It doesn’t do the job, but it’s cheaper for employers and that’s really all that counts! Gin and Tacos:
Children born since the year ~1995 will need to have the concept of a pension explained to them. It will be about as relevant to their lives as the carburetor, the telephone switchboard operator, and the Victrola. And we will have to explain that after St. Ronnie descended from heaven and a lot of people in expensive suits spent ten years doing blow, corporate America came up with this great idea: rather than having a defined benefit, why not have defined contribution retirement plans? It would cost employers far less, sure, but it would benefit the working stiff, too! Why be saddled to a defined benefit when you can invest your money in Mutual Funds (remember when those were all the rage? Gosh, I Love the 90s!tm) and watch it grow, like, 10-15% per year! Hell, maybe 20%.
The internet came along at just the right time to make this seem plausible. Look! Websites! E-Trade! You can be your own stockbroker! Sure, nobody really understands any of this shit, but… Mutual Funds! A trained monkey could pick those, and our Investment Professionals take care of the rest. You just get a drink with an umbrella in it, sit back, and watch your money grow.
Now that this new era of capitalism is mature – if any aspect of such a scheme can be so labeled – it turns out that the estimates of future gains may have been slightly exaggerated. Maybe we all were a tad optimistic. So maybe it has been more like 5% annualized, if you’re lucky. And then there’s the Investment Professionals. Boy, we should maybe have screened them a little more carefully, or supervised them a little, or maybe not incentivised gambling with your money for short-term gains. And then there was that whole real estate thing, which no one could have foreseen. Everyone knows that real estate is a good investment! OK, OK. Lessons learned.
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