*All pensions invest in the stock market* I believe that statement is untrue. Re...

yequalsx · on May 2, 2011

I like to know of an example of a pension system in the U.S. that does not invest in the stock market. I'm in a defined benefit pension system and regardless of how the stock market does my benefit is guaranteed by the state. Of course, the actuaries who set up the pension devised it so that it the guaranteed benefit would very likely be able to be met by the contributions I make to it.

There is a push by some politicians to get states to declare bankruptcy so that they will be able to renege on their guarantee.

georgieporgie · on May 2, 2011

I like to know of an example of a pension system in the U.S. that does not invest in the stock market

Social Security, as mentioned in the Wikipedia link. Additionally, there is no reason a private pension couldn't be directly funded.

I'm in a defined benefit pension system and regardless of how the stock market does my benefit is guaranteed by the state

Which is what I meant when I asked about being invested in the stock market. While your pension may be funded via stock market investments, for all intents and purposes, your pension is unrelated to the market. With my 401k, I am very much at the whim of the market. If I hit 65 and my anticipated returns don't materialize, there's nobody for me to sue. Thus, pensions are not directly comparable to 401ks.

There is a push ... guarantee.

Given the unrealistic contracts that were agreed to, in light of our near-term economic realities, bankruptcy or mass firings and re-hirings are literally the only way this problem can be addressed.