Question

Should the government pay for all pension guarantees?

Please answer in the affirmative and cite sources.

Answer 1

Yes, government should pay for the all the pension guarantees. In the USA, private sector firms take contributions from the employees and make their own contributions in the name of pension to employees after the retirement. These funds are invested in different investment plans offering varying returns, hence it puts employees’ money at risk and it is the employees who suffer if they don’t get the good return and subsequent good amount as pension. To safeguard the pension, even ERISA is also in place. To eliminate the risk and other lack of expertise on offer to the firms, that can cause poor return on investment, the government should take all the contributions from employees and employers side and make investments in good plans. These plans are selected after the proper research done by the team of analyst. As a result, the funds dedicated for the pension, achieve superior returns. So, it is a good initiative when the government takes the contribution and pay for all pension guarantees. It also brings uniformity in pension issued to the employees. It also increases the credibility of the pension program offered to the employees.

References:

1. Pension Benefit Guarantees in the United States: A Functional Analysis. Retrieved from:http://www.people.hbs.edu/rmerton/Pension%20Benefit%20Guarantees%20in%20the%20US.pdf
2. The impact of state pension reforms on people with Guaranteed Minimum Pensions. Retrieved from: https://www.nao.org.uk/wp-content/uploads/2016/03/The-impact-of-state-pension-reforms-on-people-with-Guaranteed-Minimum-Pension.pdf