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Old 04-23-2017, 05:55 AM   #61
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I suspect the biggest impact on the population at large will be increased taxation to pay for some or all of the shortfall. It would be prudent to examine such matters when determining where to live in retirement.
That would be counter productive but doesn't mean politicians wouldn't panic and do it anyway.
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Old 04-23-2017, 10:12 AM   #62
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FWIW, had I been able to take my gold and platinum pine and brass teacher's pension in my mid 50's it would also have been around $700 a month. Early retirement needs to be well thought out.
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Old 06-12-2017, 04:11 PM   #63
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Possibly, although politicians will look at the numbers, and how many voters are not on pension vs giving the pensioner's a haircut.

I know I'll vote out any politician that taxes me extra to pay for the pensions that I don't get.
I am with you in the matter of voting. I take it that by "pensioners" you refer to retired civil servants. When we vote, it remains to be seen whether the elected officials or the civil servants are more powerful. Who rules, is it the electorate or is it government bureaucracies, the deep state?
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Old 06-12-2017, 04:39 PM   #64
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I am with you in the matter of voting. I take it that by "pensioners" you refer to retired civil servants. When we vote, it remains to be seen whether the elected officials or the civil servants are more powerful. Who rules, is it the electorate or is it government bureaucracies, the deep state?
I fear no state politicians because they cannot touch what has been earned in NY. All they can do is sell out the unborn.

[Membership in retirement systems; benefits not to be diminished nor impaired]
§7. After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired. (New. Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.) (Article V, Section 7) NYS Constitution.
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Old 06-12-2017, 05:39 PM   #65
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I fear no state politicians because they cannot touch what has been earned in NY. All they can do is sell out the unborn.

[Membership in retirement systems; benefits not to be diminished nor impaired]
§7. After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired. (New. Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.) (Article V, Section 7) NYS Constitution.
My union sent me this. I was feeling good. Then my union sent me this tidbit,http://www.newyorkconcon.info/ every 10 or 20 years NY has a vote for a convention that can amend the constitution.The good news is, since 1938 the vote for a new constitution has been lower each time.
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Old 06-12-2017, 06:10 PM   #66
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My union sent me this. I was feeling good. Then my union sent me this tidbit,Home | The New York State Constitutional Convention Clearinghouse every 10 or 20 years NY has a vote for a convention that can amend the constitution.The good news is, since 1938 the vote for a new constitution has been lower each time.
For once I like ill informed voters. The majority won't vote for it because they don't understand it.
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Old 06-15-2017, 09:45 AM   #67
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I worked for 12 years for a smallish (300 employees) but well-funded company that was a branch of a well-known national brand. They offered an interesting pension - every year, an amount equal to 15% of your gross was placed into a pension fund, vested at 20% a year. So if you were salaried at $40k, you'd also get $6k put in the pension.

The way it was handled felt a bit odd - apparently, it was a private investment firm that handled it, but I could never get solid information when I was employed as to how it was invested. I would get annual "statements", that amounted to a few lines of information about my particular pension (company letterhead of the company that employed me, "last year $x,000 was deposited into your pension. You are 80% vested.)

When I left, I requested the funds be rolled over into an IRA. The benefits person (not a department, a single person) thought I was nuts. The process took several months. As you can imagine, I wondered even more whether the whole thing was a scam. Eventually, a $150k-ish payment was made into my Fidelity account as a rollover IRA.

In the decade since, that $150k has doubled, and I'm relieved to not have the mysterious pension stress.
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Old 06-15-2017, 10:26 AM   #68
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I'm relieved to not have the mysterious pension stress.
I'm sure you made the smart move there.
Not being able to find out the details would have made me crazy.
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Old 09-02-2017, 09:58 AM   #69
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Illinois has some law at constitution level that protects pensions of unions and politicians.

Chicago has been raising all conceivable taxes to pay for decades of underperforming investments to pay city worker pensions. Spouse bought a 12 count case of fizzy water last week and new beverage tax was more than the cost of the water which was like .50 a bottle.

Fortunately I will do what is necessary to minimize these on us, but most do not have the resources to establish multiple residences.

When you mention private pensions, I was wondering how secure these are compared to insurance company annuities. Seems annuities have a bulk of the money in long term treasuries and are quite restricted in what they can buy.
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Old 09-02-2017, 10:10 AM   #70
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The way it was handled felt a bit odd - apparently, it was a private investment firm that handled it, but I could never get solid information when I was employed as to how it was invested. I would get annual "statements", that amounted to a few lines of information about my particular pension (company letterhead of the company that employed me, "last year $x,000 was deposited into your pension. You are 80% vested.)
Gosh, this sounds a lot like Bernie Madoff.

I am not saying the pension administrators did anything wrong, after all I literally know nothing about what happens to the funds.

But, it's important to not only avoid wrong doing but the appearance of wrong doing when handling other people's money. Even an honest person can get into trouble if they are doing things similar to what the bad guys do.


The pension person, if for no other reason than their own personal legal safety, should probably make things a lot more transparent.
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Old 09-02-2017, 01:02 PM   #71
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for those with "over funded" pensions, what rate of return is that pension assuming and how likely is that to happen?
For awhile, pensions were claiming to be in better shape than they really were (thus needing less $ from their funders every year) by claiming rates of return that are no longer realistic.
zerohedge had an article today on how a few municipalities are starting to edge their rates of return downward.
Pension Ponzi Exposed: Minnesota Underfunding Triples After Tweaking This One Small Assumption... | Zero Hedge
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Old 11-05-2017, 01:46 AM   #72
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The solution is simple. Abolish pensions completely. You simply cannot have a system where people are "promised" some "defined benefit" regardless of contributions made, or investment returns. The financial burden ends up falling on people who have nothing to do with the pension, but have to suffer the consequences of "promises" made decades ago. This does real and significant damage to the surrounding economies. It's totally unfair. The article linked in the OP gets it exactly backwards. The damage does not come from pensions collapsing. The damage comes from propping them up.
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Old 11-05-2017, 05:01 AM   #73
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The solution is simple. Abolish pensions completely. You simply cannot have a system where people are "promised" some "defined benefit" regardless of contributions made, or investment returns. The financial burden ends up falling on people who have nothing to do with the pension, but have to suffer the consequences of "promises" made decades ago. This does real and significant damage to the surrounding economies. It's totally unfair. The article linked in the OP gets it exactly backwards. The damage does not come from pensions collapsing. The damage comes from propping them up.
Let's abolish insurance as well, then. Because the premise is the same. Collect premiums (contributions) from a large group of people in an amount sufficient that when invested, the investments cover the payouts and pay a return if the plan is supposed to generate one. Lets have everyone contribute to a health savings account, a car savings account, and a house savings account. If they are lucky, they stay healthy, have no accidents, and their house does not burn down. If not, the cost is on them. That way people that "have nothing to do with the loss" don't have to pay for it.

Unfortunately, society as a whole will have to absorb the cost and damage to the economy in a different way. People will die because they can't get health care, no one will buy an expensive car or invest in their houses because of the risk. Then there is the "widows and orphans" problem because there is no life insurance.

It won't be pretty if these pension plans start to fail in large numbers. The poverty and social instability that will result will be monumental. A better solution is to re-do the math of pensions to be more realistic. Lower expectations of return and increase contributions. Absorb the cost of the old folks on their way out the door as part of the transition.

The taxpaying public will have to pay some of the cost of what the politicians promised in the past for the public plans. Get the politicians out of the public pension business so this does not happen again. Put the pensions in the hands of people that know how to run annuity businesses.

Maybe the voters will elect people in the future that aren't quite as generous with their money and their children's money. And maybe companies will rethink compensation and pensions so that some portion of compensation is invested automatically in an annuity like plan that is portable as people change jobs. Because if something doesn't change, we will all pay for the resulting mess.
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Old 11-05-2017, 06:37 AM   #74
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The taxpaying public will have to pay some of the cost of what the politicians promised in the past for the public plans. Get the politicians out of the public pension business so this does not happen again. Put the pensions in the hands of people that know how to run annuity businesses.

Maybe the voters will elect people in the future that aren't quite as generous with their money and their children's money. And maybe companies will rethink compensation and pensions so that some portion of compensation is invested automatically in an annuity like plan that is portable as people change jobs. Because if something doesn't change, we will all pay for the resulting mess.
Well said. I think pensions were great when conceived, but like most things, the application is fraught with problems.
Politicians loved pensions because they could promise more $$$ to workers without any increased cash outlay. Then when the pension fund actually grew to a big number, they could reward friends with contracts to administer the plans, manage the money or become an employee of the plan itself. Unions loved it because they could say they won the labor battle and extracted more $$$ from the evil corporation while lining they own pockets with the money (mis)management. Corporations loved it since they could use the various assumptions in the plan to manipulate the tax deductions and required contributions. And to boot, if the plan didn't perform according to the plan, any excess $$$ could be siphoned off or an under-performing plan could be abandoned and dumped on the PBGC. Congress changed the law to prevent the over-funded plans from reverting back to the companies, so the companies responded by cutting contributions (law of unintended consequences)

To get out of this mess, set reasonable assumptions for future returns, with required 100% contributions for current liabilities and a 10 year plan to get back to 100% funding. Same rule for governments. Put personal liability on the plan managers and sponsors so they won't be overly tempted to fudge the numbers. For government plans, the liability should attach to the politicians in office when the under-funding occurs. That would scare most politicians! Also, put the plan managers and officers of the sponsors' benefit at risk for any shortfalls.

The company I worked for waited until the plan got 100% funded through investment returns and contributions then terminated it. I didn't agree with some of their assumptions, but they were mostly realistic (always shaded in favor of the company, but . . .). Employees rolled the $$ over into an IRA and no benefits were lost (earning future benefits was reduced relative to what they would have been, but nothing says that unearned benefits are guaranteed to never change).

Just my 2 cents
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Old 11-05-2017, 06:56 AM   #75
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Like anything, if pensions fail the economy will recover. Taking away or cutting a pension fund by $1M is no different than taking away $1M from a different group of people and giving it to the pension funds, except ones there are always a middle layer that siphons off a bit.

In the federal governments case, money can be printed for the PGFC, SS or the many Federal pensions. In the States case, it is more difficult.

The real problem is that younger people do not have the higher paying jobs to continually fund the pension for the older workers. And the younger ones do not want to work...

Pensions work when you continually have a larger pool of workers.
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Old 11-05-2017, 06:59 AM   #76
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All anyone can do is guess because no one has enough information to accurately predict the outcome. All right , I will guess. I would say the effect on the stock market will be minimal. Everyone knows the pension shortfall in this country. It is not a secret, nor is it new. It's been playing out for years.

So a lot of the bad news has already been baked into company results and public opinion. The end result has been and will continue to be that companies and state governments will continue to slash and terminate pensions where they can. Workers will have to be more responsible about their own retirement and will have to work longer. Gone are the days of good pensions.

It's always been tough I would imagine to fund retirement. The way I see it there are only two possibilities going forward: Either one will save and invest for retirement or one will have to work until they just can't anymore. I think that's the way it was before the unions and pensions came along.
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Old 11-05-2017, 08:49 AM   #77
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I've said in a number of SS threads that I never counted SS in my FIRE calculations, because it isn't money that was in my control. I guess I'm just a naturally suspicious/distrustful of authority type of guy, because I always felt that way about pensions too. When I went to work in megacorp in the early 80s we had what was considered an excellent pension plan. I made a conscious effort to ignore it's existence, and saved and invested on my own to the greatest extent I was able. I completely ignored the pension balance in any of my FI calculations, because I didn't trust mega to follow through. And even if they did, I had watched the retiree health benefits get cut significantly over the decades, so why not the pension.

I was right, sort of. By the time I took a package and retired, MC had frozen the pension plan, and it wasn't offered to new employees. I had the option to take mine as an annuity or a lump sum. I chose the lump sum because I still didn't/don't trust them to pay off over time.

It's nice that both the pension and SS are there to some extent when I got/get to that point. But I didn't need them to FIRE, and don't need them moving forward. They'll both just allow me to leave more to DD and DGDs eventually.

I guess I'm saying that I feel bad for all thoe people who depended on their pension for their retirement security. Still, I feel like they could have done a lot to mitigate their situation by trying to maximize the parts they had control over. I've had many "promises" made to me over the years that were jerked away or denied later to trust anyone completely, especially with something as important as my family's financial security. To paraphrase a dead guy, "Trust but cover your own a**".
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Old 11-05-2017, 08:57 AM   #78
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Let's abolish insurance as well, then. Because the premise is the same. Collect premiums (contributions) from a large group of people in an amount sufficient that when invested, the investments cover the payouts and pay a return if the plan is supposed to generate one. ....
Perhaps the premise is similar but the results are totally different because regulation is totally different. Also, the insurer is on the hook as long as they have financial resources so if they screw up pricing a particular product then profits from other products help out. Also, insurance regulators monitor regularly and step in and force remedial actions or takeover an insurer long before its liabilities exceed its assets. Very few insurers have failed since improved supervision was put in place in the early 1990s and in most cases those that did we just taken over by healthy insurers who wanted to expand their business. Also, where the worst happens, then all other insureds in that state help provide relief through state guaranty fund assessments.... no taxpayer funds needed.

The main problem with pensions is poor regulation and supervision.
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Old 11-05-2017, 10:38 AM   #79
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Perhaps the premise is similar but the results are totally different because regulation is totally different. Also, the insurer is on the hook as long as they have financial resources so if they screw up pricing a particular product then profits from other products help out. Also, insurance regulators monitor regularly and step in and force remedial actions or takeover an insurer long before its liabilities exceed its assets. Very few insurers have failed since improved supervision was put in place in the early 1990s and in most cases those that did we just taken over by healthy insurers who wanted to expand their business. Also, where the worst happens, then all other insureds in that state help provide relief through state guaranty fund assessments.... no taxpayer funds needed.

The main problem with pensions is poor regulation and supervision.
The federal government has a reasonable public interest in regulating and supervising pension plans, whether private or state and local government. As much as I hate the idea of meddling, it's the correct response.
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Old 11-05-2017, 11:31 AM   #80
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The solution is simple. Abolish pensions completely. You simply cannot have a system where people are "promised" some "defined benefit" regardless of contributions made, or investment returns. The financial burden ends up falling on people who have nothing to do with the pension, but have to suffer the consequences of "promises" made decades ago. This does real and significant damage to the surrounding economies. It's totally unfair. The article linked in the OP gets it exactly backwards. The damage does not come from pensions collapsing. The damage comes from propping them up.
43210 - Where did you come from, and why are you posting here?

You didn't introduce yourself and your retire early aspirations on the "Hi I am" forum.

This thread was last active over two months ago. You bring it up to the forefront today - why?
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