Keiser Report: Pensions Going Bankrupt (E919)
In this episode of the Keiser Report Max and Stacy discuss retirement: the ugliest word in the English language, which, nevertheless, many Americans will no longer have to encounter. In the second half Max interviews Constantin Gurdgiev, Professor of Finance at Middlebury Institute of International Studies, about the debt situation in Europe and the Irish water fiasco.
Please consider that when we have already moved from a “Defined Benefits” regime to a “Defined Contributions” system we have already lost the war without even realizing what the war was on or when it began or how it was being waged. The war was on our pensions and we lost.
By Kevin A. Schulman, M.D., Barak D. Richman, J.D., Ph.D., and Regina E. Herzlinger, D.B.A.
The New England Journal of Medicine, June 26, 2014;
A defined-benefit program provides specific benefits to enrollees when those benefits are needed. For example, a defined-benefit pension program provides payments of specified amounts to retirees. Defined-benefit health insurance, such as Medicare and most private plans, pays for specific health care services when eligible beneficiaries demand such services. In contrast, a defined-contribution program — like most typical 401(k) retirement plans — provides certain financial support to beneficiaries before any benefits are consumed, and beneficiaries then spend those funds to meet their eventual expenses. In defined-contribution pension plans, only the financial contribution is defined, and the extracted benefits are determined by the payment and investment preferences of the beneficiary.
To put in simple terms in a in defined-contribution pension plans you just pay without any obligation or promise or future returns which will likely be less than you expected or need.