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(By Stephen Corlis, COO, REPSE)
A few times each year we can count on the usual talking heads from the media and Wall Street to remind us of the dire state of our nation’s pension system. However, this typical cast of characters prefers to focus on politics by pointing fingers at bureaucrats rather than offer real solutions. Why? Well, it is difficult to say for sure but it would appear that it is much less controversial to blame silly out-of-touch politicians rather than openly discuss all the issues or real solutions.
What most of Wall Street and the news media fail to discuss is the tremendous impact Defined-Benefit plans have on our economy. Academia has attempted to quantify this, but only by focusing on the more common transmission effects of pensioners' spending. However, little academic work has been done to quantify the effect plan participants' invested capital has on our economy as their plan Trustees disperse this capital across all asset classes (with a growing amount in commercial real estate), both nationally and internationally. It is only when we consider the transmission effect of both spending and investment that we begin to appreciate the impact DB Plans (both private and public) have on the global economy and the considerable job and wealth creation that result.
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