youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
But that actually highlights the point: At the individual level, the only way to "avoid risk" is to put your money into money market funds currently earning 0.1%.
Pension funds, on the other hand -- assuming they are responsibly managed and don't overpromise -- can (relatively) safely take more risk over a very long period of time and no one participant shoulders the "market risk" where the timing of their retirement determines how much they get -- and indeed, whether they can retire at all.
Again, much like insurance, the goal of a pension fund is (or should be) to offload "market risk" away from the individual. It can be done responsibly if invested appropriately (and again, if they don't overpromise benefits). In other words, many people would rather forego the potential of 10% returns on their 401K if they could participate in something that would pretty safely be able to assume (say) 5-6% returns with the risk spread out among all participants to smooth out the ride.
Seeing as this would be optional, I don't know why those who don't like the concept would oppose it. It's not like I'm suggesting the end of the 401K as Teresa Whats-her-name was doing a while back.
Zig, sadly I think you're dreaming. It's a pleasant dream and I like it. But it's a dream.
Pension funds might be able to invest somewhat more aggressively than individuals and still guarantee 100% successful results, but I don't think in today's markets their ability to do so is as significant as you are portraying.
Most pension funds, Illinois comes to mind, are screaming that their underfunded status is the result of "poor market performance." I think that tells the story.
I have no issue with pension funds "offloading market risk from the backs of individuals" as you put it. But, it absolutely must NOT be done by simply putting that risk on the backs of others. Having tax payers or newer entrants to the fund shoulder the expense of paying guaranteed amounts to older plan members due to crappy market performance cannot be allowed to happen. Kicking the can down the road to the younger folks has become much too popular these days!
I will note that my son's 401k (Fidelity managed) does offer a stable value fund that is paying a few percent and looks attractive. Does your 401k have anything like that?
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