STRAIGHT TALK FROM GAY PEOPLE
As GOP-Tea ramp up their rhetoric, I'll try to keep the reply brief ('cause there is a lot to read, by a lot of people suddenly writing about it).
What is the optimal amount that a company should contribute to rank-and-file "pensions"?
- 1. The answer is zero, especially for the most competitive labor markets. (A special exception for start ups, for which you can promise the world.)
- 2. After that, the answer is 'as little as you can get away with', which may hardly be "enough" for anyone to "secure" their old age needs, right? One way to get away with "a little" is to churn the labor force, periodically while basing "benefits" on years-of-service or creating exclusionary periods (e.g., nothing until you've worked for two years).
Last, you get rid of defined-benefit obligations, because they are like having 30-year+ debts. If your company goes through a period of good times, you might pass out some pension obligations that you regret during slack times. Better to use defined-contribution, because then, the employee takes the whole risk, not the company's creditors.
So, when you read this, below, you know the yardstick is just arbitrary nonsense, a non-rationale, a non-critique, simply a statistic pulled out of the air for maximal rhetorical advantage:
What's a better way to benchmark it?
Put it in these terms: At 15% forced savings, i.e. 'pension contribution', you can work 30 years and retire for 12 with 65% of current salary, say (you run the numbers). If the average life expectancy at retirement is 88, then the retirement age should be 76 (except that would imply starting work at age 46, so you have to jigger the calculations until they fit).
If life expectancy rises, does that mean the retirement age *must* go up, too? No. The standard of living could rise, so that 15% savings allows one to retire for a longer period.
Could a formula be devised so that we can get the politicians hands off it, mostly? Yes.