Interesting article in today's NY Times about the Detroit bankruptcy negotiations and pensions. I'll quote from the article below, but, full-- well partial, disclosure, retirement is something I have to consider in my time horizon... The question is why pensions exist in the first place. Like, you know, why don't people save and invest enough so that they don't need pensions? So, let me explain how it is: pensions are actually a form of insurance that an employer provides. When you retire, you might die two years later at age 67, like one relative, or, you might live to age 90, like someone else I know. The obvious fact is, that no one knows how long they will live in retirement, and pretty much only the 1% will have enough cash lying around to live well in their 90's. Whatever cash you have, you just won't know at what rate to spend it. So, providing this kind of insurance is a very important job benefit to many people (maybe not in their 20's, but, when they get somewhat older for sure). So much so that, for example, people looking for stability have often chosen good benefits over current salary. On to Detroit. Bankrupt, as everyone knows. $18 Billion in debt, $3.5B of it in unfunded pension liabilities. And, right now, they are negotiating the settlements of all the debts. The current proposed settlement is more favorable to people on pensions that was previously suggested: http://www.nytimes.com/2014/04/17/us/as-detroit-pensioners-rejoice-bankruptcy-experts-are-wary.html?ref=us&_r=0 Well, I have to say that I'm certainly not going to argue against "favoring Main Street over Wall Street. But, are pensions "special"-- different from other debts and obligations such that they ought to be first in line? I think they are, because of the massive societal benefits pensions provide. First, pensions are good for economic stability-- people spend pensions at a steady rate; the velocity of pension money is very predictable; pension spending frequently immediately benefits the locale where the pensioner lives. Second, it avoids public spending on charity and social services that would otherwise have to spent, probably less efficiently. So, basically, I'm in favor of the settlement favoring pensioners over bondholders. How about "you"?