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Old 10-31-2013, 12:57 PM   #61
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The IMRF actually has decent funding (mid 80% IIRC).

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What a surprise! This is the system where most of the patronage workers and ghost employees reside. Naturally the politicians are going to fund the plan where their mistresses, kids, siblings, spouses, neighbors, bar buddies and Uncle Rod all are participants!

It's Illinois!
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Old 10-31-2013, 01:15 PM   #62
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No one wants to see promises broken. -ERD50
Oh, I think somebody here does.........
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Old 10-31-2013, 01:32 PM   #63
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Some people think that government employees work for the public.

The reality is the reverse of that.
+1

I don't begrudge people their pensions but many public employees' are over the top and I do not want to pay for those underfunded pension programs.
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Old 10-31-2013, 04:52 PM   #64
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I don't begrudge people their pensions either, but they need to find the money somewhere else other than taxes. Maybe a fairy or something.

Nobody comes to rescue my 401K when the market drops 50%...well, ok technically the fed did, but in a roundabout way... I am not sure they will rescue it the same way next time.

But if we want to raise taxes to fund retirement plans, I am all for people putting some extra in my 401K!
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Old 10-31-2013, 05:31 PM   #65
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Nobody comes to rescue my 401K when the market drops 50%...well, ok technically the fed did, but in a roundabout way... I am not sure they will rescue it the same way next time.
Ummm.... didn't the market recover all it has lost? Unless a person panicked and sold low, he or she should be pretty much whole.
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Old 10-31-2013, 05:51 PM   #66
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Ummm.... didn't the market recover all it has lost? Unless a person panicked and sold low, he or she should be pretty much whole.
Exactly! So there should not be a pension problem.
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Old 10-31-2013, 07:32 PM   #67
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I am absolutely horrified that someone paid to create this empty and worthless video.

Sure many workers do not receive Social Security - because they also did not contribute to social security. That doesn't seem like a valid reason by itself that I should expect them to receive generous pension benefits.
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Old 10-31-2013, 10:31 PM   #68
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I am absolutely horrified that someone paid to create this empty and worthless video.

Sure many workers do not receive Social Security - because they also did not contribute to social security. That doesn't seem like a valid reason by itself that I should expect them to receive generous pension benefits.
I just watched it again from start to finish. Hmmmm, I wasn't sure who produced it, who is 'thisismyillinois.com/'? They didn't really list any credits other than that. But at the bottom of that web site, it does say ' Created by the IL Office of the Governor'.

So what is the point of this video? All I seemed to get from it was:

A) We should keep our promises.
B) Pensions have been around since Roman times.
C) Illinois doesn't have enough money to keep our pension promises.
D) Thanks in advance.

Thanks for what? Was there anything about a solution there? Even a question?

Maybe this is telling: Comments are disabled for this video.


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Old 10-31-2013, 10:37 PM   #69
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Perhaps to provide entertainment to the masses, since throwing Christians to the lions is out of favor now days
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Old 10-31-2013, 10:50 PM   #70
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Ummm.... didn't the market recover all it has lost? Unless a person panicked and sold low, he or she should be pretty much whole.
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Exactly! So there should not be a pension problem.
From 2000 to 2012, the S&P500 is pretty much flat with dividends reinvested and the inflation accounted for. Meanwhile, pension funds have been running their actuarial projection with real returns of 5% or higher. Hence, that is another factor to add to the shortfall.
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Old 10-31-2013, 11:22 PM   #71
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Easiest way to eliminate underfunded status is to raise your actuarial assumption for future rate of return. Unfortunately, most pensions already use a pretty high rate.
Hope, the opiate of the masses.
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Old 11-01-2013, 12:20 AM   #72
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From 2000 to 2012, the S&P500 is pretty much flat with dividends reinvested and the inflation accounted for. Meanwhile, pension funds have been running their actuarial projection with real returns of 5% or higher. Hence, that is another factor to add to the shortfall.
The major cause of pension underfunding in Illinois is completely skipped or reduced contributions by the state year after year after year. Blagojevich, pre-prison, excelled at this but his predecessors, many of whom did prison time too, also contributed to the problem. Employee contributions were always made in full via payroll deduction.
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Old 11-01-2013, 12:37 AM   #73
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I don't begrudge people their pensions either, but they need to find the money somewhere else other than taxes. Maybe a fairy or something.

Nobody comes to rescue my 401K when the market drops 50%...well, ok technically the fed did, but in a roundabout way... I am not sure they will rescue it the same way next time.

But if we want to raise taxes to fund retirement plans, I am all for people putting some extra in my 401K!
Extra? Oh bull poopy!

Do you get a employer match on your 401k? If you were promised an employer match and the employer reneged, would that be OK? if your employer made up the missed match later, would that be "extra?"

The Illinois public pension funds do not need "extra" money. They need the money that Blagojevich and other shady governors redirected from the pension funds to pet projects and other questionable uses. While employees contributed in full, Blago, and others, skipped payments.
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Old 11-01-2013, 08:22 AM   #74
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The problem is that the government leaders and union leaders don't really want the public to know exactly what these pensions are costing. Otherwise, it would be simple to fix with a targeted tax like a gas tax.
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Old 11-01-2013, 09:47 AM   #75
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The major cause of pension underfunding in Illinois is completely skipped or reduced contributions by the state year after year after year. Blagojevich, pre-prison, excelled at this but his predecessors, many of whom did prison time too, also contributed to the problem. Employee contributions were always made in full via payroll deduction.
Shhhhh....... People are not supposed to remember that!
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Old 11-01-2013, 10:29 AM   #76
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Shhhhh....... People are not supposed to remember that!
Nor do people realize that projections STILL include unrealistic returns. Illinois is suspected to be 83 trillion underfunded but if you use 4% instead of the 7 or 8 they are still using, the projections change to 280 billion. And that's just the state not the cities. So, as usual, the government and union leaders will continue to mislead the electorate. Oh what a tangled web we weave......
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Old 11-01-2013, 10:30 AM   #77
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The major cause of pension underfunding in Illinois is completely skipped or reduced contributions by the state year after year after year. Blagojevich, pre-prison, excelled at this but his predecessors, many of whom did prison time too, also contributed to the problem. Employee contributions were always made in full via payroll deduction.
Yes. I was pointing out that the market did not help either.

As I am not a pensioner, I did not follow pension finance much, either public or private, but happened to see an article in BusinessWeek warning corporate pension managers such as GM that they used too rosy stock returns in their projection. This was in the early 2000s.

Coming off two decades (1980-2000) of wonderful stock gains, people got complacent with 10+% annual stock return and expect it to last forever.
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Old 11-01-2013, 10:33 AM   #78
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Nor do people realize that projections STILL include unrealistic returns. Illinois is suspected to be 83 trillion underfunded but if you use 4% instead of the 7 or 8 they are still using, the projections change to 280 billion. And that's just the state not the cities. So, as usual, the government and union leaders will continue to mislead the electorate. Oh what a tangled web we weave......
Edit: 83 billion not trillion
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Old 11-01-2013, 11:39 AM   #79
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There were several cases where companies reduced or eliminated matches to 401K plans during the recession but I have not heard any calls for the federal government to step in and pay the difference.

A responsible person investing a 401K does not assume 8% returns or 5% real returns or whatever similar fairytale figure the pension plans use. Usually you have a mix of stocks and bonds and will be lucky to get a 3% real return. There will be no targeted gasoline tax to make up the difference if you do not get a 5% real return in your 401K.

What would be fair is a pension cap where a certain level is guaranteed and anything above that cap is promised but not absolutely guaranteed. Thus if you work your 25 or 30 years, you get a guaranteed $40,000 a year pension (or some similar figure) and perhaps a promise of a higher pension if the market does great.

$40,000 a year corresponds to at least a $1,000,000 private annuity. A person contributing 2% of their salary (or even 9%) to a 401K will be hard pressed to get more than $1,000,000 in 25 years even with a decent market.
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Old 11-01-2013, 11:41 AM   #80
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A responsible person investing a 401K does not assume 8% returns or 5% real returns or whatever similar fairytale figure the pension plans use. Usually you have a mix of stocks and bonds and will be lucky to get a 3% real return. There will be no targeted gasoline tax to make up the difference if you do not get a 5% real return in your 401K.
I think plenty of "reasonable people" can expect 8% returns in a 401K. If you are in your 20s or 30s and you have 20-30 years (or more) until retirement, you can easily have a sufficiently aggressive asset allocation (80-100% equities) to have a reasonable expectation of 8% returns over the long term for a while, even in the "new economy" IMO. But pension funds and older folks may not be able to safely do that.

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As I am not a pensioner, I did not follow pension finance much, either public or private, but happened to see an article in BusinessWeek warning corporate pension managers such as GM that they used too rosy stock returns in their projection. This was in the early 2000s.

Coming off two decades (1980-2000) of wonderful stock gains, people got complacent with 10+% annual stock return and expect it to last forever.
And because pension funds have ongoing outflows from benefits, they can't be as aggressive as someone with a 401K they won't be tapping for another 20-30 years. Most pension funds seem to follow an asset allocation of about 50-60% equities, with aggressive funds closer to 70% -- and you can't get the reliable 8% (or more) return that the pension funds need to meet their promises with an allocation like that in the long term. And even if you could get close to 8% long term, because of ongoing withdrawals to pay current benefits a few consecutive years of significantly subpar performance can put you in a pretty big hole that's hard to climb out of.

That said, it would have been an easier hole to climb out of if many of these companies and governments continued to fund their plans even when market returns were very high. Instead, many of them basically said, "the fund up is up 20% this year so we don't need to fund it this year." That bites you in the butt when an Ursa Major event arises, as in 2000-02 and 2008-09.
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