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Pension ambassadors: Who’s praising DB plans and why?

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Joe Nunes:

“They don’t necessarily grasp that members make contributions; further, the idea that most of a plan’s income comes from investment return,”

This is one of my favourites. It’s as if the ‘income fairy’ drops money in the plan that isn’t earned and you should only care about benefits that are paid for directly by contributions. Ignore the fact that the contributions made in the past could have gone to other productive uses.

I still love DB but we need to be clear on what the benefits cost, what investment risks are being taken, and who reaps the rewards and suffers the negative consequences for those risks. The truth about many public plans (not CAAT) is that all the rewards are with the members and all the negative consequences are with the taxpayers.

One of my favourite Malcolm quotes of all time….”if someone is receiving a guarantee, then someone is extending a guarantee”

Friday, October 27 at 11:33 am | Reply

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