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Home » Lessons to be learnt from pension fund loss


Lessons to be learnt from pension fund loss

The loss of the special railroad workers pension fund has pointed to the lessons that need to be learnt. The incident will influence the ongoing debate about whether the various government-affiliated retirement programs need to be kept solvent.

Previously in the initial stages when the National Railroad Retirement Investment Trust made hefty profits, lots of financial planners praised about the plan and said that it would serve as an example for the future retirement plans. However, since the end of the year 2007, the funds have heavily crashed. The fund officials became too confident and even started investing in foreign stocks, real estate and other "opportunistic" investments. This created problems and after the market tumbled, the funds also crashed heavily.

However, officials of the railroad board said that they believe that the program will pay off in the long run. They say that once the market recovers, things will start becoming alright.

According the federal bill that was created by the Congress, the railroad employees do not get Social Security and also do not pay any types of taxes for the benefits. The railroad employees are entitled to taxes for the two-tier system which is more or less similar to Social Security.