More State Pension Problems

[Blue Collar Guy]

Quote:

Originally Posted by Teacher Terry BCG: did your BIL get screwed by a public pension or was it a private one? That is awful what happened to him.

It was a teamsters union pension, one of the multi employer ones

[Teacher Terry]

It sounds like it ruined their retirement. So very sad.

[Just_Steve]

Quote:

Originally Posted by Bamaman My father was a civil servant working for Tennessee Valley Authority (TVA.) In the 1950's, wages were relatively low but they were promised a great pension, great vacation time and the ability to bank their unused sick leave. TVA built their own steam plants, nuclear plants and all power construction with 35,000+ employees. TVA quickly realized they didn't have the money to fund the pensions of so many employees and they privatized construction and laid off or retired about 25,000 employees. 20 years later, TVA has thrown $ billions into the pension program and it's still $ billions short of being adequately funded. Other governmental entities simply failed to fund their pensions anywhere near a reasonable level. And there will be a day of reckoning coming for Illinois, City of Chicago and California state employees. You cannot come up with new taxation to pay for the sins of past politicians. Look at what happened to the City of Detroit employees--now living on a pittance of their original pensions. The money is just not there despite the upswing in the stock market.. I'm just thankful MegaCorp well funded our defined pension. And they went early to 401K's where I have sufficient $ to live on. I do feel sorry for the civil servants that were promised the pie in the sky--only to know the sky's going to fall eventually.

Cuts not as bad as you think.
Pittance is a bit of hyperbole.

Questions & answers on Detroit's pension problem
Underfunding of the city's pension funds and the magnitude of pension and health care benefits owed to Detroit workers and retirees was a driving factor behind the city's historic bankruptcy, which resulted in 4.5% cuts and other reductions for general pensioners and decreased cost-of-living increases for police and fire pensioners.

For Detroit retirees, pension cuts become reality
Under the city's plan, the pensions of police and firefighters are not being cut, but their annual 2.25 percent cost-of-living adjustment is reduced to about 1 percent.

General workers will endure a 4.5 percent base cut in pensions and the elimination of an annual cost-of-living increase.

[Blue Collar Guy]

Quote:

Originally Posted by Teacher Terry It sounds like it ruined their retirement. So very sad.

It completely trashed it.

[travelover]

Quote:

Originally Posted by Just_Steve ............General workers will endure a 4.5 percent base cut in pensions and the elimination of an annual cost-of-living increase.

I believe that they also lost their paid health care coverage, which was a significant hit.

[97guns]

Even private pensions are in bad shape, I have a cousin and his wife that works for united airlines, both mechanics and bbeen with the company for over 25 years. They just retired in their mid 60's


"United Air Wins Right to Default on Its Employee Pension Plans. United Airlines, which is operating in bankruptcy protection, received court permission yesterday to terminate its four employee pension plans, setting off the largest pension default in the three decades that the government has guaranteed pensions.May 11, 2005

[Texas Proud]

Quote:

Originally Posted by Bamaman /snip/ Look at what happened to the City of Detroit employees--now living on a pittance of their original pensions.

Really? A pittance? The haircut was 4.5%... I would not call that a drastic cut where it would be considered a pittance...

The big benefit to Detroit was not having to fund COLA....

[NanoSour]

Quote:

Originally Posted by Texas Proud Really? A pittance? The haircut was 4.5%... I would not call that a drastic cut where it would be considered a pittance... The big benefit to Detroit was not having to fund COLA....

4.5% is a great number if you're trying to convince people that the situation is not that bad. If all retired health care benefits were also taken a way, well that 4.5% could be more like a 50% total cut in benefits after health insurance is purchased prior to Medicare kicking in.

Example: city employee works 30 years from 25 to 55 years old and decides to retire with an immediate pension and full healthcare benefits. Now he/she gets 4.5% less in pension, but no healthcare and has to purchase it in the open market with reduced pension dollars. Depending on family situation, that could easily be 15K/year. And of course that pension is now fixed, but health insurance will rise significantly year over year taking a bigger bite out of the pension.

Numbers are so easily manipulated for political purposes.

[Texas Proud]

Quote:

Originally Posted by NanoSour 4.5% is a great number if you're trying to convince people that the situation is not that bad. If all retired health care benefits were also taken a way, well that 4.5% could be more like a 50% total cut in benefits after health insurance is purchased prior to Medicare kicking in. Example: city employee works 30 years from 25 to 55 years old and decides to retire with an immediate pension and full healthcare benefits. Now he/she gets 4.5% less in pension, but no healthcare and has to purchase it in the open market with reduced pension dollars. Depending on family situation, that could easily be 15K/year. And of course that pension is now fixed, but health insurance will rise significantly year over year taking a bigger bite out of the pension. Numbers are so easily manipulated for political purposes.

I do not know... did they lose health care?

Also, they could buy into the ACA market and get credits if their income is low... I do not see anybody that does not make a lot of money spending $15K on health insurance...


Edit to add... the one article I read says they did not lose their healthcare, so your point is moot...

BTW, I was looking forward to company healthcare and they changed the rules and dropped younger people... I was 6 months away from qualifying... not sure if they still have it or not as a number of companies are getting rid of this perk...

[Chuckanut]

Quote:

Originally Posted by NanoSour Example: city employee works 30 years from 25 to 55 years old and decides to retire with an immediate pension and full healthcare benefits. Now he/she gets 4.5% less in pension, but no healthcare and has to purchase it in the open market with reduced pension dollars. Depending on family situation, that could easily be 15K/year. And of course that pension is now fixed, but health insurance will rise significantly year over year taking a bigger bite out of the pension.

One point. People must look at the ENTIRE compensation package to make a judgment about "pay".

I have a friend who does not not have a pension, but has contributed to a 401K with 4% match, and in addition, has at least $250,000 (as of 2014) in company stock he has earned over the years of his service. They are being bought out and he will cash in very soon. Oh, he also has a Cadillac medical plan for which he pays peanuts. Occasionally, he mentions my pension and my being 'lucky' to have it. I point out that I am not any luckier that he is to have a healthy 401K balance and over a quarter million dollars in the stock of a prosperous. We both were responsible and planned well.

What's going on with under funded pensions is, IMHO, the moral equivalent wage theft. And it's just plain irresponsible behavior towards the citizens, taxpayers, etc.

The best pension reform would be to deposit the 'pension' money monthly into an investment account that only the employee can access and control. No management, politician, bureaucrat, etc. has any further control or claim to the money.

I know, ain't gonna happen soon. Control of money = power.

[pb4uski]

Quote:

Originally Posted by NanoSour 4.5% is a great number if you're trying to convince people that the situation is not that bad. If all retired health care benefits were also taken a way, well that 4.5% could be more like a 50% total cut in benefits after health insurance is purchased prior to Medicare kicking in. .....

Quote:

Originally Posted by Texas Proud ...Edit to add... the one article I read says they did not lose their healthcare, so your point is mute [sic]....

Quote:

Originally Posted by NanoSour ....Numbers are so easily manipulated for political purposes.

Yes, NanoSour, I believe you.... numbers (and I guess facts) are easily manipulated for political purposes.

[OldShooter]

Quote:

Originally Posted by Chuckanut ... What's going on with under funded pensions is, IMHO, the moral equivalent wage theft. And it's just plain irresponsible behavior towards the citizens, taxpayers, etc. ...

From one angle, yes. The pensioners have been promised something that they will not get. But whom to blame?

Part of the blame, IMO, runs to the public employee unions who negotiated deals either without trying to determine the consequences or by ignoring them. The politicians, too, who wanted the union votes but needed to hide the bribe in the pension promises rather than making it visible as wage increases. And, then, of course kicking the financial can down the road for future politicians to deal with.

And pretty much the same scenario on the private side. Labor peace being purchased by making impossible future promises, exacerbated by underfunding.

So now it looks like the state taxpayers are being the wage theft bad guys by refusing (being unable, really) to fund the promises, but they too have been snookered by the unions and the politicians.

Terrible situation but no one around to guillotine.

[pb4uski]

+1 and many of the true culprits are dead or retired and the promises that they either knew or should have known could not be kept were made long ago. SS could end up being a similar story if we don't see some courage in DC pretty soon.

[ncbill]

Quote:

Originally Posted by 97guns Even private pensions are in bad shape, I have a cousin and his wife that works for united airlines, both mechanics and bbeen with the company for over 25 years. They just retired in their mid 60's "United Air Wins Right to Default on Its Employee Pension Plans. United Airlines, which is operating in bankruptcy protection, received court permission yesterday to terminate its four employee pension plans, setting off the largest pension default in the three decades that the government has guaranteed pensions.May 11, 2005

OTOH, a relative was an aircraft mechanic for 30+ years at a different airline, but the union was always in charge of his plan.

though, unfortunately for the pilots...

[Texas Proud]

Quote:

Originally Posted by pb4uski Yes, NanoSour, I believe you.... numbers (and I guess facts) are easily manipulated for political purposes.

Thanks for fixing my mistake.... I was able to go back and edit...

But, I wonder why you are saying that what I put down is being manipulated NanoSour was saying that it could be a big issue if they lost health care... I would agree with that stmt...

So, I looked and from what I read they did not... so it is back to the 4.5% reduction that was stated... how is that manipulation for political purposes? It is the fact and it is not being manipulated... unless you can show me that something else happened here, I will have to go with the real facts and not speculation....

[pb4uski]

I guess that I was thinking that NanoSour included health care being lost as if it was a fact to make some sort of political point about how these retirees got fleeced when in fact they did not since the 4.5% reduction with no chnges to health benefits is not that big a deal in the whole scheme of things.

Though I see now that his post was "if" healthcare was taken away and not asserting that it was taken away.

[RenoJay]

My two observations are that neither a rising stock market nor the existence/non existence of state income tax seem to make any difference on funding levels.

[gcgang]

Kentucky Public Employee Retirements Surge As Fears Of Pension Collapse Mount | Zero Hedge

Above on Kentucky, and why the financially correct answer won't be politically acceptable.

[aja8888]

Quote:

Originally Posted by gcgang Kentucky Public Employee Retirements Surge As Fears Of Pension Collapse Mount | Zero Hedge Above on Kentucky, and why the financially correct answer won't be politically acceptable.

Just another state pension system in the que.....

[Running_Man]

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Originally Posted by Just_Steve New York 94.5% funded. I sleep well every night, keep those pension checks coming.

New York the last five years has been paying 20%+ of payroll to the pension, but even still the pension is counting on 7 percent annual returns, is heavily invested in private placements (KKR just got 3 billion of the pension funds this week for a private deal) that are valued at 5 year rolling asset estimations.

While this is what Illinois has not been willing to do, any kind of a bear market is going to crush these pensions because the cash payouts are so high and going higher. It is hard to make it work when your base case counts on adding 20% of current payroll to the pension assets plus 7% return on existing assets and that is the third best state pension fund available.