Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 07-21-2013, 10:22 AM   #81
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by utrecht View Post
... There are plenty of pension funds that have none of those things going on and most of them are going strong, but you dont hear about any of them. Typical of the media.
And they don't report on the number of planes that land safely, or cars that arrive safely, or houses that don't burn down.

Sure you don't hear about the well managed pensions, that isn't news. We need to get the bad ones in the news to get attention/action, and look at the good ones for solutions.

-ERD50
__________________

__________________
ERD50 is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-21-2013, 10:36 AM   #82
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
When a plane crashes everyone doesn't instantly become afraid to fly. They realize that planes crash a small percentage of the time. Why then do people want to kill the entire public pension system as a whole entity when they hear about some badly mismanaged pensions amongst all of the well run ones? I don't hear people wanting to discuss the good pensions. All I hear is how public pensions are bankrupting America. Pensions aren't evil as long as they are managed correctly.
__________________

__________________
utrecht is offline  
Old 07-21-2013, 10:45 AM   #83
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Quote:
Originally Posted by ERD50 View Post

Sure you don't hear about the well managed pensions, that isn't news. We need to get the bad ones in the news to get attention/action, and look at the good ones for solutions.
To paraphrase Tolstoy, well run pensions are all the same, while underfunded pensions are all mismanaged in their own way.
__________________
MichaelB is offline  
Old 07-21-2013, 10:55 AM   #84
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by utrecht View Post
... Why then do people want to kill the entire public pension system as a whole entity when they hear about some badly mismanaged pensions amongst all of the well run ones? I don't hear people wanting to discuss the good pensions. All I hear is how public pensions are bankrupting America. Pensions aren't evil as long as they are managed correctly.
I don't know that it is true that (most? implied?) people want to kill the pension system as a whole? Are you extrapolating from some comments you hear?

And on this forum, I have read about some good pension systems - I believe that Wisconsin has been discussed as a model for how to do it right (or at least far better).

That said, many of us are in favor of DC type systems. Contribute, maybe get a match, and it is yours. No promises to be broken or manipulated by crooks. You've got market risk, but TANSTAAFL.

-ERD50
__________________
ERD50 is offline  
Old 07-21-2013, 10:57 AM   #85
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
If all well run pensions are all the same and there are plenty of them that aren't bankrupting their City or State, then it should be pretty easy to duplicate them everywhere. If this is such a massive problem in America, why doesn't someone in authority (like the President) do something about it? The problems are well known and the solutions are right there in front of their noses. Start passing new laws that prevent pensions from doing all of the things that the underfunded ones are doing.
__________________
utrecht is offline  
Old 07-21-2013, 10:59 AM   #86
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Ensuring proper funding for a pension is always simple but never easy.
__________________
MichaelB is offline  
Old 07-21-2013, 11:04 AM   #87
gone traveling
 
Join Date: Jul 2012
Posts: 84
Quote:
Originally Posted by ERD50 View Post
I don't know that it is true that (most? implied?) people want to kill the pension system as a whole? Are you extrapolating from some comments you hear?

And on this forum, I have read about some good pension systems - I believe that Wisconsin has been discussed as a model for how to do it right (or at least far better).

That said, many of us are in favor of DC type systems. Contribute, maybe get a match, and it is yours. No promises to be broken or manipulated by crooks. You've got market risk, but TANSTAAFL.

-ERD50
In the private sector, pensions are going the way of the dodo bird. The problem is risk. The people paying the pensions are accepting a large degree of risk because they do not know how the markets will perform in the future. Problem is even worse for public pensions because one group of politicians grants pensions as payback to unions for support, but they don't have to deal with the associated pain. Years later, when the pension obligations come home to roost, the politicians who created the pension obligations are long gone and some one else is left with the mess. Defined contribution eliminates this risk of underfunded liabilities. Public pensions should be replaced with 401k style plans. That's the way things seem to be slowly starting to go. The transition is almost complete in the private sector.
__________________
CH is offline  
Old 07-21-2013, 11:18 AM   #88
gone traveling
 
Join Date: Jul 2012
Posts: 84
Quote:
Originally Posted by ERD50 View Post
There were two other options. Increase revenue (taxes), or cut spending (in other areas, or wages, employment, benefits). Or combo.

I can't 'get away with' not paying my mortgage with the explanation that I don't have the money. I make more money, spend less, or turn over the house.

-ERD50
This can be done to only a minor degree. Large increases in tax rates can actually result in less tax revenue over the long term. Employers can move to more tax friendly states creating unemployment. That's why you see many of the northern states lowering tax rates, even in these tough times, to attract industry. Also, if tax increases were excessive, I think taxpayers would protest excessive taxes for benefits most of them do not have themselves!

Cutting spending in other areas also sounds simple, but is not so easy in practice. I know a lot of states including us here in PA have a lot of people moaning that, when you exclude teacher benefits, school funding is going down, and social program budgets are being reduced. It is theoretically possible to cut spending in other areas, but not so easy to do in practice.

I agree we have to pay our mortgages and if we do not have the money, the home will likely be repossessed by the lender or taxing authority. We as individuals do not have the latitude the government does. The federal government can print money and run huge deficits. Try that at home. Comparing government operations to operating your household is really an apples to oranges comparison.
__________________
CH is offline  
Old 07-21-2013, 12:18 PM   #89
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Quote:
Originally Posted by CJHorne View Post
In the private sector, pensions are going the way of the dodo bird. The problem is risk. The people paying the pensions are accepting a large degree of risk because they do not know how the markets will perform in the future. Problem is even worse for public pensions because one group of politicians grants pensions as payback to unions for support, but they don't have to deal with the associated pain. Years later, when the pension obligations come home to roost, the politicians who created the pension obligations are long gone and some one else is left with the mess. Defined contribution eliminates this risk of underfunded liabilities. Public pensions should be replaced with 401k style plans. That's the way things seem to be slowly starting to go. The transition is almost complete in the private sector.
The problem is not risk. The problem is corruption and mismanagement. If politicians are "granting" pensions as you say then they are corrupt. Why does a politician have any say in granting any pension to anyone? Why does a politician have anything to do with pension benefits?

My pension fund is run by a board of directors who are not politicians and don't work for the government agency that I work for. Pension benefits can not be raised or lowered without a vote of the pension fund members. A few years ago a study was done by an outside firm and they recommended that changes be made for new hires including increasing the length of time before they were vested and lowering the percentage factor that they receive. The fund was already strong but the last decade of lower returns took its toll on the funding level. The members voted to accept the recommendations along with some minor reductions to COLA and things like that for existing members.

We take care of our side of things. The only thing the City does is make their contributions. They have no say in anything else and have no access to the money so they cant screw it up. If they don't make their contributions as required by state law and our contract, they will get sued so there isn't going to be any underfunding. I'm sure the City wishes they could contribute less and I know the employees wish they would receive more. That's the way it should be.
__________________
utrecht is offline  
Old 07-21-2013, 12:29 PM   #90
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,401
Quote:
Originally Posted by utrecht View Post
... Pension benefits can not be raised or lowered without a vote of the pension fund members. A few years ago a study was done by an outside firm and they recommended that changes be made for new hires including increasing the length of time before they were vested and lowering the percentage factor that they receive. The fund was already strong but the last decade of lower returns took its toll on the funding level...
A DC plan would lower everyone's benefit proportionally if the market condition changes. That is fairer to the newcomers to the plan.

I do not have any pension, but can see how the young employees feel, which is not too different than the situation with SS where the young generations get less and less.
__________________
NW-Bound is offline  
Old 07-21-2013, 12:32 PM   #91
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by CJHorne View Post
The transition is almost complete in the private sector.
The resistance to changing public pensions isn't so much based on where the risk will reside, tax payer or retiree, but whether to change the already earned benefits of retirees.

In the private sector, to the best of my knowledge and based on what happened at the MegaCorp where I toiled, DBP pensions were changed first to cash balance and then to 401k's. But, already retired folks were allowed to keep the benefits they were already receiving. With the public sector folks, it appears that retirees already receiving their pension will take a hit in some cases. That seems to be the controversy.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline  
Old 07-21-2013, 12:38 PM   #92
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Lets not go overboard here. Public spending is not limited to salaries and pensions, underfunding does not mean corrupt. There are many other hands at the public till and many of the people involved are not elected officials.
__________________
MichaelB is offline  
Old 07-21-2013, 12:42 PM   #93
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by MichaelB View Post
Lets not go overboard here. Public spending is not limited to salaries and pensions, underfunding does not mean corrupt. There are many other hands at the public till and many of the people involved are not elected officials.
Yes, there must be an exception out there someplace.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline  
Old 07-21-2013, 01:20 PM   #94
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by MichaelB View Post
Ensuring proper funding for a pension is always simple but never easy.
Especially difficult for a generous one (which is subjective). My pension pays only about 5% of 3 yrs of highest salary after 20 years of service should I take it in the form of life-time annuity. Another option is lump sum which is about 7% of all salary combined for 20 years. I can't really complain since it's free money.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline  
Old 07-21-2013, 01:51 PM   #95
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Quote:
Originally Posted by youbet View Post
Yes, there must be an exception out there someplace.
Public spending goes far beyond salaries and pensions. At the same time pension commitments were made but not funded much more spending was carried out. The fact that other spending was paid for does not make it legitimate and the fact the pensions were not funded does not make then less so.

It is convenient to point to the pension funding as the problem and elected officials as responsible, that just lets other constituents off the hook.
__________________
MichaelB is offline  
Old 07-21-2013, 02:01 PM   #96
Recycles dryer sheets
vttlarry's Avatar
 
Join Date: Sep 2011
Location: Saint Cloud
Posts: 55
Don't forget, when one doesn't get social security, it is because one did not contribute. That means no SS taxes were withheld either. One could have invested that amount over 25-35 years.
__________________
When all is said and done, usually more was said than done.

Retired Fall of 2011 @58 :)
vttlarry is offline  
Old 07-21-2013, 02:18 PM   #97
Recycles dryer sheets
vttlarry's Avatar
 
Join Date: Sep 2011
Location: Saint Cloud
Posts: 55
MN made changes 3 years ago when the pension funds had losses from the 08-09 markets. Changes included higher contributions and a cap of 1% on the cola. The rule of 90 (age plus years of service) went away 15-20 years ago. The pension board did a study about going to a defined contribution plan rather than defined benefit plan and concluded that it would cost over a billion to switch.

I am a pensioner from MN (worked 35 years) and I would support much higher contribution rates. Even after the increase, employees were contributing 5.5%. My wife was contributing 25% to her 401k when she was with megacorp.
__________________
When all is said and done, usually more was said than done.

Retired Fall of 2011 @58 :)
vttlarry is offline  
Old 07-21-2013, 02:41 PM   #98
gone traveling
 
Join Date: Aug 2011
Location: Los Angeles
Posts: 39
Quote:
Originally Posted by almost there View Post
Fact is, those numbers are simply not sustainable..
Nobel Laureate Paul Krugman mostly disagrees. See his blog post this morning:

The Great Pension Scare - NYTimes.com
__________________
westcoast is offline  
Old 07-21-2013, 02:57 PM   #99
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by vttlarry View Post
MN made changes 3 years ago when the pension funds had losses from the 08-09 markets. Changes included higher contributions and a cap of 1% on the cola.
Just curious. Did this change to the cola apply to you and other folks that were already retired or only to future retirees?
Quote:
I am a pensioner from MN (worked 35 years) and I would support much higher contribution rates.
Yeah, what a surprise. A retiree would support having those still working pay more.......
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline  
Old 07-21-2013, 03:02 PM   #100
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by vttlarry View Post
MN made changes 3 years ago when the pension funds had losses from the 08-09 markets. Changes included higher contributions and a cap of 1% on the cola. The rule of 90 (age plus years of service) went away 15-20 years ago. The pension board did a study about going to a defined contribution plan rather than defined benefit plan and concluded that it would cost over a billion to switch.

I am a pensioner from MN (worked 35 years) and I would support much higher contribution rates. Even after the increase, employees were contributing 5.5%. My wife was contributing 25% to her 401k when she was with megacorp.
Speaking of MN, the company (or megacorp with sales revenue over $18 billion for which I worked is headquartered there. Managing funding for the pension of this company, I think, is rather easy. The company contributes 4.8% of salary to a personal pension account collecting 3-4% interest. Eligibility for retirement is age 55 + 10 years of service or age 62 & over regardless of age. Distribution is lump sum or various forms of life-time annuity with an IRR of little bit over 4%. The company also provides 401K + company match.
__________________

__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Big decision-WHEN to cash in the Pension?? Ken11 FIRE and Money 15 09-28-2011 08:11 AM
How to properly identify a vested deferred defined benefit pension in FIRECalc? nico08 FIRE and Money 2 09-25-2011 08:51 PM
Net Present Value of State Government Pension and Social Security Benefit nico08 FIRE and Money 19 08-22-2011 12:44 AM
RE and forgoing pension income Grainiac FIRE and Money 7 08-08-2011 09:46 PM
Lessons from Well-Funded Public Pensions mickeyd FIRE and Money 38 07-05-2011 11:22 AM

 

 
All times are GMT -6. The time now is 03:30 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.