Public Policy Brief Highlights No. 109A | April 2010

The Trouble with Pensions

Toward an Alternative Public Policy to Support Retirement

Pension funds have taken a big hit during the current financial crisis, with losses in the trillions of dollars. In addition, both private and public pensions are experiencing significant funding shortfalls, as is the government-run Pension Benefit Guaranty Corporation, which insures the defined-benefit pension plans of private American companies. Yeva Nersisyan and Senior Scholar L. Randall Wray argue that the employment-based pension system is highly problematic, since the strategy for managing pension funds leads to excessive cost and risk in an effort to achieve above-average returns. The average fund manager, however, will only achieve the risk-free return. The authors therefore advocate expanding Social Security and encouraging private and public pensions to invest only in safe (risk-free) Treasury bonds—which, on average, will beat the net returns on risky assets.

Publication Highlight

Working Paper No. 932
Rethinking China’s Local Government Debt in the Frame of Modern Money Theory
Author(s): He Zengping, Jia Genliang
June 2019

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