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#93 | Posted by Danforth at 2026-09-22 02:45 AM
Funding pensions is not a pyramid scheme.
Defined-benefit plans are the very definition of pyramid scheme (relying on and requiring an infinite economic expansion of issuing entity to support the accruing benefits of both current and past employees) ... which are very difficult to manage, having to use complicated formulas because many variables such as the rate of return, longevity, economic performance etc. are unpredictable and uncontrollable and can quickly become underfunded when conditions of any of these variables change. Like all pyramid schemes, they are more and more difficult to support over longer period of time.
www.clientfirstcap.com - 2026-03-12
|------- "Across the United States, underfunding remains a widespread issue - particularly in the public sector. For example, state pension systems collectively reported about $1.27 trillion in unfunded liabilities in recent years, reflecting the gap between promised benefits and available assets.
Even with improvements in investment markets, the national average funded ratio for public pensions remains around 80% or lower, leaving many systems with substantial funding gaps.
... critics sometimes draw comparisons because pension plans depend on ongoing contributions and investment returns to sustain benefit payments.
The key difference is that pension plans are regulated financial institutions,..."
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Except for the fact that they're (obviously) "legal and regulated and 'insured'", the reasons that there are so few of the DB plans left and more of them are getting frozen or capped, and so many (particularly, public pensions) are underfunded just underscore what happens when the laws refuse to accept economic realities, when those can be stretched over long period of time.
Anyway, just because they're not legally considered a pyramid scheme - only "walk and quack like a duck" - the economic reality is (at least in private sector) that the time of DBs is long past its prime, and many of them (not TBTF, which would get bailed out by the taxpayers) are generally on life support until the next market crisis or extended period of economic underperformance.
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"I'm not really sure why so many people are hung up on money as a measure of success"
money is measurable....
my daughter is taking a different job that pays significantly less. she's leaving a large NY law firm to move to DC to work for a Senate committee as counsel.
She's totally excited and the pay drop doesn't bother her a bit.
And this move will be seen as a step up in many ways. Even though it's for less money.