The biggest problems with pension funds going joining the stock market (from a socisl justice perspective it is even worse if privatized and individualized, but also true in public pension funds) are frequently overlooked:
First of all, it is an injection of fresh capital in global finance markets, following usually unsustainable investment patterns (I mean, my increased wealth will be of little help when my house burns down in a bushfire, or I suffer a heatstroke). A few years ago, when it seemed for a short while that society haf understood the existential danger from.climate change, e.g. pension funds in Canada tried to incorporate other metrics into their asset management, in order to take in mind that their pensionists need a liveable planet to be able to enjoy their pension. So, there are solutions for tis problem (investment criteria regarding sustainability that incorporate metrics the market is apparently incapable of taking into account) is there. But anyway, these days are gone and the backlash is still ongoing. This is one issue.
The other problem is even more structural and has to do with sovereignty: with capitalized pension funds, the stock markets cannot fail anymore. Because imagine if people would lose their pensions becaise of a market crash (AI bubble, I am looking at you). This makes the wellbeing of the stock market a core task of the state, and if already today it is justified criticize that the public administrations are working in the interest of the large capital holders instead of their populations, the servitude of the state towards the financial markets will only increase. I have to admit, to tie the retirement funds (and thus the general population) to the well-being of the stock market is somewhat genius from the perspective of the large capital holders, but I see a significant hazard for the independence of administrations from the market, which are the two structures we are supposedly using to organize our society around.
(that said, it is not easy to organize pensions in a just and equitable way, and even less intergenerationally. Also, we have a problem of power: due to our societal organization, the most powerful positions are in the hands of 50-70 year old wealthy men, who have a significant personal stake in the matter.)
#StockMarket #Finance #PensionFunds #SustainableFinance #Börse #RiesterRente #Pensionsfonds
