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In the US we have "defined benefit" and "defined contribution" plans. One difference is that the payout of the "defined contribution" plans explicitly depends on how well the economy and the investment decisions of the provider work out, whereas the burden of coming up with the benefit remains with the provider in defined benefit plans. State sponsored pensions funds, such as CALPERS provide what they can from their investments and the State of California remains on the hook for the balance, it what CALPERS provides doesn't meet the definition.
Defined contribution plans seem to work out better for the provider than for the beneficiary. That is why there is such pressure for companies that provide "defined benefit" retirement plans to label them "unsustainable" and convert them to "defined contribution" plans. The state plans are likely to be "re-defined" benefits when all is said and done. Voters getting $20,000/yr or less from Social Security are not likely to be terribly sympathetic to retired officials getting >$75,000/yr from CALPERS.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 13th, 2011 at 05:56:32 PM EST
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