Get employee. Put money in pension fund. Let fund grow. Wait 20 years earn interest and pay employee.
end.
What you are describing is gross mismanagement of funds, and blaming the rightful recipients of funds for the existing.
So if you're putting money into a system, and you know it's not enough to cover your benefits, you're not exactly just a innocent victim here. You're benefitting from a system that you know is broken.
The money did exist. Workers pay into the pensions as part of their compensation package.
Chicago borrowed against the actual pension accounts and corruption/incompetence drained them. Then they did scoop and throw methods for two decades to avoid having the pensions land on their heads.
There is a ton or corruption in Chicago. I have a friend who works for Idot. They have a lot of workers on the payroll who are making 6 figures. My friend has never seen these people who are supposed to be his co-workers show up for work, and when he asked he was told "Don't bring it up. Over your head. We can't fire them."
Firstly pension funds are conservative in their estimates, they aren’t growth funds.
And what precisely is anyone supposed to do? NOT put money into a fund ?
The only option other than a pension plan is to put it in a more risky fund. Which means your investment would be blown out post 2008.
AND that means your benefit from that job changes, making it less likely for you to join a government job -at all.
There’s a huge amount of discussion here that seems to have nothing to do with pension funds, but some bizarre form of fund which you should be blamed for partaking or being a dependent of through your job.
One is a fund you pay into and at the end you get whatever it's worth.
The other is a scheme you pay into which guarantees a set payout at the end. It's that which often causes problems, because the scheme has promised payouts that significantly exceed their investments if they have assumed greater growth than they get.
Not really.
Pensions are partially the outcome of wishful result-oriented thinking ("workers should have pensions they can depend on, so make the promise first and then the solution will happen").
That’s a bond. Why does that have anything to do with a pension ?
And who in his right mind plants a bond and links it to a pension ? How does that even work?
A bond is a loan. That means the firm or institution is taking a loan.
A pension is the opposite of that - it’s money taken from employee payments and added to a conservative fund with a time horizon of 20-30 years. This allows them to make long term plans which avoid the risks of high beta and risk stocks or deals.
So as your economy goes up, your fund goes up and you pay people off with the interest.
Something changed/went wrong, long before you got to the bond.
There is nothing more "conservative" in investing than bonds ( particularly treasury bonds ).
Nobody "plants" a bond and links it to a pension. A pension buys bonds, stocks, etfs, etc which hopefully grows in value or pays healthy interest.
The problem is if the pension doesn't do as well as expected or the ratio of workers to retirees gets too skewed and they can't meet their defined payouts.
But even they will not produce enough for the benefits that are promised: as soon as someone outlives their contribution the fund might not be actuarially safe. It turns out it is exceedingly difficult to mitigate all risk in a retirement fund, and government makes the promise that if they fail, they will pass the bill to someone else.
Pension funds are truly evil.
That's the problem, politicians don't care about 20 years from now. They care about their next election.