Wednesday, August 13, 2014

Detroit Pension Problems

One thing that the problems with Detroit's pensioners point out that workers would be better off with a defined contribution plans if the money is registered in their name rather than defined benefit plans. I know that in theory that the defined benefit plan should pay more and also be less of a problem for the future pensioners, but if in the future the pensioners find out that their pension plans are not properly funded, they can end up big losers.

If I was starting out working I would go for the defined contribution plan every time. I rather have my pension money in my hot little hands and go to some trouble in looking after investing the money than end up with no or little in pension money when I need it.

The other thing is that if you switch jobs in your working career, a defined benefit plan pays you very little when you are young. When funding a defined benefit plan, employers put a lot more into pension plans for older workers than younger workers. So if you are young and switch jobs you get little. I rather have a defined contribution plan and each worker gets the same amount of money each year.

On my other blog I am today writing about Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF) ... continue...

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