[PaulDavisThe1st]

Republican political philosophy.

Company-administered pensions offered little to no opportunity for a financial services middleman to collect a percentage, and involved employers promising their employees things that might (might) cause some pain to the employer to deliver.

So a story was made up that "you can do better on your own investing in the market", thus allowing Fidelity et al. to collect their cut, and to let employers off the hook.

And of course, like all other Republican political policy that asserts that you are responsible for yourself and nobody else is, it has all turned out swimmingly, don't you agree\?

[marcus0x62]

They also involved a not-insignificant risk to the employee in the event of bankruptcy, or losing their job before eligibility for full retirement. A close relative put in more than 20 years at Eastern Airlines.

He collects less than 10 cents on the dollar from the PBGC backstop since Eastern went bankrupt.

> So a story was made up that "you can do better on your own investing in the market"

In his case, that story was true. After Eastern, he took a job at FedEx. FedEx killed their pension plan and the employees largely had to save for retirement via 401k accounts. He lives off of that money quite nicely now. The Eastern pension buys him a nice dinner once a month or so.

[PaulDavisThe1st]

This is an issue with the way corporate pensions are/were run, not the basic concept. The fact the the pension fund members got shafted in favor of other creditors is a detail that also stems mostly from, well, not exactly Republican political philosophy, but capitalism itself (in the sense that it is a system predicated on the concept that the rewards of human ventures go primarily to those who invest capital rather than labor or ideas).

Certainly the facts are not contestable: plenty of corporate bankruptcies left their employee's pension funds screwed in a way that does not happen with a 401k plan. But it didn't have to be that way, it was a choice (of our legal, political and economic system). Other countries have made different choices, for examples.

[marcus0x62]

Sure, if the facts were totally different, the resulting circumstances would be different as well. But they aren't, and your thesis that these circumstances were principally caused by Republicans is supported by no evidence that I can find.

If you look at the history of the 401k, specifically, which you originally claimed was some sort of republican conspiracy to generate asset management revenue for financial firms, you'll see more Democrats than Republicans involved. For instance, the law that created section 401(k) of the internal revenue code was passed by a congress where Democrats maintained a majority in both houses, and was signed into law by a Democrat (Jimmy Carter.) In the intervening years, every single Democratic president has supported (or strengthened) the status quo. Bill Clinton signed SIMPLE plans into law, Obama championed the "MyRA" thing bolted onto the side of IRAs, etc.

[scarface_74]

Yes because it’s much better to let the company be responsible for your retirement and depending on the viability of your company.

How many times have you changed jobs in your career? I’m on #9.

[PaulDavisThe1st]

I'm nearly 60. I've been self-employed for the last 25 years. I worked at precisely two jobs that offered any sort of pension funding at all.

Next month, I'll be forced to cash out the pension funds from a multinational corporation I worked for for 18 months back in the mid-1980s. $14k. I'll take it :)

The point you're making is predicated on the idea that there are only two options: company-owned-and-managed pension plans (typically defined benefit) and individually directed investment based strategies (i.e. 401(k)).

However, the problems with both of these (and yes, there are problems with both of them) can be addressed by socialized pension schemes. Make them opt-out (opt-in if you must): the vast majority of people will opt in, the plans will have enormous financial stability (some would argue based on too much economic power, which we can already see said about e.g. Vanguard), and people would not be forced to grapple with investment questions they are generally ill-equipped to answer. For those that really think they can do better by themselves - go for it.

[scarface_74]

Because Social Security has been so well managed…

[PaulDavisThe1st]

How has it been badly managed?

[scarface_74]

Really? In the next 20 years less money will be taken out for current employees than needed to meet current obligations. The “trust fund” is a lie.

Either taxes will have to be raised on workers or benefits cut. Social security taxes have been used as part of the current general budget since the 70a

[PaulDavisThe1st]

Also, see myth #4 here: https://www.ssa.gov/history/InternetMyths.html

and myth #5 here: https://www.aarp.org/retirement/social-security/info-2020/10...

[PaulDavisThe1st]

This was known from the beginning.

I'm not a fan of the PR that surrounded the introduction of SS in the USA, but the technical aspects of how it was intended to work have not changed, and have worked as intended thus far. Fixing the demographic issues is relatively easy: just remove or increase the cutoff for SS taxes.

[refurb]

> Company-administered pensions offered little to no opportunity for a financial services middleman to collect a percentage

This comment is laughable with it's "blame the Republicans". It's incredibly misinformed.

Who do you think manages the pension fund? Do you know how much money they make? If anything, getting rid of the pension fund eliminates the middleman.

The answer is easy - there is no long-term financial liability with a 401k match. The company gives the money and their obligations stop.

Pensions are notorious for creating future liabilities that companies can't predict. So they end up taking a hit to their financials in 2020 for a pension they awarded back in 1995.