A pension fund savings of the public and, as such, subject to the usual controls. General mechanics is indeed conducive to fraud cavalry called snowball or Ponzi scheme.
Nearly 150 billion pension obligations are recorded as liabilities of non-financial companies in the CAC 40 in late 2009, yet as the assets are only 93.4 billion, the deficit was estimated at 54.38 billion euros.
The sensitivity of a pension crisis is limited if the assets of pension funds are not placed. Indeed, much of the financial flows that concerns merely the crossing. If the payment of the member A is transformed into capital itself is sold to fund retiree’s pension B, it is as if A paid pension B as in a PAYG system, which essentially serves as the capital conversion key (and incidentally provision) .
However, this sensitivity exists, and the fact that a pension fund like CalPERS lost 30% of its value is not irrelevant.
Political Battles of pension funds
Pension funds are major modern capitalists, and as such suffer the wrath of anti-capitalists of all kinds: when their capital increases (bull market, for example), they accuse them of being speculators, profiteers, exploiters.
When the capital decreases (crisis, decline in the value of financial assets), they accuse them of mismanagement, irresponsibility, reducing pensions and dramatic implications for members.
Pension funds also raise strong temptation for a government to hand over the capital of pension funds, while ensuring the payment of pensions. This was done in France in 1941, when the PAYG was created there.