Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 10-13-2016, 04:59 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,350
Quote:
Originally Posted by jazz4cash View Post
It's $43/year per resident. Maybe they can hock something.


Sent from my iPhone using Early Retirement Forum
I read it as a town of 700 residents now owing $1.6 million to CALPERS.

That would be $2285 per resident. Quite a bit of hocking.
__________________

__________________
Fermion is online now   Reply With Quote
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 10-13-2016, 06:20 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,343
Quote:
Originally Posted by Fermion View Post
I read it as a town of 700 residents now owing $1.6 million to CALPERS.

That would be $2285 per resident. Quite a bit of hocking.

The 1.6m is the termination penalty payment to Calpers. The pension reduction for the 71 yr old retiree is 43k-19k=24k. If the other 3 retiree payments and reductions are similar that's 24*4=96k/yr. So it's actually 96k/700=138 annually from each resident for all four retirees. That's for the city to make up the reduction instead of rejoining Calpers.


Sent from my iPhone using Early Retirement Forum
__________________

__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 10-13-2016, 09:27 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,350
If every resident is a taxpayer. If only half of them are, then it is $276 per taxpayer.

For someone with a normal property tax of, say, $1500 a year, that would be a increase of 18%.
__________________
Fermion is online now   Reply With Quote
Old 10-13-2016, 09:55 PM   #24
Full time employment: Posting here.
Dog's Avatar
 
Join Date: Apr 2006
Posts: 744
Sad situation. But I'm shocked at a $48k pension for 29 years of service specifically for a small town in a depressed area. She must be doing pretty well with with SS and her pension compared to her neighbors.


Sent from my iPhone using Early Retirement Forum
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
Dog is offline   Reply With Quote
Old 10-13-2016, 09:57 PM   #25
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,343
Quote:
Originally Posted by Fermion View Post
If every resident is a taxpayer. If only half of them are, then it is $276 per taxpayer.

For someone with a normal property tax of, say, $1500 a year, that would be a increase of 18%.

My point was just that the numbers are not huge.


Sent from my iPhone using Early Retirement Forum
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 10-13-2016, 11:10 PM   #26
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Tijeras (Albuquerque), NM
Posts: 1,291
Quote:
Originally Posted by Dog View Post
Sad situation. But I'm shocked at a $48k pension for 29 years of service specifically for a small town in a depressed area. She must be doing pretty well with with SS and her pension compared to her neighbors.


Sent from my iPhone using Early Retirement Forum
She might not get SS, it depends how it was set up. I know some state employees do not participate in SS.
__________________
I used to have a handle on life....... but it broke!

Semi-Retired 7/1/16: working part-time (60%) for now
38Chevy454 is offline   Reply With Quote
Old 10-14-2016, 12:22 AM   #27
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,504
I do not understand why there is so much pushback on the city when CALPERS, supposedly the premier pension folks in USA charged 30K per year to fund a pension with only 4 retires who were paid over 100K per year, how in the world did that work out. Obviously the city dropping out was a mistake but really why was CALPERS ok with 30K per year when they needed 1.6 million and are charging 7.5 percent interest on the balance?
__________________
Running_Man is offline   Reply With Quote
Old 10-14-2016, 07:53 AM   #28
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,343
Quote:
Originally Posted by 38Chevy454 View Post
She might not get SS, it depends how it was set up. I know some state employees do not participate in SS.
I wondered about SS also. I think many of these articles are poorly presented when they do not include details such as SS participation and whether employee contributions were required.

Here's more on the state of finances at CALPERS

Calpers CIO Says Funding Gap to Widen for Foreseeable Future - Bloomberg
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 10-14-2016, 09:22 AM   #29
Thinks s/he gets paid by the post
MooreBonds's Avatar
 
Join Date: Aug 2004
Location: St. Louis
Posts: 1,950
Quote:
Originally Posted by Running_Man View Post
I do not understand why there is so much pushback on the city when CALPERS, supposedly the premier pension folks in USA charged 30K per year to fund a pension with only 4 retires who were paid over 100K per year, how in the world did that work out. Obviously the city dropping out was a mistake but really why was CALPERS ok with 30K per year when they needed 1.6 million and are charging 7.5 percent interest on the balance?
You're not looking at the bigger picture: the city started contributing when the workers started working. They worked 25-30 years before collecting the pension. That money grew - they didn't start paying into CALPERS in 2001.

And with an annual pension payout to the retirees of (I think) $120k/year, CALPERS would need a decent chunk to finish paying out those pension payments for the projected life of the retirees.

In many pension funds, there is some allowance for current contributions funding current retirees. For instance, my fiance is a teacher in Missouri. Missouri state teacher's pension is pretty decent as far as financial footing - and even they rely on roughly 20% +/- of the current retiree pension check to be covered by current workers' contributions, AND about 20% covered by current school district's contributions, with only about 60% covered by investment earnings. And MO teachers are not covered by social security, so their plan is probably a little more conservative than others....although I see on their website where they are targeting (and probably assuming) an 8% return on investments for their actuarial assumptions.

However, similar to Social Security, the % of salary that the school districts and teachers have had to pay into the system has steadily increased over the years (14.5% now, but was around 10% or so many years ago).
__________________
Dryer sheets Schmyer sheets
MooreBonds is offline   Reply With Quote
Old 10-14-2016, 11:12 AM   #30
Dryer sheet wannabe
 
Join Date: Oct 2015
Location: Bozeman
Posts: 24
If anybody wants to delve into the minutae of the problems with Calpers, the website nakedcapitalism has done a number of articles. See: You searched for calpers | naked capitalism Many of these are so technical that they go right over my head. One of the most fundamental issues however is that they're predicting ROIs that are more than what they're actually getting. Thus, "Ponzi" is pretty close to reality.

Things will get ugly, it's only a question of when (like with Detroit's pensions, and soon Chicago's)
__________________
l8_apex is offline   Reply With Quote
Old 10-14-2016, 04:59 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 13,426
Something doesn't smell right. It would cost about $707k just to buy a SPIA to pay Betty's pension benefits ($4,000/year for life) so if she is at all indicative then the $1.6 million Calpers is demanding for 4 retirees doesn't sound that bad... but it is hard to tell given scant information.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 10-14-2016, 05:59 PM   #32
Recycles dryer sheets
 
Join Date: Nov 2011
Posts: 74
Look for this scenario to play out in many more municipalities in the years to come.
__________________
523HRR is offline   Reply With Quote
Old 10-14-2016, 11:52 PM   #33
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 2,766
Quote:
Originally Posted by MooreBonds View Post
......
In many pension funds, there is some allowance for current contributions funding current retirees. For instance, my fiance is a teacher in Missouri. Missouri state teacher's pension is pretty decent as far as financial footing - and even they rely on roughly 20% +/- of the current retiree pension check to be covered by current workers' contributions, AND about 20% covered by current school district's contributions, with only about 60% covered by investment earnings. And MO teachers are not covered by social security, so their plan is probably a little more conservative than others....although I see on their website where they are targeting (and probably assuming) an 8% return on investments for their actuarial assumptions.
......
This sounds pretty terrible, having current employees paying the pension of retired ones, because it means the contributions of the retired ones was too low to be self funding.
So the current employees are not even getting their full investment set "aside" for themselves as 20% is being siphoned off to pay for the retired ones. This means the current employees are going to be really cheated.
This truly seems like a ponzi scheme.
__________________
Sunset is offline   Reply With Quote
Old 10-15-2016, 11:15 AM   #34
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 15,459
Quote:
Originally Posted by jazz4cash View Post
My point was just that the numbers are not huge.


Sent from my iPhone using Early Retirement Forum
Yes. It's hard to believe the city can't cut some corners and raise taxes a bit to accommodate these four aging retirees until they no longer receive their pensions. The $30k a year the city is saving by not funding the pension system is a start.
__________________

Bestwifeever is offline   Reply With Quote
Old 10-15-2016, 12:55 PM   #35
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,343
The ponzl reference is being taken way to far in this thread. I know it's a good way for the author to create interest but just because current income is being used to meet current liabilities doesn't make it a ponzi scheme. The big crime in a true ponzi scheme is lack of legitimate investment activity IMO.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 10-15-2016, 01:10 PM   #36
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 2,766
Quote:
Originally Posted by jazz4cash View Post
The ponzl reference is being taken way to far in this thread. I know it's a good way for the author to create interest but just because current income is being used to meet current liabilities doesn't make it a ponzi scheme. The big crime in a true ponzi scheme is lack of legitimate investment activity IMO.
Perhaps the definition is being loosely applied. But even most ponzi scheme do perform some investing of the money, rather than have it all sit around in bags on the floor.

But the pension plans that use current contributions to pay for retired folks is much like a ponzi scheme. If they wanted to fund it from current contributions, then there was no need for the retired folks to contribute a penny until one of them hit retirement, then tax everyone to pay for the retired fellow.
Here there is lack of investing or sufficient contributions for each retired person to actually retire.
__________________
Sunset is offline   Reply With Quote
Old 10-15-2016, 02:51 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 8,656
Quote:
Originally Posted by Sunset View Post
............
But the pension plans that use current contributions to pay for retired folks is much like a ponzi scheme. If they wanted to fund it from current contributions, then there was no need for the retired folks to contribute a penny until one of them hit retirement, then tax everyone to pay for the retired fellow. .............
Hey, wait a minute. Isn't this exactly how SS works? And didn't the initial recipients basically get something for nothing?
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 10-15-2016, 03:26 PM   #38
Thinks s/he gets paid by the post
MooreBonds's Avatar
 
Join Date: Aug 2004
Location: St. Louis
Posts: 1,950
Quote:
Originally Posted by travelover View Post
Hey, wait a minute. Isn't this exactly how SS works? And didn't the initial recipients basically get something for nothing?
Pretty much. And while my fiance's pension that I cited as an example doesn't have as great of a history of SS withholding increases there has been a definite increase payment over time, currently at 14.5% paid by employee and 14.5% paid by school district. I wouldn't be surprised if that continues its steady increase, to be 15% each, then eventually 16% each...much like SS will probably also increase the % tax.

What really wakes one up is when you consider that SS withholding started out at something like 1% withholding on just the employee, then increased over time to become the current 12.4% total employee/employer (and likely going higher still). Increases like that are nothing to sneeze at, and show just how ill-fated the initial plans were, where you have to hike funding from just 1% to 12.4% per worker!
__________________
Dryer sheets Schmyer sheets
MooreBonds is offline   Reply With Quote
Old 10-16-2016, 11:05 AM   #39
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,520
My main question, which the article does not address, is are public pensions protected at all by the State of California or its constitution.

If the laws are written so that the pensions are only protected subject to a municipalities willingness to pay, then that is no protection at all.

My guess, from how this went down, is that there is no legal protection for public pensions in California at the state level.

Would be interested if anyone knows the details on this.

-gauss
__________________
gauss is offline   Reply With Quote
Old 10-16-2016, 05:39 PM   #40
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,504
Quote:
Originally Posted by gauss View Post
My main question, which the article does not address, is are public pensions protected at all by the State of California or its constitution.

If the laws are written so that the pensions are only protected subject to a municipalities willingness to pay, then that is no protection at all.

My guess, from how this went down, is that there is no legal protection for public pensions in California at the state level.

Would be interested if anyone knows the details on this.

-gauss
California courts decided that the pensions were guaranteed but came up with a hair brained idea that pension guarantee is only for a "reasonable" pension and that calculation can be changed if the state is not able to pay, so in essence if there is no money government can cut
California county unions appeal to state supreme court on pension decision | Northern California Record

But more interesting is that starting next year all business in California with more than 4 employees will be required to join funds in with the CALPERS, which is woefully underfunded, unless they already have a pension plan. California’s pension deficit is $77,000 per household and CALPERS is requesting that the rate of contribution be changed from 3 percent presently approved to 5 percent and rising over 5 years to 10 percent of California worker’s salary.
http://www.washingtonexaminer.com/th...rticle/2604191
__________________

__________________
Running_Man is offline   Reply With Quote
Reply

Tags
ponzi pension


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
Noticed more people holding signs "need work or food" rayinpenn Other topics 3 05-03-2015 03:51 PM
Now even girls are playing the Ponzi game mickeyd FIRE and Money 4 09-03-2010 04:28 PM
Millenium Bank is a Ponzi Scheme....... FinanceDude FIRE and Money 9 03-27-2009 09:20 PM
What if Vanguard is just a giant ponzi scheme? soupcxan FIRE and Money 62 12-28-2008 08:12 PM

 

 
All times are GMT -6. The time now is 10:23 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.