Pensions should be privatised
With pension time bombs sprouting across liberal democracies and more and more pensioners being brought below the poverty line this house would privatize pensions. This proposition supports a gradual phasing out of government pensions to be accompanied with a regulatory framework to ensure fair competition and risk transparency in developed liberal democracies. The case put forth addresses the suitability of government for the task at hand, the effect of government intervention on private enterprise, the suitability of the private sector for long-term planning and the impact on government and individual of these different systems.
We the opposition; 'challenge' the definition proposed above as we feel it is vague in not pronouncing what countries these plans are being suggested for. We feel the definition should be restricted to the economies of the U.S and U.K as privatization of the kind suggested is already in practice in greater Europe.We would further like to define pension funds and insurance companies as contractual saving institutions( A C.S.I is an entity that collects installments over periods of time to return them with interest at a later date). We would also like to draw attention to significant differences between the U.K/U.S(market-based financial systems) where we feel complete privatization will not work and (Japan along with) European countries such as Italy,France and Germany(bank-based financial systems) where privatization has been successful because of differences in financial systems and culture.
Government is fundamentally unsuited to running pension schemes.
The way democratic governments function, with frequent elections to replace officials and constant reshuffles to preserve public support allows, on the one hand, for representation and accountability but, on the other renders government fundamentally unsuitable for the task of running enterprises that require long-term planning and flexibility. Having 8 executives in change of pensions in 10 years is a recipe for bad management. As Nicolas Moreau explains: "Without stability, there can be no concerted effort for change and, consequently, rather than making serious inroads into addressing the pensions problem, we...continue to spin plates."[[http://www.telegraph.co.uk/finance/comment/7442644/Pensions-problem-cant-be-solved-by-ministers-endless-musical-chairs.html]]. This structural inadequacy can be explained with reference to political shortsightedness.
Pension funds as an enterprise require long-term planning to prevent crises. Politicians, however, are structurally inclined to favour short-term benefits. Pensions display a strong inflation-bias. When a politician is faced with a choice of reducing pensions to prevent a crisis in 10 years or increasing pensions to win an election that year they will choose the latter. While reducing pensions can be necessary to preserve the pension system in the long-term, acting thus incurs severe electoral penalties which politicians, who won't be around in the long-run, do not want to take on.
Pensions are a thankless business which requires objective, long-term evaluations which governments cannot offer.
The proposition seems to be suggesting that private companies/organizations bailed the government out; this in reality was not and can never be the case.
Usually the reason people(however not the proposition) speak for privatisation is to favor the increase of market efficiency via self-regulation. It is understood that financial institutions will have to regulate themselves in the long run in the free market; when the government fall back option is not available. However, practically this has never been the case.This self-correcting mechanism that privatization supporters tout never occurs. Free banking(thus private pension schemes) causes counterfeiting, wildcat banking(Over-issuance of a currency so it cannot be converted) and fraudulence.
In the U.S free banking period; bank failures in Indiana, Minnesota and Wisconsin are prime historical examples of where
(privatization) free markets fail. The central bank was created out of necessity ; reverting to the mistakes made in the 1970s is not a step forward but two steps taken back. "Stock market failure"
The reason most people prefer public pensions over private even when the payout is significantly lower is because government sponsored contractual saving institutions(entities that collect installments over periods of time to return them with interest at a later date) offer risk free options whereas private companies do not and can not offer up that sort of fool-proof security.
Government Presence in the Pensions Sector Reduces Quality of Pension Services
The presence of government in the pensions sector, as in most others, "crowds-out" private providers of pensions. Private providers of pensions are supported only by their pension funds with occasional risk-sharing with other financial services. This forces them to make realistic and sustainable choices as to the rates they change and the level of pensions they give out. Governments, however, are able to mask inefficiencies, corruption and unsustainable practices by drawing on taxes and be such means as increasing the retirement age as has happened in Greece.[[http://www.commonwealthfoundation.org/research/detail/health-care-reform]] This renders most pension practices uncompetitive, forcing them to specialize in client niches as the bulk of the population is bought off by promises of high pensions by the government which are unfeasible and lead to measures such as the increasing of the retirement age, stealth taxes which in the whole leave pensioners in a worse off position than under a properly regulated market.
The inherent lack of competition of the pension sector reduces choice and quality of services. The effect the government sector has on pensions is similar to the "crowding out" of private options observed in the healthcare sector. [[Ibid.]]The long-term nature of pension funds aggravates this situation by pushing back costs into the long-run. While the government remains active in the provision of pensions other public services will be unable to fully develop and make use of their increased efficiency and flexibility.
This is not to say that there is not a legitimate role for government. In support of this motion we advocate a gradual privatization of pension schemes with a phase-out of public schemes. We would regulate the market so as to promote competitiveness and inform consumers of the potential risk associated with each
This rather weak argument that pension should be privatized on the sole basis that Private providers cannot 'handle the competition' provided by Public providers needs to be revised extensively. [[Mishkin&Eakins(also cited earlier, same book different page) pg584]]
Stock market failure in 2000(Specifically falling stock prices in the 2000-2002 period) wised people up to the problems with privatization. 70%+ private pension plan assets are based in the rather unreliable stock market. "The biggest obstacle to privatization is that funds diverted into private accounts will not be available to pay current retiree's benefits.This exacerbates the problem rather than solving it." analysts suggest the cost of a fully-privatized pension plan would be unaffordable(whereabouts 100 billion U.S.D) People retiring today will only receive a 2.2% return and a 30-yr-old employee will literally lose money in absolute terms upon retirement.
Insurance companies are being crowded out by Private pension funds. Both institutions assume risk for their customers in exchange for a fee called a premium. The premium is lower for private pension funds.Public pension plans are preferred over both insurance and private pension funds, for the reason that they do not call for any such fee in exchange for no risk at all. Lower cost and greater security seem to be the dependable impetus to people's preference/choice.
Private Enterprise is more suited to long-term planning and sustainability
Private Enterprise can cope with the need for long-term planning. The interplay between the different managers and stockholders works to instill a strong sense of self-preservation in such enterprises. Private enterprises, when regulated properly, work to ensure their own long-term survival. Unlike the government, their survival is (a) not guaranteed and (b) dependent on efficient running of the business practice. They are forced to make attractive yet sustainable proposals to consumers, who as responsible individuals are allowed to choose from a wide variety of schemes within a market framework that is liberated from government intervention but still supervised to ensure competition. Allowing for the flourishing of private enterprise aligns incentives with efficient, sustainable and long-term minded practices.
The way government schemes function act creates a pension time-bomb. The system works by the current generation of workers providing the pensions for the previous generations. Given the aging population this creates a time bomb that most developed countries are facing. [[http://roomfordebate.blogs.nytimes.com/2010/05/20/can-states-fix-their-pension-problems]]. Chronic failures of this system coupled with public mismanagement leads to an unsustainable situation.[[http://www.manhattan-institute.org/html/cr_61.htm]].
Private institutions gather contributions from workers which then form the basis for their pension which is more sustainable. Moreover, given proper regulation, private institutions will be adverse to excessive risk as consumers will choose to move to other providers. Private corporations are better suited in the long-run than the government allowing for sustainability.
The government via the central bank or federal reserve; usually buffers the risk entrepreneurs need to take in market-based economies. This is done either by bailing out banks that give out loans to risky investors or by protecting them from the get-go.
If the Government does not provide any pension the risk is not neutralized/buffered; as the government will have no part in it.
We cannot afford to lose the fall-back option; especially for senior citizens who need financial security more than the rest of us.
When entrepreneurs feel that there is a fall-back option they are more likely to start businesses. Most people are risk averse and neutralizing risk gives these people incentive to start businesses thus increasing the number of entrepreneurs. Adding risk is a disincentive to starting a business/project just as corporate taxes and set up costs are. Generating greater risk for business equates to greater business failures and thus fewer businesses in the long run. Potential entrepreneurs will weasel/chicken out(as privatization explodes risk); innovation will suffer tremendously and the problem we are trying to face and solve will worsen.
Unions and governments are expected to protest any moves in the U.S and U.K towards complete privatization of pension funds simply because of economics; because the numbers do not add up. Privatization of pension funds may work in France, Italy and Germany where pension plans had little or no importance/relevance to begin with but not in the U.S or the U.K where pension plans/schemes/funds are prioritized above all else.
State involvement in pensions is deleterious to both pensioners and the state.
One's pension is essentially an extension of one's income into retirement. The government needs to provide a framework where private providers can provide pensions which individuals are free to choose from. Rather than "crowd-out" different options the government should help foster competition and the associated variety of retirement schemes to allow individuals to make choices about their own retirements. The present system imposes taxes in support of a system whose inefficiencies mean that pensioners get less for their money than they would under a developed private system. Indeed, the dominant blanket policy pushes many pensioners below the poverty line. [[http://www.financemarkets.co.uk/2008/04/16]] If everyone provided directly for his own pension, as under private pensions, without having to worry about the next generation not sufficing to pay for his pension as he did for the previous ones then he would have a greater incentive to work and save for his retirement, Governments are not the best judge of what is best for each member of society which is why individuals should be afforded their own choice in deciding what is best suited for them.
Moving on from the last point one can also deduce that apart from harming individual pensioners this inflexible, inflation-prone system of state pensions results in a fiscal-burden that is detrimental to the legitimate role of government. The massive fiscal burden that governments take on prevents it from focusing its attention where it is really needed, providing benefits to those below the poverty line, reducing taxes to attract business and regulating the markets. This as a whole is not conducive to the government's role in society.
Presently we have both private and public pension funds competing with each other in terms of quality,cost,revenue and public trust.
If public pension funds were replaced entirely by private options as the proposition is suggesting (but somehow seems not to be aware of it) then there would be no tussle of the sort glorified on the left; forcing quality from competition.
We reiterate crowding out is not equivalent to removing contest/opposition from existing private pension funds altogether. Total privatization of pension funds is however counter-conducive to competitive productivity. Removing the prime/best contender (public pension funds) will not logically improve matters.
Teresa G's book "when I'm sixty four" is an understandable hyper-critical rhetoric on the flaws of the privatisation/privatization of social securities.Enron is a notorious example of the scathing damage that moves reverting to privatization especially in America can result in. [[http://press.princeton.edu/titles/8608.html]] The answer is to push for greater savings, better government/public pension plans not to go back to a system comprising solely of highly risky failed constructs(total privatization of pension funds) that we have suffered enough for; to date. [[http://www.plastic.dsl.pipex.com/unison/public.html]]
401 K plans are a private pension fund operated currently in the united states. They are flawed in three areas one: they are generally post tax; so that a smaller percentage of your income(income minus taxes) counts to your pension, two: the payment is generally fixed; withdrawals are difficult when permitted. And most importantly failure to make one payment or paying a lower installment than required means being forced out(90% 401k plans have this).I.e all previous installments are taken by the economically self-interested corp supposed to provide pension.
Government pension schemes are not a viable or sustainable option.
The impact of decreasing birth rates and improved medical care which has increased life expectancy is burning holes into public finances.[[http://247wallst.com/2010/05/20/state-pensions-face-1-trillion-shortfall/]]. The fact of the matter is that in addition to the fact that government handling of pensions is inefficient, short-sighted and in many cases corrupt, the very model governments use, taking funds from one generation to give to the other, is not longer feasible.
Private enterprises employ savings accounts. Workers are responsible for their pensions and are reliant only on themselves for it. This model allows for sustainability and is safer in the long-run than the time-bomb in public finances created by continuing public pensions.
Proposition note that Russia is a bank-based economy we have pointed out in the debate definition and in our points that we are considering the detriment of such a policy 'only' to market-based economies such as the U.S/U.K.
The proposition has illustrated that government is unsuited to running pensions schemes because of its structual short-sightedness and lack of motivation to plan for the future at the expence of the present. This point was never seriously contended by the opposition, other than to say that private firms also have private incentives.
The ability of government schemes to run at massive losses and push costs into the future is highly detrimental to the development of competitive pension systems that target the general public. This reduces choice and prevents private pensions schemes from developing sufficiently to counter government programs under the status quo. The opposition has misinterpreted this as an inability to stand up to competition, however, there is no competition when one of the competitors can massively subsidize failing programs for decades at end.
Private enterprise given proper regulation is more suited to long-term planning. Private firms have an incentive to protect their assets and plan for the long-term in a way that policy-makers don't. Apart from the fact that executive teams tend to stay in office more than most governments the interplay between stakeholders, management and regulators is such as to dissuade overly risky moves. The opposition countered this by claiming that the absence of government would disincentivize investors, which, apart from missing the point, is not true as shown by the UK private sector.
By conceding, that privatization would work in most of Europe they, at least partly, accepted the three above arguments. It focused its case on the issue of riskiness. Giving two examples over the last century it tried to show that markets are fundamentaly unstable. We explained that both these crises were caused by lacking or faulty government intervention and are not characteristic of markets in general. This system is less risky in that it allows government to target those in real need and the few cases of market failure whereas now we have a debt-ridden government and massive pension poverty as the government in the long-run can't provide what it keeps promising pensioners. We presented the benefits of privatization for both the government in fulfilling its role and pensioners finding higher, reliable pensions that suit their personal needs.
Lastly, we showed that state pensions are unsustainable for demographic reasons. We were accused of being opposed to longer lifespans. All we are saying is that we need to solve the issues this creates with pensions so that governments can focus on healthcare for example.
It is because the status quo is unsustainable, fails pensioners and cripples governments and privatisation clearly works that we are proud to stand in proposition to this motion.
senior citizens should not and cannot be exposed to such naked risk on moral grounds
'A retirement fund that relies on the stock market is simply not a secure benefit...is a sacred compact between the Federal Government and senior citizens.'-[[http://books.google.com/books?id=eaCIX6d3Y5YC&pg=PA4870&lpg=PA4870&dq=pension+funds+privatisation+senior+citizens+take+the+fall&source=bl&ots=7w1L71RHkY&sig=mPDLR2fnKPvY4rsgrAiKw2SytwM&hl=en&ei=p0JrTLqENYiEvAPS8tH1Dw&sa=X&oi=book_result&ct=result&resnum=7&ved=0CDMQ6AEwBg#v=onepage&q&f=false]] 'twas argued in this particular congressional hearing that most senile Americans only have the option of risky privatized securities and therefore privatization is the answer. However we feel that makes no sense; If a child starves that does not entail that all children should starve. We should rather offer safer, more reliable funds to old largely incapacitated people rather than privatize all pensions. The vote at the end of this was fairly close; mainly because the President was not very clear on his exact objective.
It is understood however that Privatizing securities puts older citizens at the risk of being left with no pension by being 'forced out'http://en.wikipedia.org/wiki/401(k)#force-out when it comes to 401 K plans; by not reading the small print in do it yourself retirement schemes and on the whole the public is not rife qualified to handle our own finances and old people need the extra-help. When you are senile the last thing you need is to find out that you don't have retirement pension because you were forced into fishing through financial jargon at a younger age and missed the bottom-line.Insurance policies can also get canceled.The only reliable retirement fund then becomes public/government pension. The removal of that will leave people out on a limb at old-age.An age when we should be sitting comfortably living on definite retirement/old-age funds/benefit.
We respectfully disagree with the patronizing attitude of the opposition towards citizens; senior citizens are not necessarily senile and while were not all bankers we are able, We stand by the core principle of liberal democracies: we are capable of making the best possible decisions for ourselves. Unlike the opposition we welcome the fact that this motion promotes individual responsibility.
There are limits to what governments can do. The crippling fiscal burden of supporting state pensions for everyone drastically reduces governments' ability to focus on and provide for those who fall below the poverty lines and are truly in need of help.[[http://247wallst.com/2010/05/20/state-pensions-face-1-trillion-shortfall/]] By encouraging individuals to pursue private pensions by more efficient private producers and actually take control of their pension,like they do with their income, the government can focus on the minority that falls through the system.
Public pensions are not risk-free. As they are unsustainable we have explained governments resort to increases in the retirement age and extensive taxes, [[http://www.cato.org/pubs/journal/cj15n2-3-1.html]].
While individuals can sue a private company for their withheld pensions or have the ombudsman intervene for them. Claiming your lost benefits from the government is a much trickier endeavor that makes it much riskier that a private but well regulated option.
Germany,france and Italy: economies where privatisation works because Unions and banking trump over risky finacial markets; the most unreliable being the Stock market that both the U.S and U.K depend on in private funding ventures.
If we remove public pension funds/schemes unlike Germany,Italy,France and Japan; a market crash will be impossible to absorb. The four countries mentioned are bank-based economies they are not largely dependent on the goings on of financial markets rather they are dependent on regulations, banks and most business decisions, declines and successes are made via the banking system and not through stock valuation. Ups and downs in the market do not effect/affect them considerably. They can privatize pension funds entirely without worry over the effect on their economy: Over-privatization is a non-issue.
The related definitional challenge brought forth in the introduction intrigues us in that:
(a) Germany, France, Italy and most of central Europe still have state pensions ergo the debate is relevant to them as liberal democracies. We're not trying to prop the status quo.
(b) The UK and the US have smaller government sectors with more developed private pension provision than most of central Europe, [[http://www.oecd.org/dataoecd/61/5/39524851.pdf]] If anything this makes them more suitable for privatization not less. While the transition would still be gradual it would come more naturally than elsewhere.
As regards the issue of financial stability the survival and development of private pensions because of the opportunity given by the relatively limited state pension in the UK and the US is evidence against the argument made by the opposition.[[Ibid.]] Indeed, if the opposition concedes that:
Then why shouldn't it be used, with various regulatory protections (eg. reserve ratios), to increase the amounts available for pensions?
The opposition has provided two examples our of an entire century and put them forward as evidence of the failure of markets, without considering the decades of prosperity they have brought and the fact that both of the crises mentioned were caused, one way or another by inadequate or excessive government intervention.[[http://www.essortment.com/all/causeofthegre_rbtv.html]]
Historical evidence has shown that privatisation has been unsuccessful
Privatization works. The key caveat, however, is that it needs to be done under close government supervision and regulation to prevent anti-competitive practices. When the government devices a good framework for private firms to operate in, consumers will benefit.
Privatization has proven successful in many cases such as British Gas and British Telecom[[http://en.wikipedia.org/wiki/Privatization#Supporting]]\
The core intention of a firm is to make maximize its profit. This can lead it to seek to attract consumers but also to cheat (eliminate opposition or collude to increase prices at the expense of the consumer), The crucial extra step need to ensure that the aim of the firm to make a profit is aligned with its incentive to give consumers the best possible deal is government supervision. While governments are bad at the supply of pension services they are much better suited to supervising markets., This comes down to facilitating information between consumers, CEO's and shareholders (to allow for proper appraisal of risk), to eliminating fraud and enforcing competition law. It was the failure to regulate properly that damaged privatization in Russia and was one of the main causes of the 2008 financial crisis.[[http://shareholdersunite.com/2009/03/07/imf-regulation/]]
The lesson that has been learn is that while private trumps public in efficiency and willingness to carry out long-term planning, supervision is still necessary to ensure smooth running of the system.
Twelve reasons why privatizing social security is a bad idea
Govt. salaries will be reduced; Infamous Fact: There is no money in the public sector; reducing Govt. Pay will aggravate this issue.
The U.S' experience [[http://www.nea.org/home/16546.htm]] reveals that many people fail to understand even the most basic aspects of investment and that most make bad investment decisions (eg. not diversifying investments: asset portfolio diversification is necessary to neutralize risk:basic logic behind mutual funds) [[Alicia Munnell, "We've Already Tried Private Accounts!" in The American Prospect , January 2005]]
Disability funds will be dramatically cut by 19-45%; most of us get disabled in old age.[[http://www.tcf.org/Publications/RetirementSecurity/12badideas.pdf]] (we are not being patronizing as the prop suggests only reiterating fact). The U.S government will be indebted to the private sector; given the debt she's already taking on:This is not a good idea.(bad idea 3); people who are young now will get lower retirement pay or not get any if the market is down.(bad idea 9) Women+minority-races work less,live longer and earn less; privatizing securities will damage future prospects for minorities considerably.(point 10+11)
Tax payers will not bail retirees; again we've already mentioned this lack of security. (point 12)
We see the proposition as being confused about how we've defined the debate. We repeat: we are not including bank-based economies because they are not relevant having already employed this policy and having a different F.S from that of the nations(market-based) who need to make this choice.
So, here goes:
-Superior reliability/dependability of public funds
Unsubstantiated assertion. State pensions are unsustainable (see last argument). In the US "when Social Security began in 1935, the contributions of 17 workers paid for the benefits of one retiree. In 2035 the estimated ratio will be 2.1 workers per beneficiary."[[http://socialsecurity.procon.org/]]
-UK/US are market based
They have relatively smaller government sectors and among the most developed private pension systems in Europe. "Around half" of UK citizens have voluntary private pensions, the highest in Europe.[[http://www.oecd.org/dataoecd/61/5/39524851.pdf] Being more market-oriented is not as devastating for pension schemes as the opposition would have us believe.
-Self-Interests of Corporations
Yes, their search for profit leads them to compete with each other to attract consumers and government regulation ensures competition. This is how mixed economies work. Governments don't have this incentive as they are focused on the short-term (see our 1st point which has not been denied by the opposition).
-"There is no money in the public sector" and privatizing will aggravate this
Exactly. This is partly caused by the fiscal burden of pensions and shows the system isn't sustainable. The opposition are suggesting pension funds are sources of government income. This is the government short-sightedness we talked about (arg 1), spending money they don't have because they won't have to deal with the consequences in 20 years.
-Less money for greater risk.
Unsubstantiated assertion. See example of Chile (Piñera quote) and next rebut.
Lastly, we remind the opposition that the right of definition lies with the proposition. As clearly explained in our 2nd rebut, we firmly stand by ours
Private Accounts Would Primarily Benefit Wall Street
The opposition's answer:The only reason the U.S financial services industry has favored private pension funds is because Wall Street can make huge brokerage fees(incl. premiums) on the billions of dollars that will be invested in private accounts. The N.P.V(net present value) of payments of financial fees to private companies in the case of privatizing securities will be a dramatic profit of $940 billion over 75 years. [[Austan Goolsbee, "The Fees of Private Accounts and the Impact of Social Security Privatization on Financial Managers", pdfsmall.gif PDF, 8 pp, September 2004.]]
However, such funds can never benefit the ordinary citizens of the U.S and other market-based economies. For the sole reason that it is too risky. While and we have said this before; for economies that are largely bank-based the market and thus private pension funds play a rather unimportant insignificant role in terms of citizen welfare. As companies/schemes/funds rise and fall based on their relations with prominent banks and not on the ups and downs of markets; in a market economy once pension funds are privatized wall street benefits, the public is duped and most(if not all) of us are victimized by financial scams of the kind noted earlier.
The market is unpredictable; we the citizens of these nations are not equipped with the financial expertise required to handle our own finances. Wall street is wary of the tricks of the trade and how to bend the rules to favor finance gurus. Betting on two opposite future outcomes is one such tactic.
If everyone was taught finance in school things would be different; however, that is not presently the case. We can not set the public up for disasters it has faced in the past, that too not at an old-weak age; knowing that the factors contributing to the dismal effects of free Marketisation/Marketization still exist.
-Markets are too risky to benefit consumers
This is unsubstantiated. If the UK, with its "market-based economy" can maintain a larger private pension sector than most of the rest Europe then the prospects for these systems do not look too grim.
If the government does not have to incur the crippling burden of having to provide pensions for everyone then it could focus on the poor and the few occasions of bankrupsy. If one in 20 firms goes bankrupt over ten years the government could step in and provide benefits (highter than existing state pension, lower than what they would get if the fund hadn't gone bankrupt to disincentivize consumers from taking policies with risky firms). Even if this is needed, it would be much cheaper than constantly providing pensions for the entire population. The opposition condemns the riskiness of our proposal by using two examples of crises over a century which has otherwise seen extraordinary growth while under the current system, 1 in 4 pensioners live in poverty. [[http://www.abc.net.au/news/stories/2009/06/24/2606874.htm]]. Under the status quo, extensive poverty isn't a risk its guaranteed, and here the government is too indepted to help those in need.
-Citizens not able to decide.
As we've said, in liberal democracies, we are trusted with finding our own jobs, taking out our own mortgages, insuring our cars and planning for our children's education. The opposition is patronising in claiming that allowing consumers to choose for themselves is too risky and is a recipe for disaster.
The proposition has given no argument to favor privatization of pension-funds/securities in market-based economies except for the hypothetical self-regulation and balancing out of the market in the long run. Sadly such has never happened in the past; the damage during the short run has caused governments to resort to banks and themselves at the end of the day. Removing public pension funds entirely strips us of that last resort option. We cannot afford to wait for the long run; which may, (given our history) never come. While offering a certain amount of private pension funds is okay; removing entirely the Govt. fallback option is unacceptable.
Last but not least we have been criticized for being patronizing and would like to clarify that being caught in the whirlwind of financial bunkum does not make anyone weak/silly but that we believe the risk is too great no matter how savvy a person is, we want the surety/insurance that we will be taken care of in our old age rather than hope/optimism which may not follow through when we get there. Private pension funds take away the certainty of future return and according to reliable sources give a lower return when they do pay up.