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Old 04-22-2012, 07:52 PM   #81
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The debate seems to continue here in the abstract. If this is one of the latter cases, honoring obligations that were obviously unsustainable even in retrospect no matter at what cost to present taxpayers hardly seems fair. We all agree that those already in retirement must be shielded as much as possible, but it comes at the cost of benefits to future retirees and/or an increased tax burden to those still working. All indications are that's how it will play out, but those protected need to face that responsibility, to children, grandchildren, neighbors - the funds come from them, not "government." Arguing these issues in the abstract unfortunately leads to self interest (for many) and an impasse for the umpteenth time...
It sounds to me like Gov Quinn is trying to shield the taxpayers. I'm not sure I follow your line of thinking.
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Old 04-22-2012, 09:16 PM   #82
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Just to be clear, it is misleading to assume that the PBGC will cover all mega-corp pensions $ for $ should mega-corp go belly up.
Didn't mean to mislead, I'm just not covering every detail in this complex situation, or my posts would read like legal documents. Yes, PBGC covers $ for $ up to a cap, currently $54,000. There are other limits for some other specific cases, like multi-employer plans.

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You seem to be attempting to have both feet off the ground at the same time but, bottom line, it seems like you're a proponent of cutting the pensions of already retired public workers........ as long as they're "about last on the list."
I think you are painting my position in far more black/white terms than I tried to convey. When I say cuts to already retired public workers should be about last on the list, that doesn't jibe with saying I'm a 'proponent of cutting those pensions' does it? I'm just trying to face the reality that this could be a very tough position, and there may be some tough choices that need to be made. Can we take anything off the table unconditionally?

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But, of course, you're fighting for the pensions of already retired private workers to be upheld even if the corporation under funded pensions in the past and are having to supplement the funds today to the detriment of stockholders.
Well, if my mega-corp had underfunded their pensions for years down to a mid-40% level, and had no insurance coverage, then I don't think I'd be too surprised if there was talk of cutting the pensions. But they are not that far underfunded, and they (we - employer-employee) have paid into the PBGC to buy insurance against this kind of problem. Stockholders know that funding these pensions are a part of business, like any other business expense. There should be no surprises to anyone.

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I'll disagree. I think the sword should cut both ways.
Well, we just had our IL income tax raised from 3% to 5%, seems like the sword has cut one way so far for retirees.

-ERD50
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Old 04-22-2012, 10:46 PM   #83
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As a retiree from Illinois I now reside in Indiana. In Indiana out of state pensions like mine is fully taxed. (3.4%) It is not the end of the world. I think it would be better off taxed than to lose the 3% compounded COLA.

I just wonder how they could have introduced a COLA that has nothing based on an actual cost of living.... heck, I almost have a hard time calling it a COLA except that I guess it is a cost of living adjustment....
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Old 04-23-2012, 07:52 AM   #84
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Y ... But, of course, you're fighting for the pensions of already retired private workers to be upheld ...
I thought of something relevant to add to this. Recall that the PBGC only covers to a max of ~$54,000 in 2011 ( at age 65). And since the PBGC has stepped in and taken over some 1.5 million pensions (4300 companies), I'm sure that some people in the private have already had some adjustments to their pensions (we know that some UAL pilots have). Why should someone with a public pension be considered immune from these kinds of actions?

And if we apply those 'correction factors' to better compare to a COLA, available-at-age-55-pension (as seems to be the case with poster Flsail) , that makes that $54,000 non-cola cap look like a $27,000 cap, and the PBGC max at age 55 is just $24,300, bringing the non-cola adjustment down to an ~ equivalent of a $12,150 cap.

Those PBGC caps look pretty painful compared to anything I've seen discussed as adjustments that might be applied to public pensions (if those adjustments are required). I just don't think we can take the idea of some kind of capping/adjustment to public pensions off the table if other measures can't cover it. We already have it in the private sector. So yes, maybe that knife needs to cut both ways.

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Old 04-23-2012, 07:59 AM   #85
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It sounds to me like Gov Quinn is trying to shield the taxpayers. I'm not sure I follow your line of thinking.
I was referring to later posts re: honoring pension obligations, not Gov Quinn's actions...
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Old 04-23-2012, 08:32 AM   #86
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Applying the logic and principles of PBGC to public sector pensions is an interesting approach. In this discussion, however, it would be helpful to not personalize the examples. We should also keep in mind that public sector pensions are not one homogenous financial group but many different pensions.
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Old 04-23-2012, 09:18 AM   #87
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I just wonder how they could have introduced a COLA that has nothing based on an actual cost of living.... heck, I almost have a hard time calling it a COLA except that I guess it is a cost of living adjustment....
I guess they were going on an average of inflation. I think eventually they will find a way to get current retired employees involved. One of the ideas they were floating were making the 3% simple interest instead of compounded or half of CPI whichever is less.
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Old 04-23-2012, 09:25 AM   #88
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Applying the logic and principles of PBGC to public sector pensions is an interesting approach. In this discussion, however, it would be helpful to not personalize the examples. We should also keep in mind that public sector pensions are not one homogenous financial group but many different pensions.
Duly noted. I didn't mean to single out that poster in a personal way, it was just that their numbers were out there, so they made a convenient reference point for the discussion. So I'll just make the point generally, that one must take into account COLA and FRA in any pension comparison.

You are correct, there are many different public pension systems out there with their own rules and funding levels. As I've mentioned, even within IL, there is a big difference between the IL state Teacher Retirement System (TRS), and the IL Municipal Retirement Fund (IMRF, which DW is in as a part-year admin in a local school district). TRS funding is in the 40% range, IMRF is funded in the 80% range.

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Old 04-23-2012, 09:33 AM   #89
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In this discussion, however, it would be helpful to not personalize the examples. We should also keep in mind that public sector pensions are not one homogenous financial group but many different pensions.
Agreed. By the same token, members probably shouldn't make sweeping generalizations either, I take your message to apply to both aspects.
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It puzzles me the way some look at pension benefits. Just because a provision of his pension has not been yet been realized, does not mean that it is not owed.
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Old 04-23-2012, 09:40 AM   #90
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So your $40K cola pension @ 55 is ~ $80K cola pension at 65.


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Not really sure how you get to these numbers. It doesn't seem possible that a 3% COLA doubles the value of a pension in 10 years as you have portrayed, but it wouldn’t be the first time fuzzy math was used in a discussion (more like 25 years). This is the same type of calculations that the cities’ used over the years to keep from properly funding their obligations to the funds.
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Old 04-23-2012, 09:51 AM   #91
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Not really sure how you get to these numbers. It doesn't seem possible that a 3% COLA doubles the value of a pension in 10 years as you have portrayed, but it wouldn’t be the first time fuzzy math was used in a discussion (more like 25 years). This is the same type of calculations that the cities’ used over the years to keep from properly funding their obligations to the funds.
It's not fuzzy math. I think what you may have missed is it isn't just the 10 years of inflation, it is also 10 years of not collecting the pension. Someone taking the pension at 65 will be collecting for 10 less years. IIRC, LE at 65 is ~ 86, so that would be an average of 21 years of payments versus ~ 31 years of payments (roughly, LE at 55 is different).

At least for my MegaCorp non-cola pension, they cut it in half for 65 versus 55. Right now, I'm not sure if a COLA affects those calcs, I'd need to go look at the charts to see if COLA pensions are affected differently, but they are probably close, due to those 10 years of non-payment.

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Old 04-23-2012, 10:03 AM   #92
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I would like to see any pension changes made over a long period of time, maybe 10 to 20 years. Otherwish, how can those pension members make plans and evaluate their career choice?

I know many here have had their megacorp pensions suddenly cancelled, but just because private sector does it it doesn't mean we have to in the public sector.

I have a small military pension I will be able to collect in 15 years, and have 15 years in the FERS system. If they are going to change FERS I'd like to see it phased in so I cna decide to find another job or continue working.
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Old 04-23-2012, 10:04 AM   #93
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I have joined in these discussions before on the "don't renege on promises side of the argument." Still, I probably fall somewhat close to ERD's put changes to current retirees last argument. Some of these systems are in dire straits and a few municipalities have already gone belly up. As a public pensioner I would prefer a bit of a haircut to total default with no PBGC to fall back on which, I believe, a couple of towns have already done. Even I'm my golden Fed pension situation there is talk of changing the COLA index (for both SSA and Fed pensions). I expect that change will take place and will readily accept it in lieu of more radical changes. I expect most governments will do all they can to avoid dramatic changes to current OAP's in recognition of the fact that it is too late for them to make up the losses.
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Old 04-23-2012, 10:18 AM   #94
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I have joined in these discussions before on the "don't renege on promises side of the argument." Still, I probably fall somewhat close to ERD's put changes to current retirees last argument. Some of these systems are in dire straits and a few municipalities have already gone belly up. As a public pensioner I would prefer a bit of a haircut to total default with no PBGC to fall back on which, I believe, a couple of towns have already done. Even I'm my golden Fed pension situation there is talk of changing the COLA index (for both SSA and Fed pensions). I expect that change will take place and will readily accept it in lieu of more radical changes. I expect most governments will do all they can to avoid dramatic changes to current OAP's in recognition of the fact that it is too late for them to make up the losses.
I tend to agree with you and probably have more in common with ERD50’s position than may be apparent.
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Old 04-23-2012, 10:19 AM   #95
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I know many here have had their megacorp pensions suddenly cancelled, but just because private sector does it it doesn't mean we have to in the public sector.
How would you propose public pension underfunding (where applicable, and substantial in some cases) be addressed - higher contributions from current public employees, higher taxes & fees for all taxpayers (most who don't have pensions themselves, and will have to work longer or live on less), or both?
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Old 04-23-2012, 10:38 AM   #96
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I know many here have had their megacorp pensions suddenly cancelled, but just because private sector does it it doesn't mean we have to in the public sector.
True in and of itself -- but there's a perception that some folks got victimized once by losing the pension, and that they are feeling victimized a *second* time by being asked to pay more taxes and/or accept fewer services so others don't even have to be victimized a first time. Fair or not, that's the feeling out there.
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Old 04-23-2012, 10:42 AM   #97
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Gradual phased in higher contributions from current workers as well as higher taxes (I pay taxes as well, so I would take a double hit) and fees. Definately get rid of the loop holes allowing pension inflating the last couple of years, and maybe even address the retirement age.

I'd also like to see some legislation to address funding the pensions. Mostly so we don't have a repeat of politicians not funding pensions in the "good times."

I guess my main beef, and I am biased being that my federal penison is the cornerstone of my financial plan, is that any changes should be long term, fix the issue, and insure the pension is well funded and managed going into the future.
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Old 04-23-2012, 10:48 AM   #98
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I'd also like to see some legislation to address funding the pensions. Mostly so we don't have a repeat of politicians not funding pensions in the "good times."

I guess my main beef, and I am biased being that my federal penison is the cornerstone of my financial plan, is that any changes should be long term, fix the issue, and insure the pension is well funded and managed going into the future.
I can certainly see this. I've also known people who have specifically turned down more potentially lucrative private sector opportunities because they wanted to keep the benefits and retirement security of the government job. I can see how they would feel backstabbed if they had their pension frozen like I did.

Having said that, as one who *did* lose his pension and saw approximately no one come to our defense, I can understand why folks in similar situations as mine would shrug and ask exactly why they should fight to save the pensions of others (possibly at their expense) when no one fought for theirs.

Much of the problem is that some governments play games with the pension funding. (Some suspend funding in a strong market, arguing that appreciation in the fund value *is* the "funding". That's just dumb.) Too many allow spiking with overtime, sham promotions and other things (which hurt pensioners who don't spike). Too many base benefits on unrealistic long-term expectations (anything over 8% is probably in trouble). A significant portion of the public pension messes are likely the result of these problems. And all too often, the political status quo tries to make it another divide-and-conquer battle of ordinary folks, the pension "haves" and "have-nots", so they can stay out of the fray and not be held accountable for legislative contributions to the mess.
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Old 04-23-2012, 10:51 AM   #99
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True in and of itself -- but there's a perception that some folks got victimized once by losing the pension, and that they are feeling victimized a *second* time by being asked to pay more taxes and/or accept fewer services so others don't even have to be victimized a first time. Fair or not, that's the feeling out there.

I know in my state we got into trouble when the state decided to not fund the pensions in the "good times." I guess instead of lowering everyone's taxes, the state spent the money on something else. So, the people of the state still got some benefit.

I guess I'd rather pay the piper than reduce current benefits. I'd like to think people learned their lessons and won't allow the politicians to do the same thing again.

But I don't believe that. Its a bad situation all around for sure.
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Old 04-23-2012, 10:53 AM   #100
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Misery loves company. I suspect there is a bit of jealousy here.
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