Speaking of Boomers and pensions (#1574105) and other vile things #1573526, #1573531, Matt Levine discusses pensions on Money Stuff today again!

His theory of pensions is roughly what I described today:

There are two main components to this theory. One is that people in the US used to have defined-benefit pensions, and now they mostly have defined-contribution retirement plans like 401(k)s. A pension is a big pool of money, managed by professionals, that has to pay thousands of beneficiaries some promised level of benefits every month when they retire. Because the payouts are pretty predictable, the pension fund can make very long-term investments: Some of its money definitely won’t be needed in for the next 30 years, so it can lock that money up for decades. So pension funds can make illiquid investments, and get paid an illiquidity premium: By locking up their money in bespoke, non-traded stuff, they can hope to earn a higher return than they’d get by just investing in Treasury bonds or even the stock market.

So far, so predictable. Problem is, Americans and American companies use 401(k) arrangements (#1573526).

a 401(k) is an individual account; you put money into the 401(k), you pick how it’s invested, and at retirement you can spend it. In the abstract, a 401(k) has similar goals to a pension, and could do similar things: If you are a 35-year-old saving for retirement, you shouldn’t need your money for 30 years, so you can also buy illiquid investments and earn an illiquidity premium. But because a 401(k) is, in most respects, an individual account, it is not so simple to lock it up for 30 years. You probably won’t withdraw money until you retire, but you might. What if you have a medical emergency and need the money? What if you die? A pension fund can smooth out those risks; a 401(k) can’t.

...and then my paywall busting efforts failed me. Fucksake. Even look at that stupid archive link: https://archive.li/bRHIJ

I'm disappointed. Paywall busting used to be Den's jam; now he's just a regular nobody :/