US Budget Simulator

[Admiral Yi]

That would only be true if one thinks that the government will be more effective in investing the surplus funds. Otherwise it would be a better idea to distribute the money back for the general population to invest and rely on higher path growth rates to finance the pension obligation.

This doesn't account for the distributional and moral hazard aspects.

[Barrister]

Assuming that the government is assuming primary responsible for pensions, perhaps. But then why have 401k, etc. in the tax code?

It still makes sense if the government has  any responsibility at all for pensions.

That would only be true if one thinks that the government will be more effective in investing the surplus funds. Otherwise it would be a better idea to distribute the money back for the general population to invest and rely on higher path growth rates to finance the pension obligation.

Unfortunately a large number of people in the public are not very effective in saving and investing for their retirement.  A great many people in this country seem to be planning to rely on lotto winnings and the Canada Pension Plan for their golden years.  So as a result the CPP has started investing for the future, and now has a reserve fund of some $200B dollars invested.

[MadImmortalMan]

Where are these growth rates going to come from? We can't do better than 2% a year in the modern safety net countries anymore. It might not be possible at all.

[Monoriu]

Why would you want the government to do that?

Presumably to finance the retirement of an aging population.  Another use for a sovereign wealth fund  is to distribute natural resource wealth across generations.

There is no government funded pension in HK 

[CountDeMoney]

Talk about numbers spiraling out of control

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[Ed Anger]

I'm not in the top ten. Thank god.

[CountDeMoney]

You don't start threads, you just shit on them.  Threadshitter.

[Ed Anger]

That is why I am loved.

[Ideologue]

Where are these growth rates going to come from? We can't do better than 2% a year in the modern safety net countries anymore. It might not be possible at all.

It's not the safety net.

[Siege]

Where are these growth rates going to come from? We can't do better than 2% a year in the modern safety net countries anymore. It might not be possible at all.

It's not the safety net.

Its the lack of a free market economic model.

[Ideologue]

It's certainly not that.

[The Minsky Moment]

That would only be true if one thinks that the government will be more effective in investing the surplus funds. Otherwise it would be a better idea to distribute the money back for the general population to invest and rely on higher path growth rates to finance the pension obligation.

This doesn't account for the distributional and moral hazard aspects.

Sure it does.
If your trend growth is a few tenths higher, then with compounding that brings in a huge amount of money.  That money can be used to insure for distributional variances.

MH can be dealt with by a forced saving mandate with conditions, which is the same thing as a government running a surplus, except the money is managed in the private sector.

Kind of funny - me taking the position the private sector is the more efficient investor of capital and you taking the opposing view.   

[Admiral Yi]

Distribution and moral hazard are not related to efficiency.

If you want to argue for alternatives to public pensions, that's fine.  But in the absence of those alternatives public pensions still need to be funded, and a sovereign wealth fund is a good way of solving the problem of a demographic bulge.

[Siege]

Mirror universe?

[The Minsky Moment]

If you want to argue for alternatives to public pensions, that's fine.  But in the absence of those alternatives public pensions still need to be funded, and a sovereign wealth fund is a good way of solving the problem of a demographic bulge.

I would concede that as a general principle.
But I do think there is cause to worry if every major country were to establish big SWFs for their national pension obligations.  That would be a huge amount of money.  If invested optimally, with a significant allocation to equity, it wouldn't take long before the ownership of every major public company on earth would be majority public entity owned.  That I think should be concerning for anyone committed to the idea of private ownership of capital as a foundational principle.