at least not suggesting it will trickle down to anyone?
Quote:
But, at the end of the day it’s a pointless discussion where you constantly fire out red herrings and borderline personal attacks.
The money has to come from somewhere. Why do you assume every employer earns so much profit that they can pay DB to all of their employees? Do you think BestBuy or London Drugs can just take on hundreds of millions more in liabilities in a retail climate where former retail giants like Sears are going bankrupt? How about your local pizza joint, liquor store, or landscaping company? Can they just jack up prices by 30 per cent to pay everyone better and provide them with 30 year guaranteed pensions?
It’s not as if these employers are offering DC pension plans to their employees either. Your questions require more data to fairly answer as you can’t claim each business would need to raise their prices by x amount without knowing what their current profit margins are, even you’d admit that comparing a major corporation like Best Buy to a local pizza place or landscaping company is disingenuous given the context. I’ll say this much though, I’d be willing to bet that in the overwhelming majority of cases these businesses could pay their employees more, maybe not 30%, but that’s an arbitrary figure anyways.
Quote:
Then there’s the skewed notion of who’s wealthy. When I hear someone who earns $90k (likely married to another person who earns $80-120k) say the wealthy should pay more I just have to chuckle. You are the wealthy. You’re one of the winners of the modern economy. Defending your privileges as sticking up for the common man is self-serving.
Why are you attacking those people when they may be in favour of paying higher taxes themselves? Also, a household income of $200k, while definitely an above average household income, are still likely a family that has to rely on working everyday to maintain what they have. Whether that be running a small business or being employed they are not the “winners” of this economy, they’re generally people who have to work for what they have. The truly wealthy winners of the modern economy are the business owners who keep making more money without lifting a finger except to lobby for lower taxes while finding new and exciting ways to make sure the working class people who they employ and who buy their products can’t keep up with the pace.
Quote:
If we want to sustain our current programs and services (never mind improve them) everyone will have to pay more. So a GST/PST of 15-20 per cent. Higher income taxes across the board. And increased retirement age. For everyone.
I’ll give you credit, you really do your best to try and convince people that what will actually help them in the long run is somehow going to be bad for them. As much as I don’t think a PST should be the first option, it’s interesting to watch you use it as a scare tactic when the price for most goods that would be exempt has already gone up almost that much in the last year and people are stuck paying for the increase as is without any gain. Meaning capacity was already there at least to some degree to do the things you’re trying to convince us that we wouldn’t be able to handle, and yet you’ve been making these types of statements on this board for about as long as I can remember. I guess you prefer to just continue kicking the can down the road. Oh well.
If we want Northern European quality public services, we need to be willing to pay Northern European tax rates. The problem is Canadians want Northern European services at closer to American tax rates. Or they want corporations or ‘the rich’ (defined as anyone who earns more than twice as much as they do) to pay. Or they don’t think about who pays at all.
Basically, I want Canada to be more like Northern Europe. Better and more accessible public services, sustained by both higher taxes and hard-headed discipline around public sector spending and debt. Despite having a younger population and weaker public services, Canada has a higher debt-to-GDP ratio than Germany, the Netherlands, or Sweden.
__________________
Quote:
Originally Posted by fotze
If this day gets you riled up, you obviously aren't numb to the disappointment yet to be a real fan.
Last edited by CliffFletcher; 04-05-2022 at 09:50 AM.
