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View Diary: New IRS report confirms upcoming retirement crisis (95 comments)

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  •  doesn't (0+ / 0-)

    a bankrupt company stop funding? what percentage might that wind up being?

    •  right, so the unfunded part is at risk. (0+ / 0-)

      IIRC per the pension protection act of 2006, pensions have to be 80% funded or so.

      •  and if the money is (0+ / 0-)

        invested in something that loses money?

        Or life expectancy suddenly goes up a few years? because of expensive new medicines?

        the future is not known. Just guessed at.

      •  Of course, the definition of "funded"... (1+ / 0-)
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        RainyDay

        ...is part of the problem.

        By necessity, the definition makes assumptions about future returns and, in the case of pensions with COLA adjustments (which I don't know that many have?), inflation. Of course, assumptions are also made about the age folks die at and those may be off if there are too many medical breakthroughs.

        Some of the ROI assumptions are absurd, although these are being reigned in within the private sector by the pension protection act. But I think, for example, CalPERS is still assuming a return of over 7%, which is pretty absurd. The public sector plans should be held to the same standards that the private sector plans are.

        And, I have no idea why 80% funded is good enough - it should be 100%! Are they planning on killing 20% of their pensioners the day before they begin to collect benefits?

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