Again, no. A ponzi scheme is blatant fraud and pension underfunding is corporate deficit and/or failure. So already by definition, they are not ponzi schemes... I dont understand your persistance in using this term. Most companies seeing the liability risk too great have switched new employees to reduced benefit plans or started defined contributions plans, limiting the liability of pensions in the future. New Air Canada employees are funded under a different pension benefit system, one that is sustainable unlike it's previous government-owned public service like commitments. Canada Post switched and new employees starting in 2010(might not be exact) have defined contribution plans.Raident wrote: ↑Jul 16th, 2017 11:07 pmNearly every company will fail someday - according to Wikipedia, there are only ~5,500 companies that are over 200 years old, the majority of which are small family businesses in Japan where the company's history is closely intertwined with the family's lineage.
Of course, no company is run with the intention of going bankrupt, but in a capitalistic society where time is nearly infinite, it's pretty much an inevitable end result. Sears, for instance, topped the Fortune 500 list back in the 1970s - who would've imagined that it would end up in such a pathetic state? Nonetheless, the lack of acknowledgement of this inevitability that makes me wonder if these pensions are Ponzi schemes.
Companies do go out of business. That doesnt mean their pension plans are underfunded or that they are ponzi schemes (which you really want to call them for some reason). Some businesses go out of business and some or all of their creditors still get fully paid (pension fund being a creditor). Bankruptcy can sometimes just be a cashflow issue.
And if these defined benefit plans are scams, try compiling a list of pension plans that have cut the benefits of retirees vs. plans that have continued to pay as agreed to their former employees. Despite the liability and cost, you will find more in the latter. Even some public service pension plans are self funded and have giant surpluses (eg. HOOPP, Ontario Teacher's, see the link in my second post) meaning they are more than funded and have extra money left.
Remember, a defined benefit plan doesnt even have to be that valuable. A defIned benefit plan could theoretically say they will give each retiree $1 per year and that makes it a defined benefit plan. A defined contribution plan could say that a company saves 50% of an employees salary each year. In this case, the defined contribution plan is much nicer. What makes or breaks a pension plan is whether what a company promises can be delivered or not.
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