Many people who think they understand risk do not understand risk coming from completely unexpected sources. I do not mean some 50% market crash – one is reasonably prepared for a market crash, but something else.

– What happens if the government withdraws medical cover for retirees of government organisations?

-What happens if PPF is frozen for 10 years for all of us?

– What happens if they introduce a withdrawal tax on PPF?

– What happens if your employer tells you that the Provident fund that he was managing has a hole -because the trust was defrauded, and so your assets (you thought it was Rs. 70 lakhs) is now worth NOTHING, and the employer does not have money to pay all of you?

You do not want to get more scared, do you?

Has something like this happened?

Well in the US the employee found a NEVER THOUGHT OF AS RISK – the employer who dipped into the pension fund, and well, killed it. The companies happily dipped into the pension fund….and some of the middle level managers are now working as guards.

So like Taleb says, if you know from where it will come, that is not risk.

The risk that you have to be prepared is the risk that can come from an unknown source. So a lion killing you in a forest is not a risk. However, if you see a deer and think it is a lion and die of a heart attack…then it is unknown risk! Or worse you trip on a vine, fall on a poisonous snake…Anyway read on..WSJ had this good story on pensions:

http://online.wsj.com/article/SB10001424053111903532804576566862041674794.html?mod=sf2tw

 

 

 

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  1. i dont think we have defined benefit pension in india.atleast no major scheme.PF is a defined contribution scheme,so it depends on the a)hope that there is no mismanagement ie buys only govt securities and b)the great ponzi scheme continues ie.more employees join the work force than those retiring.atleast the present generation in india will not see the EPFO go belly up(barring fraud) because indian population is not projected to peak even by 2050.

  2. I wont be surprised if there is any new scam exposed with EPF in India.
    Just imagine the scale this scam would ammount to..

    OR it’s just the lack of transparency in EPF that it’s not known till now.
    Just a scary thought…

  3. I find the risk of government retirees being left with no medical cover alarming. I have seen quite a few cases where the recommendation for a medical cover has been turned down just because the govt. provides it today. They just do not want to think of a scenario other than this.

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