Note, occupational pensions vs. old-age pensions or other such arrangements.
Consider the situation where you see fraud or other misbehavior at work. You are 15 years into a 30 year pension, and you’re the average worker who doesn’t have a lot of savings, because all those savings are going into your pension fund.
Under what conditions would you choose to report or stop that behavior? If you felt that reporting it wouldn’t have a negative effect on your career, you would report it. If you felt that you would get fired for it, you would be placed in the position of losing a huge amount of money, becoming an economic martyr. You would be looking at maybe 20-30 years of additional work, and you might not retire at all.
Hence whether that crime will be exposed depends on:
– The individual worker’s judgment of the probability spectra of the outcome
– The individual worker’s willingness and capability for sacrifice
which you clearly can recognize are critical estimation parameters.
The individual worker does not know the workings of human resources, nor of his senior management. He observes at best a small fraction of their overall behavior. Hence he can have no justified confidence in the outcome unless he observes a clear pattern of punishment of misbehavior and rewards/continuation of service of those who reported and were involved in the investigation. Historically the record of the average whistleblower is not favorable; even in the 48 states, you routinely see whistleblowers and critics in the government, in private businesses, and in charities expelled for heterodoxy. Sometimes the reporters stay with the organization, but usually they leave (sometimes with hefty settlement, sometimes not). Hence the individual worker has strong reason to fear punishment for reporting.
On top of that, sometimes the misconduct is reported and the leadership applies no significant correction or penalty, in which case the report has no effect, and hence the gamble becomes less favorable as such a response becomes more likely.
As for the individual worker’s willingness and capability to sacrifice, here are some data points that bound this critical estimation parameter:
– There are whistleblowers that do come forward in free societies (of course in an unfree society we can assume they are punished, not only from the historical record, but for lack of reliable reports).
– Usually by the time those whistleblowers come forward, the behavior has been going on for months and in many cases years, involving multiple other individuals, so the percentage of reporters vs. participants and non-reporters is probably low double digits or single digits percentage.
– As unfree societies emerge from free ones, individuals choose to sides with which to ally. Hence, in those historical situations which apply, we can take this as an indication of the willingness of the bulk of the population to align themselves with correct behavior at great personal cost. Looking back at the examples of Weimar Germany and Chavista Venezuela, for example, it’s clear that the vast majority of the population is not willing/capable of direct violent martyrdom, and only a relatively small minority will engage in active resistance. Those don’t perfectly translate to the economic situation, but give an indication of limits based on consequences.
– Resistance to corruption in places like India and Pakistan provide another indication, since the corruption skews towards economic ends. Here you see a general popular disapproval, but the number of individuals actually empowered to stop corruption or directly to resist, who actually do so, is very small.
– The “blue wall” (Americanism, cops tend to be blue) of silence, seen in many police organizations, indicates that toleration of outright criminal behavior such as robbery and torture often is accepted even amongst those nominally vetted to be disinclined towards such behaviors.
Since we wish to engineer incentives to do the right thing, this leads us to the conclusion that the anti-disclosure incentive structure should be modified to one that pays out immediately, or into an ownership-separate account (for those countries that are foolish and put tax preferences on retirement).
Note that there are other economic reasons not to have occupational pensions, such as inefficient allocation of skilled workers, but since the criminal incentives already indicate removal, I don’t know that there’s a need to consider those downsides.