The fragility point is a good one, but it's also misleading if you only look at one side of the equation. The other side is assets sloshing about the system -- like a large tanker without internal divisions, if there are a lot of assets sloshing about and the tanker gets into bad weather, the internal movement of assets can increasingly destabilize the whole thing.
That's one aspect of retirement systems that has always concerned me. Sure, it's neat to give people the control over retirement that comes with investing in an open market. But contrast this to public retirement systems where you pay in and the money is used to pay out retirement (of other people) immediately. Ultimately, both systems have to be sustained by a real economy that can provide the goods and services that folks require during retirement. But one of them puts a large amount of assets into the hands of unelected money managers, which is surely a potential source of instability.
That's one aspect of retirement systems that has always concerned me. Sure, it's neat to give people the control over retirement that comes with investing in an open market. But contrast this to public retirement systems where you pay in and the money is used to pay out retirement (of other people) immediately. Ultimately, both systems have to be sustained by a real economy that can provide the goods and services that folks require during retirement. But one of them puts a large amount of assets into the hands of unelected money managers, which is surely a potential source of instability.