How do companies and the government afford to pay people a pension?
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From corporate profits and sometimes employee contributions, depends. An accountant can weigh in but Im pretty sure the funds for future pension obligations are carried as an asset on the ol’ balance sheet.
So, in theory, a well run company would be socking money – net of profits and cost of business and/or from employee deductions or manual contributions (depends whether the pension is 100% company paid or is some kind of employee deduction, employer match type of thing) – into some type of investment vehicle: stocks, bonds, big interest savings account, whatever. A less-well run company may not, but might bank on _future_ earnings to backfill. If a company’s pension obligations are _underfunded_** in this way, it actually counts as a liability aka a debt that has to be paid. So, in theory, if the company goes under, the pension obligation would be considered one of the debtors and hopefully would receive any payout from liquidation of the assets.
In the case of say a union pension, the funds for current withdraws are funded from present member contributions AND investment income. But the larger better run union pensions are making enough off their investments that the pension dues to current members aren’t necessary (Ontario Teachers Pension Plan looking in your direction). So you can see why some large pensions are quite concerned about say, oh Twitter stock value – a lot of union pensions have invested in that and don’t like Mr. Musk messing around with it.
**edit: as /u/CreativeGPX points out it doesn’t necessarily mean bad, or its being horribly mis-run, but it does mean that _at the moment_ the pension fund isn’d adequately funded to fulfill currently known future pension obligations. The company HAS to do something to fix that or they won’t be able to pay out.
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