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Old 07-29-2013, 08:37 AM   #81
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I believe this already happened in the private sector, Do a Google search for Delta Airlines pilot pension
I scanned a few articles and yes, but if I understood correctly the system fell into the PBGC's hands. They then have the right to amend these pensions. Detroit of course being public cannot have the PBGC take it over. I truly do not know what to make of it, nor am I averse enough in the matter. But it just took me back that the system sounds reasonably funded. Here of course is my nativity. I assumed government pension monies would be walled off, like a persons Vanguard funds are from the company, but evidently not. I wonder if that is the reason why my pension systems monies are in a trust; so it can't be commingled with other state financial issues?
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Old 07-29-2013, 10:37 AM   #82
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I beleieve there may be some critical difference between the RI case and that of Detroit. The protection for past bennifits in Michigan are constitutionally protected while it appears to be a much higher level than the protections offerd in RI.

http://crr.bc.edu/wp-content/uploads/2012/08/slp_25.pdf
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Old 07-29-2013, 11:45 AM   #83
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I scanned a few articles and yes, but if I understood correctly the system fell into the PBGC's hands. They then have the right to amend these pensions. ...
Maybe it's semantics, but as I understand it, the PBGC follows rules that are pre-defined. It's not like they look at the situation and then decide how to 'amend' the pensions. Everyone gets handled the same. Maybe that is what you meant?

And as I understand the pilot pensions, they do get whacked relative to others, since there is some built in 'early retirement' for them, and they are highly compensated. But those are the pre-defined rules that apply to everyone, regardless of occupation - the pilots fit that general profile though.

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Old 07-29-2013, 12:44 PM   #84
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Maybe it's semantics, but as I understand it, the PBGC follows rules that are pre-defined. It's not like they look at the situation and then decide how to 'amend' the pensions. Everyone gets handled the same. Maybe that is what you meant?

And as I understand the pilot pensions, they do get whacked relative to others, since there is some built in 'early retirement' for them, and they are highly compensated. But those are the pre-defined rules that apply to everyone, regardless of occupation - the pilots fit that general profile though.

-ERD50
Yes, that is what I meant. I am guessing here, but I imagine along the lines of what you are saying, ERD, is that some of these pilots got double whacked: Pension too high in relation to what the PBGC'S maximum amount is, along with a possible age reduction amount if below age 65.
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Old 07-29-2013, 01:55 PM   #85
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The following article describes a precedent set in a tiny small town of 1 square mile in Rhode Island. A retired firechief got his $34K pension cut in half. He started as a fireman at the age of 20, and retired at 42 at a salary of $60K. He also had retiree's family health insurance with no copay, but it was not clear what happened to that.

'It's degrading': Bankrupt New England mill town offers Detroit a bleak preview - In Plain Sight
The difference between this and Illinois is that the Rhode Island town's retired firechief had his pension reduced as the result of a bankruptcy judgment. In the Illinois situation, legislators are considering reducing the pensions of retirees and the already earned credits of current employees to avoid bankruptcy and to redirect future dollars toward other state needs rather than the pension fund.

It doesn't seem like there is much question that Illinois can slash the value of benefits earned in future years for both current employees and new hires without declaring bankruptcy. The interesting question is whether, in an effort to avoid declaring bankruptcy, Illinois can reduce the value of already earned pension credits and reduce the pensions of already retired employees without declaring bankruptcy. If they can, it will set an interesting precedent for other pension fund managers to look at.

In preparation for a possible court battle, Springfield has already declared that the pensions of the judges, including the State Supreme Count judges who would decide on the case, will not be included in the outcome.

It does seem a bit disconcerting that already earned pensions could be reduced without the pension fund holder going through bankruptcy. In Illinois, the outcome would certainly be politically driven and likely not transparent. OTOH, going to bankruptcy court hardly guarantees retirees a better deal.

What a huge mistake Illinois employees, and their unions where applicable, made in not demanding to be part of SS. That would have at least given them a floor of retirement income not likely to be jerked around by the likes of Rod Blagojevich and the other, sometimes convicted, crooks dipping into the 9.4% they've been blindly sending in each paycheck.
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Old 07-29-2013, 02:02 PM   #86
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The difference between this and Illinois is that the Rhode Island town's retired firechief had his pension reduced as the result of a bankruptcy judgment.

... The interesting question is whether, in an effort to avoid declaring bankruptcy, Illinois can reduce the value of already earned pension credits and reduce the pensions of already retired employees without declaring bankruptcy. If they can, it will set an interesting precedent for other pension fund managers to look at.

... OTOH, going to bankruptcy court hardly guarantees retirees a better deal.

What a huge mistake Illinois employees, and their unions where applicable, made in not demanding to be part of SS.
Then, in a bankruptcy all bets are off, as in the RI case. This is where Detroit pensioners are.

Regarding opting out of SS, was that not a long time ago, when SS was first instituted? Groups that opted out were allowed, including the Amish as I have read.
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Old 07-29-2013, 02:16 PM   #87
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Then, in a bankruptcy, all bets are off, as in the RI case. This is where Detroit pensioners are.

Regarding opting out of SS, was that not a long time ago, when SS was first instituted? Groups that opted out were allowed, including the Amish as I have read.
Right. Illinois is looking to have their required contributions to the funds reduced. (Although they frequently skip the payment anyway........) They have already put new hires on new, less expensive, less generous plans. But the current savings are too small and the Springfield gang feels they need the immediate relief that cutting the already earned credits of current employees and the pensions of those already retired. They say being allowed to do that will save them from declaring bankruptcy in the future. And that may be, for all I know, correct. It's just difficult to picture a notorious group like the Springfield Machine doing this without some judicial oversight such as bankruptcy court. But, again, there's nothing about bankruptcy court that would guarantee the retirees a better deal.

Illinois employees have never been in SS. Goes back many decades. Big, big mistake on the employees part to not demand it. Now, the state says they could not consider it because they cannot afford the 6.2% employers match. This leaves current retirees with no floor as to how low this can go, formal bankruptcy or not.
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Old 07-29-2013, 02:38 PM   #88
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Right. Illinois is looking to have their required contributions to the funds reduced. (Although they frequently skip the payment anyway........) They have already put new hires on new, less expensive, less generous plans. But the current savings are too small and the Springfield gang feels they need the immediate relief that cutting the already earned credits of current employees and the pensions of those already retired. They say being allowed to do that will save them from declaring bankruptcy in the future. And that may be, for all I know, correct. It's just difficult to picture a notorious group like the Springfield Machine doing this without some judicial oversight such as bankruptcy court. But, again, there's nothing about bankruptcy court that would guarantee the retirees a better deal.

Illinois employees have never been in SS. Goes back many decades. Big, big mistake on the employees part to not demand it. Now, the state says they could not consider it because they cannot afford the 6.2% employers match. This leaves current retirees with no floor as to how low this can go, formal bankruptcy or not.
As a person who has followed this from a distance over the years, this is just outrageous what they have done. For many, many years, they have slowly let the balances and funding rates dwindle down and have done nothing to even stabilize the system, let alone contribute back what they were supposed to. If they had over the years, it maybe would have forced them to address the system in a fair and responsible manner; instead of acting like everything was fine and eventually it would be fixed. Well we know how it's going to be fixed now. They sure had no problem taking the workers money, but seemed to not be so worried about their portion of the bill.
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Old 07-29-2013, 03:15 PM   #89
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As a person who has followed this from a distance over the years, this is just outrageous what they have done.
It is frustrating. We have a number of extended family members involved. None could be described as being in a "gravy train" situation, and all just wish the situation would finalize so they can plan where to go from here.
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For many, many years, they have slowly let the balances and funding rates dwindle down and have done nothing to even stabilize the system, let alone contribute back what they were supposed to. If they had over the years, it maybe would have forced them to address the system in a fair and responsible manner; instead of acting like everything was fine and eventually it would be fixed. Well we know how it's going to be fixed now. They sure had no problem taking the workers money, but seemed to not be so worried about their portion of the bill.
Well, the guy most responsible for the funding debacle of the past decade is sitting in a jail cell but that doesn't help things now.

There's lots of blame to go around. Politicians were (are) arrogant, dumb and crooked. Union leaders were in the politicians pockets. Employees were na´ve, or, in some cases, there were huge disconnects between the employees and the union bosses. I recall the association president at the school where DW taught going ballistic over the "pension holiday" that occurred under Rod Blagojevich. He called DW, and the other 2 or 3 dozen teachers at that school, asking that they call, write or visit their state rep and the state level union boss. DW did and I assume others did too. But, in the end, the state level union officials winked and signed on to Gov Blagojevich's grand scheme. Who knows what they got in return......... Blago was quite the deal maker, as you've no doubt heard!

It'll be interesting to see how this all turns out. I'm particularly interested in seeing if they're able to cut the pensions of current retirees without declaring bankruptcy.
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Old 07-29-2013, 03:30 PM   #90
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The interesting question is whether, in an effort to avoid declaring bankruptcy, Illinois can reduce the value of already earned pension credits and reduce the pensions of already retired employees without declaring bankruptcy. If they can, it will set an interesting precedent for other pension fund managers to look at.
More than that. Why not do the same with already earned payments on contracts that have been completed? It's not like this sorry state of affairs is strictly due to employee pensions. "Sorry, Acme Roadworks, we paid you 10 million to do highway repairs in 1997, but now we realize we should have paid you eight million. So the court has authorized us to seize 2 million of your assets and sell them to get our money back."

For that matter what about fringe benefits like medical, sick pay and vacation?

People who buy bonds and stocks know they are assuming some risk. I don't think employees ever had that same warning. At least nobody ever told me that my earnings for today's work might be reduced in the future, the same way that today's value of my stocks and bonds could be reduced.

That said, if the money ain't there, it ain't there. We need the wisdom of Solomon to solve this one.
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Old 07-29-2013, 05:44 PM   #91
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Somehow I think attitudes would be different if States, Cities or the Federal government was hurting for money so they started garnishing people's 401k balances.
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Old 07-29-2013, 05:48 PM   #92
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Somehow I think attitudes would be different if States, Cities or the Federal government was hurting for money so they started garnishing people's 401k balances.
So, you took the lump sum? Gimme half back!
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Old 07-29-2013, 05:50 PM   #93
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Somehow I think attitudes would be different if States, Cities or the Federal government was hurting for money so they started garnishing people's 401k balances.
They have already garnished people's pay in the form of taxation.
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Old 07-29-2013, 05:56 PM   #94
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Well, there's talk that for these stingy, scroogey, and dirty people who have saved money, we will not give them SS.

SS should be reserved for the unfortunate people who, despite having made the same money in their working life and contributed the same into SS, managed to spend it all and are now broke. That's what some pols have been thinking aloud. It's called means testing, baby!

Let these ER's run their FIRECalc on their stash alone without SS. Whoopie Doo!
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Old 07-29-2013, 06:19 PM   #95
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They expect us to be brave and run towards danger, then they want to sue us when we have to shoot someone.
Well, I hope our service men/women get the same benefits/pension as you do. There are servicemen who are in trouble now because they shot people overseas when "supposedly" they shouldn't have...not fair.

Either way, I don't think any public emp should be able to retire at 55 with a full pension and benefits. This is the reason cities/states are going bankrupt and it is only beginning.

Taxpayers can't afford to have their taxes increased when their raises don't keep up with COL. I'm sure you have read the middle class person hasn't seen a real increase since 1995, so they can't afford to keep paying your healthy benefits when you reach 55. If you want to retire at 55, take a reduction in pension like the private employee does and pay into your healthcare like the private retiree.

If at 55 you aren't physically capable of performing your job, there are other jobs you can do at a lower pay scale. It happens everywhere, why should public emp be different.
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Old 07-29-2013, 06:24 PM   #96
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Either way, I don't think any public emp should be able to retire at 55 with a full pension and benefits. This is the reason cities/states are going bankrupt and it is only beginning.
The former fire chief of that RI town retired at 42 (with a 22-yr service) with a pension of more than 50% of final pay (do not know if COLA'ed or not), and full health insurance for the family with no out-of-pocket expenses. The article did not say what level of contribution he made while working.
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Old 07-29-2013, 06:30 PM   #97
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The former fire chief of that RI town retired at 42 (with a 22-yr service) with a pension of more than 50% of final pay (do not know if COLA'ed or not), and full health insurance for the family with no out-of-pocket expenses. The article did not say what level of contribution he made while working.
I would have given 1/4 my pay over those years to get a deal like that!
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Old 07-29-2013, 06:31 PM   #98
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The question is (and your system appears to not be part of the question) is the math and accounting backing up the promises to pay the pension.
If they keep getting the hefty pensions/benefits they get now, the math won't add up. There just aren't as many businesses around because of outsourcing overseas. Because of that there aren't as many employees to pay taxes so public personnel has to be cut too. That adds to less people putting money into the system and the gov. has to cut the amt. they contribute.

It's happening everywhere. My husband ret'd. 3 yrs ago and is a contractor at the same place. He just said today that people at the company are mad because they rec'd letters in the mail on Friday explaining how pensions are going to be changing. The company has places in multiple states and all pensions in all states are going to be calculated the same. At one time, states with higher COL got higher pensions....not no more!!
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Old 07-29-2013, 06:42 PM   #99
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Still, if a system is self-contained, it's nobody's business to envy or to criticize it.
But it isn't self contained. It is taxpayer contained.
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Old 07-29-2013, 06:48 PM   #100
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I would have given 1/4 my pay over those years to get a deal like that!
Highest bid is 1/4! Do I hear 1/3?

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But it isn't self contained. It is taxpayer contained.
Then the law should be changed to make it self-contained. Even the US Constitution has been amended.

Let the young workers and the old retired workers work it out among themselves on how to spend their "lock box". That's what has been happening with SS.

At the national level, SS has to be self-contained. Who bails us out? The Chinese? So, why not the same at the state level, the city level, etc...?
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