There has been a concept at the heart of what many call the “American Dream” for over a hundred years. That is, if you work hard and live an upstanding life you should be taken care of in your old age. From 1870 to 1929 over 400 private pension plans were created for employees of businesses all over America. The workers at these companies trusted their employers to pay out their pension plans, and it would provide them with a source of income when they were ready to retire.

In 1935 as America was just starting to pull itself out of the Great Depression, Franklin D. Roosevelt signed Social Security into law. This provided yet another way for Americans all over the country to help them save their money for retirement, with the security of the US Federal Government behind it.

The two types of plans that are talked about often today. The first being Defined-Contribution plans. These are your 401(k)s and IRAs, which are tax advantaged accounts that have a constant stream of income from you and the occasional bonus from your employer. Some employers may even offer to match you. You maintain complete custody over these accounts. The biggest risk faced when using this plan is some stocks not performing as expected, but usually the market will balance itself out. The second option is a Defined-Benefit plan, where it promises to pay those who’ve retired based on salary and how long they worked there. But if these plans fall short, it leaves the people using the plan worried that their benefits might not be safe. It also can throw the burden on whoever is there to bail them out, which is more often than not be American tax payer.

Let’s go back to the social security system. That whole operation is taking in much less than its paying out to people. According to government projections as of 2012, that can add up to a $800 billion operating deficit. Even the cushier option offered to the employees of the US government known as FERS, which is on top of social security, is losing money thanks to rising costs. Even the god damn Post Office is worried they won’t be able to take care of their most loyal employees.

It gets even worse when you look at the state and local governments. As of 2012, over three fifths of states have had to cut benefits for new employees, while half are requiring more contributions from currently employees. Nine have had to reduce the cost-of-living budget for those who’ve already retired. The liability that still remains is a jaw dropping $900 billion, and efforts already made by states have only lowered it by $100 billion.

Together, all of the unfunded liabilities in the federal government is responsible for is totaling a staggering amount of two and a half trillion dollars. Yeah, with a T. That is over 15% percent of America’s total federal debt. All coming from unpaid pension funds.

Many people reading this may remember the teachers strike in Chicago, IL back in 2012. It received huge levels of media coverage and was a hot button topic for weeks. Thousands of kids in the city stayed home, burdening their parents with the choice of taking off work to watch them or hiring a babysitter. Of the $10 Billion in assets that the system controls, it has needed to sell investments simply to pay the teachers. It is spitting out much more than it is taken it.

In 2013, the Chicago Public School system flipped. It now had more people that were receiving benefits from the fund than there were people paying into the fund. Not only that, but the Pension fund is only around fifty percent funded at the moment, meaning CPS needs to come up with some $9.5 billion dollars. This now has a direct effect on the schools themselves. More money being put into the pension fund, less money going into classrooms to help kids learn.

Most of these problems in Chicago come from broken systems and rulesets that allowed for this problem to snowball out of proportion. With policies that made it so it was economically infeasible for these funds to become anything up bankrupt, it was bound to happen. The question is now, how do we solve this problem? Will the government need to step in with a massive bailout for people all over the place, or with other systems arise to help people manage their money better for retirement? The one thing known for sure, is that the sooner these issues are addressed, the better off we’ll be.

To address these fallacies of the pension fund industry, we launched Auctus, a unified platform that revolutionizes operational inefficiencies by increasing transparency, automation and control which leads to significantly lower operational costs and thus increases returns, allowing pensioners to reach their goals faster.

The Auctus Platform is run on blockchain and Ethereum Smart Contract technology. The combination of those two technologies eliminates the need for intermediaries and guarantees that pension fund terms are met, without interference. Being completely decentralized, there is no entity or group of people that is able to corrupt the system for their own benefit.

The Auctus team has already started to develop the platform and expect to release a demo version soon.

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