401Ks are a disaster: Column

[Ratty]

170. That funding point it certainly true for my pension

For decades many employees paid nothing into CALPERS because it was completely self-funded. The investment returns were more than adequate to keep the fund in good shape. With the great recession it suddenly found itself in the red. This is an example of a pension abuse: not adequately planning for economic downturns. We all certainly pay into out pensions now and I'm happy to do so. They were other shenanigans that occurred with CALPERS when the longtime head was ousted by a board beholden to corporations, after which the fund never regained the success it had achieved in years past. Someone made out like a bandit and it wasn't the workers. But that's another old story.

Republican Gov. Pete Wilson borrowed 2 billion from CALPERS to close California's budget gap and Republican Arnold Schwarzenegger tried to do the same.

Admittedly the pension system isn't perfect but that doesn't mean it should be chucked. Like anything you improve it until it gets better and better and you learn from your mistakes. And the alternative can be much worse. Yes, people have gotten wealthy from their 401Ks. I had an argument with my RW sister in law about pensions. She was a banker and had the knowledge, the motivation, and the disposable income to manage her investments and now in her retirement she is very well off (her husband, a state employee collects a nice pension himself). Naturally since her experience with 401Ks was a lucky one she disparaged the parasites who suck up tax-payer money for their monthly cash bonanza. I made her mad by asking if what she was saying is that people who are too stupid to manage their investments deserve to be destitute and out on the street.

Many if not most people don't have the knowledge to manage their investments. They don't have the motivation - they have bigger more immediate fish to fry, like feeding and clothing their families. They don't all have tons of disposable income like my sister in law. When their 401Ks fail they are destitute with few options. Those people who love their 401Ks and have done well usually forget about them.

I heard a quote once about social security that has always stuck with me and I think it applies to pensions as well. Social security was never intended as a get rich scheme. It was always intended to keep old people off the streets.