"Although non-fraudulent in intent, a pension fund can share some of the characteristics of a Ponzi scheme in that, except during the final period of the fund's life-span, the outgoing cash used in any month to pay pensions is usually taken from the incoming contributions of the active members of the pension scheme. In a year of poor equity returns such as 2008, a pension fund can often perform worse for its members than a Ponzi scheme."
Saturday, December 27, 2008
Auto-workers take note
Somebody wrote in Wikipedia:
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4 comments:
Boy! That's scary!
Bear in mind that whoever wrote this may not know what he is talking about, but he got it past the "wikipedia police"
Some pension funds invest money, others just play a shell game. I believe GM, for example, is notorious for handling it's pension fund as an unfunded liability... assuming I know what I'm talking about [g].
Certainly when I lived in Youngstown OH people realized pensions run by labor unions were a disgrace. I would run into people who found out they were [pretty much] forced to make contributions when working, but at retirement found themselves disqualified because they didn't get vested in and the money was gone. Sometimes the Union leaders would just plain old steal the money.
um, they didnt get vested in because their work record was erratic.
Stealing the money was illegal of course, but that didnt stop it from happening.
this is precisely why i don't believe in pensions.
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