More Pension Fund Trouble

[NW-Bound]

...
Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats ...

I've got to admit that not being a participant to any pension plan, I do not follow or study as to how public pensions are funded. I know a bit more about private pension plans, and of course some more about SS as that concerns me.

It may be true that politicians or unions have been promising and upping their constituent benefits in exchange for the votes. But same as with SS and Medicare, I suspect demographic changes are a big factor here. People simply live too long now.

Who do we blame? Or more importantly, what do we do?

I don't think SS will go away. Rather, I fully expect that it will be reduced, or taxed, or the eligibility age raised. I fully expect my standard of living to decline, and being LBYM'er, I have built in some margin by saving, living frugally, and rationing or curtailing my extraneous pleasures as needed. I hope it will be enough.

In another thread, Midpack asked how we could insulate our portfolio from the ravage of external destructive forces. Other forum members said it was not possible and I agreed. You can only minimize it, and take efforts to make your fate a little better than the next guy.

Demographic change is a big force. In another post, I point out that if we, as a nation, put our savings into blocks of gold, that does not save us either. How do we later convert the saved assets back to services that we need, like health care, or nursing homes? We need workers at the point that we need services, who must be paid with the assets that we have been saving. And if there are fewer workers than needed, it will cost more in assets to pay them.

What I am saying is that once we recover from this economic fiasco, labor provided by the fewer younger workers may be worth more than the assets that we retirees have been saving. Inflation, anybody?

That's my simple understanding, and again, I have prepared myself to a reduced standard of living. I hope to be pleasantly surprised.

 

[jazz4cash]

I could not access the full artical, but a couple of the comments were interesting:
Quote:
"If you are going to do an “Evil Wall Street” story at least get try to get your facts straight. The payments being made to the street by the State are due to the drop in the value of the equity benchmark being used to the fund, so they nothing more than the mark to market that every other equity investor is experiencing."

Quote:
"The Pennsylvania Pension funds (SERS for state employees and PSERS for school employees) use 8.5% as their estimate rate of return."

And if you think it's unusual for a pension fund to invest in a hedge fund, look at this from 2005......
Pension plans pouring billions into hedge funds - International Herald Tribune

 

[al_bundy]

Al, here is a well-meaning comment: It is a mark of respect for your readers to at least make an attempt at standard punctuation, capitalization and sentence structure. Your readers will appreciate the effort. Thanks.

The sort of pensions you speak of are rare to the point of being apocryphal. But that is not my argument. By the way, should I retire early, my pension would barely cover a cup of coffee.

looks like the internet grammar police is out on patrol

if they were that rare than we wouldn't have california on the verge of bankruptcy along with NJ, GM and a lot of other large organizations. what the unions don't realize is that us younger folk can refuse to play with this craziness where half our property taxes go just to pay for pensions. we just move somewhere else

 

[ziggy29]

Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats. In response, I say the following: If *I* don't have a pension, why should anyone else? Indeed, we can't compete and have pensions too! They are destroying our very way of life!

If a company wants to provide a pension, great for them. If a city or state government wants to provide it along with a total compensation package that doesn't significantly exceed "market value" -- and where they don't cause city and state budgets to swell out of control -- great.

What I will say is this: As more and more taxpayers without pensions are feeling squeezed financially, fearing for their job security and seeing their retirement destroyed by a 1/3 loss in their 401Ks and IRAs, their willingness to have more and more of their tax money go to shore up pensions they don't get will shrivel away. It's not so much a question about wanting to take pensions away as it is the fact that people are sick of rescuing everyone else and getting no relief themselves.

Want to bail out pensions and raise taxes to shore them up? Bail out my 401K and we'll talk. That's the attitude I'm seeing, not that no one else should have a pension.

 

[FinanceDude]

If a company wants to provide a pension, great for them. If a city or state government wants to provide it along with a total compensation package that doesn't significantly exceed "market value" -- and where they don't cause city and state budgets to swell out of control -- great.

I have no problem with that.

What I will say is this: As more and more taxpayers without pensions are feeling squeezed financially, fearing for their job security and seeing their retirement destroyed by a 1/3 loss in their 401Ks and IRAs, their willingness to have more and more of their tax money go to shore up pensions they don't get will shrivel away. It's not so much a question about wanting to take pensions away as it is the fact that people are sick of rescuing everyone else and getting no relief themselves.

Sort of the famous phrase: "I don't care what you are getting as long as I am doing ok" mantra??

Want to bail out pensions and raise taxes to shore them up? Bail out my 401K and we'll talk. That's the attitude I'm seeing, not that no one else should have a pension.

That won't happen, because the powers that be will point out that you had CHOICES in whether to participate or not, and HOW those funds are invested. They will say if you were afraid of loss, you should have changed your investment mix to protect yourself..........

 

[Leonidas]

Austin firefighters recently turned down a new contract which would (among other things) INCREASE their pension even as most of us have watched our 401K plans go up in smoke and we watch municipal budgets strained to the hilt.

What planet are they on?

According to the Austin newspaper, the firefighters' union thought they had a good deal on salary issues, but the majority of the individual firefighters voted against the contract because the city wanted to change hiring standards. Apparently the city has a desired racial/ethnic/gender mixture they want the FD to have, but the current hiring and promotion standards are not allowing that to happen as quickly as they would like. Some said that the firefighters felt that this would result in a lowering of standards that would result in their working with unqualified people.

We faced similar issues in Houston in the past. The city could not manipulate testing to control the racial/gender makeup of the department or it's supervision, and before we had collective bargaining they could not get the state law changed, so they would promote as far down a list of eligibles as they could in order to get a minority. A lot of incompetent non-minorities got promoted in that process. We negotiated with the city to create a better system in one of our first contracts.

I believe that Texas also has a separate pension fund for its police and firefighters that is not directly associated with Austin.

No - there is a state retirement system for municipal employees that a number of the smaller cities participate in, and some of the police and firefighters are included,but all of the big police agencies have their own systems. Plus, under the TMRS, each individual city can pick and choose from options in the TMRS and in effect has its own plan.

 

[utrecht]

nothing against defined benefit pensions but when people are getting $100,000 a year pensions after retiring before they hit 50 because they didn't take any vacation the last 2-3 years to raise their income and the company is going bankrupt or the local government is raising property taxes to insane levels then something is wrong

Please show proof of this happening. Stating it on an internet forum with no reference to a source, doesnt make it true.

 

[ziggy29]

Please show proof of this happening. Stating it on an internet forum with no reference to a source, doesnt make it true.

Fat paychecks and pensions spell trouble - Jun. 3, 2008

 

[utrecht]

Sounds like there are some morons running that city, but still, its not exactly what Bundy said.
1. 1st of all, its not that amount of the pension that matters, its the percentage of their final salary. Some of them might be getting more than $100K in pension benefits but thats because they get paid so much while working, which they pretty much have to to be able to afford to live anywhere near that area. Trust me, I dont make anywhere near what the cops in that city make, but then I dont live in California. You cant exactly expect cops to make $60K per year and be able to afford to live there can you? i dont know how anyone can afford California.

2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.

3. Bundy said they were getting more than $100K before age 50. Didnt see any mention of that in the article. If they retire before age 50 they will take a large hit to their benefits.

4. Where does it mention that not taking any vacation in their last few years will raise their benefits?

These California cites going bankrupt has much more to do with the real estate bust than anything else. They did the same thing everyone else did. They set their budgets based on wildly inflated housing prices which gave them insane amounts of property taxes that were unrealstic. Once again, too much greed. Housing prices in Texas have always been and remain much more steady and the State is doing just fine.

Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.

 

[ziggy29]

These California cites going bankrupt has much more to do with the real estate bust than anything else. They did the same thing everyone else did. They set their budgets based on wildly inflated housing prices which gave them insane amounts of property taxes that were unrealstic. Once again, too much greed.

They certainly did act like the gravy train would never derail. That was poor management, but there's also a lot of pressure on them to give away the farm when things are rosy. And often they decide to "buy labor peace" at City Hall with surplus funds.

And the problem is that once you give more away when times are good, it's pretty darned hard to take them back when they go bad. And that, in a nutshell, is where much of the problem is now. Many jurisdictions have made pie-in-the-sky promises based on unsustainable long-term assumptions.

 

[Grep]

looks like the internet grammar police is out on patrol

Actually, Al, you may notice that I did not actually criticize you. I only made a suggestion. But don't worry, I won't bother again.

One of the reasons I enjoy coming to this forum is that the posters are generally quite thoughtful and write well. Maybe it's because many of them are from an earlier generation, back when writing was considered an important skill. Or maybe it's because only those who exhibit self-discipline can retire early, and that shows.

Curiously, I've noticed that those that write lazily or without concern for their readers seem mostly to hang out on the "Stock Picking" forum. I wonder what that means?

As far as pensions go, I live in an expensive area. The bedrock of the retirement plan of a number of people I know is their pensions. If they work 30+ years and retire at 60+, etc., many will receive a pension that is quite a high percentage of their final salary (say 75-85%). But they will need that to live, for if the pension goes down in flames, so will they.

 

[utrecht]

I agree with that but heres what gets me. As Ive stated many tiimes, my pension fund is not run but the city. They make a certain percentage contribution and thats as far as it goes. That contribution percentage hasnt been raised in over 25 years. The City makes no decisions about who gets what.

If the pension board decides to raise benefits, there is a vote and if passed, the new benefits take affect, but it doesnt cost the city another extra dime. The pension board has their own actuary experts and they know what we have and what benefits we can afford to pay out. The taxpayers arent on the hook for any bad decisions the board might make and they have no reason to complain when good decisions result in higher benefits for me. Its not costing them anything more at all. Why they dont all work that way is beyond me, but I know this.....you cant put a politician in charge of money without expecting a bad outcome.

 

[FinanceDude]

2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.

Cops, maybe. Firefighters, quite likely.

4. Where does it mention that not taking any vacation in their last few years will raise their benefits?

I didn't see it either. However, in Milwaukee, there was a window where retiring folks could take their sick days, multiply them by a factor of 1.5, convert them to their hourly rate, and convert them into either a lump sum or enhance their pension rate. The city put the kabosh on that after a few of those stories hit the newspapers.......

Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.

I guess I need to learn more. I always thought the amount that went to fund the pensions was set by a collective bargaining agreement with the labor unions of the govt workers. Then if the county or city or whatever couldn't make the payments, they would raise taxes to make up the difference. At least that's the way it works in Milwaukee County...........

 

[ziggy29]

I guess I need to learn more. I always thought the amount that went to fund the pensions was set by a collective bargaining agreement with the labor unions of the govt workers. Then if the county or city or whatever couldn't make the payments, they would raise taxes to make up the difference. At least that's the way it works in Milwaukee County...........

That's the kicker that has some people outraged, IMO -- the part about coming back and raising taxes on everyone to make up for pension shortfalls -- not the existence of the pensions themselves.

Personally, I think the governmental employers should get out of the business of promising certain levels of pension benefits and instead negotiate a certain level of pension fund contribution -- to give to the union to manage. The unions can manage the fund and set the payouts together with whatever managers and actuaries they hire.

I believe that is similar to what GM recently worked out with the UAW with respect to retiree health insurance. My understanding is that GM will provide a certain negotiated level of funding, and it's up to the union to manage that money wisely and negotiate the health insurance package for retirees.

That might be a way employers (public and private) can continue to afford funding pensions. It's the market-based risk and the possibility for very large liabilities years down the road that are really the problem. If the pension contributions (like 401K company matches) are fixed and negotiated, the employer pays it out to the union, the future liabilities are zero -- pay as you go, no ticking time bomb. It's like a 401K match to the company, but paid into a pension fund controlled by the union for all the employees.

Alternatively, if employers (especially governmental employers who have the power to tax) stay in the business of providing guarantees about benefit levels regardless of market conditions, the assumptions about rates of return need to be a lot more conservative so there's no need for pension fund managers to go to Vegas with the money and then run to the taxpayers when it blows up. As I've written before, I think any assumptions about return that are higher than the reasonable long-term return of a 50/50 portfolio is too risky.

 

[Goonie]

I agree with that but heres what gets me. As Ive stated many tiimes, my pension fund is not run but the city. They make a certain percentage contribution and thats as far as it goes. That contribution percentage hasnt been raised in over 25 years. The City makes no decisions about who gets what.

If the pension board decides to raise benefits, there is a vote and if passed, the new benefits take affect, but it doesnt cost the city another extra dime. The pension board has their own actuary experts and they know what we have and what benefits we can afford to pay out. The taxpayers arent on the hook for any bad decisions the board might make and they have no reason to complain when good decisions result in higher benefits for me. Its not costing them anything more at all. Why they dont all work that way is beyond me, but I know this.....you cant put a politician in charge of money without expecting a bad outcome.

Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.

That's exactly how my public pension fund operates also. It's run by an elected board of trustees, all of whom are employees of participating public employers, or retirees of those same employers. I previously posted that they are a 50/50 mix of employer elected trustees and employee elected trustees....That was a slight error on my part. Actually, the participating public employer elects 4 trustees, the participating employees elect 4 trustees, AND the participating retirees elect 1 trustee. Those trustees are 100% responsible for our pension fund....NO politicians are allowed (by state statue) to have any control or jurisdiction over our fund. Because, as utrecht stated, "you cant put a politician in charge of money without expecting a bad outcome".

The proof's in the pudding....The IL State Employees public pension has been basically robbed by our idiot governor....not that he's taken money out of it, but rather he has refused to put money into it...money that, by law, is mandated to be put into it. Instead, he's blown that designated, appropriated money on his own whims and agenda. So not only has our economy taken a toll on State Employee pensions, but the governor has torpedoed the ship as well!

2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.

3. Bundy said they were getting more than $100K before age 50. Didnt see any mention of that in the article. If they retire before age 50 they will take a large hit to their benefits.

The rules of our public pension fund for the full pension benefit, require that the employee be at least 55 years old AND have at least 35 years of service, OR be at least 62 years old and have at least 20 years of service. The only exception to that rule is if the participating employer officially offers an Early Retire Incentive (ERI) package as allowed by the pension fund rules. The ERI allows qualifying employees to "buy" up to 5 years of age/service credit....as I did in April '07. No one under 50 is eligible to do that...NO exceptions! The pension fund calculates how much the employee's contributions would amount to for the number of years being "bought", including projected pay raises and/or cost of living increases, and they send you a bill for that amount, due payable the day after you retire. I "bought" 5 years worth, as I was 50 years old, and had just over 30 years of service.....my cost was $10,000.

If you bailout before full qualifying age, your pension is drastically reduced, and you can't draw it until at least age 62!

In the history of our municipality, which has been a participating employer for over 50 years, only 3 employees have EVER qualified for that! That was myself and 2 co-workers...we were all hired before we turned 20 years old. Currently there is 1 employee that will qualify IF he stays there at least another 28 1/2 years!

Our police employees rarely stay with our department long enough to qualify for ER here....most move away to other areas, and other depts. for better wages/benefits. Many of the firefighters try to hang in there for ER...some make it...some don't....most have worked full term and retired at normal retirement age, because they liked their jobs....some have retired early (not a lot though) and gone onto new jobs/careers.

 

[FinanceDude]

Personally, I think the governmental employers should get out of the business of promising certain levels of pension benefits and instead negotiate a certain level of pension fund contribution -- to give to the union to manage. The unions can manage the fund and set the payouts together with whatever managers and actuaries they hire.

You'd have to destroy a few powerful unions to do that, like the teacher's union........

FWIW, I have yet to meet ONE person involved in the pension process from local govt or anywhere that knows anything substantial about the plan they have........

 

[ziggy29]

You'd have to destroy a few powerful unions to do that, like the teacher's union........

Hey, I never said it was feasible, and I'm sure many public employees unions would consider this DOA. But I do think it -- or MUCH more realistic expectations about future returns on pension funds -- are the only way to keep public pensions affordable and feasible indefinitely.

If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. Better than the whole thing blowing up or expecting a taxpayer bailout.

 

[FinanceDude]

Hey, I never said it was feasible, and I'm sure many public employees unions would consider this DOA. But I do think it -- or MUCH more realistic expectations about future returns on pension funds -- are the only way to keep public pensions affordable and feasible indefinitely.

If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. Better than the whole thing blowing up or expecting a taxpayer bailout.

Well, to agree to 60%, the unions would want a 30% increase in pay. That won't happen, either. FWIW, starting kindergarten teachers in my school district make $42K plus benefits. To me, that seems like a fair wage for 4 years of school plus one year of student teaching

 

[Goonie]

I always thought the amount that went to fund the pensions was set by a collective bargaining agreement with the labor unions of the govt workers.

The amount that is paid into our public pension fund is 100% controlled and set by the fund's elected trustees. It is a flat percentage of the employee's gross pay....the employee pays (IIRC) 4.5% of his/her gross pay, and the employer pays ~7% of the employee's gross pay. The percentages haven't been raised in about 30 years!

The union's only hand in the matter, is bargaining for actual employee wages and benefits....they have NO say whatsoever about pension funding, nor does the employer. The only say that either the employers or the employees, or for that matter the retirees, have is through the 9 trustees the were elected by the employers (4), the employees (4), and the retirees (1). And since each of the 9 trustees are all active participants in the plan themselves, they're going to be looking out for the best interests of their respective groups....since all of their decisions have a direct impact on each of them also.

 

[utrecht]

That's the kicker that has some people outraged, IMO -- the part about coming back and raising taxes on everyone to make up for pension shortfalls -- not the existence of the pensions themselves.

Personally, I think the governmental employers should get out of the business of promising certain levels of pension benefits and instead negotiate a certain level of pension fund contribution -- to give to the union to manage. The unions can manage the fund and set the payouts together with whatever managers and actuaries they hire.

This is exactly how my pension fund operates (and apparently how Goonies does also). It sounds like Goonies' fund is very strong and mine certainly is, so obviously public pension funds CAN operate efficiently and without causing undue burden on the government agency or the taxpayers. My point is that public pensions themselves are NOT the source of any problems. The source of the problems is constant govenment mismanagment. In this case, mismanagment of their pension funds. They could take away the public pensions in those troubled cities and the politicians would still run the city into the ground in other ways. The solution has nothing to do with doing away with public pensions. The solution is to get rid of the morons in office that dont know what they are doing. Why not do a study of public pensions that are working around the country and copy them?

Why on earth would the unions be upset if they had a pension fund run by people who know what they are doing? I can promise you their benefits would be higher and more secure than they are now.

 

[Texarkandy]

....
If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. ...

I'm wondering how much you actually know about govt pensions.

A federal employee (FERS - hired after 1984) after 30 years earns - guess what, 30% (1% per year) - granted that's based on high-three salary & includes a "diet" COLA (CPI minus 1%) - oh, & that pension is also permanently reduced by 5% per year for every year you are under 62 -

So lets say you start as a federal worker at 25 y/o & early-retire at 55 at a high-3 salary of 60k you get 20,000 pension minus 35% (age reduction) = $13000. year pension annuity.

Of course since you've been paying into Social Security all these years you will be eligible for SS at 62 - & guess what, your FERS pension is going to also give you what's called a Special Retirement Supplement (SRS) till age 62 when you can apply for Social Security. Since you worked as a fed for 30 years you get 75% (30/40) of what your SS benefit will be at 62. So lets say that age 62 SS benefit is $15000 a year then your SRS will be an additional $11250 not COLA'D & reduced by $1 for every $2 earned income you have while retired - NOTE: (the SRS stops at age 62 whether you elect to take reduced SS early or wait)

So now your retirement benefit is:
$13000 pension
$11250 SRS (assuming you don't work at all after retirement)
$24250

So it seems that 30 years on the job earns you a fat federal pension of about 40% of your high three (if you don't work after retirement) - & you pretty much will have to take your SS early at age 62 cause you'll suffer nearly a 40% reduction in your pension if you want to wait till 67 (your SRS goes away at age 62)

(plus whatever you've saved in your TSP for 30 years +5% employer match - much like any other large employers 401k & subject to bad years just like anyone elses 401k)

I'm not complaining about my retirement benefit personally, I'm under fed Law Enforcement retirement which is a bit better, but just want to set the record straight, cause I don't know where you get that 80% for 30 years (I'll take that 80% for-life any day & you can have my whole TSP to boot!)

(Oh, and that thing some people think about federal pensions being tax-free is a myth, it's taxable like anybody else's)

 

[ziggy29]

I'm wondering how much you actually know about govt pensions.

A federal employee (FERS - hired after 1984) after 30 years earns - guess what, 30% (1% per year) - granted that's based on high-three salary & includes a "diet" COLA (CPI - 1%) - oh, & that pension is also reduced by 5% per year for every year you are under 62 -

Actually, for the most part, federal pensions aren't a ticking time bomb and I haven't really been referring to federal pensions. It's mostly state and local pension plans that overpromise. I think the feds did a pretty good job of sensible pension reform a while back that balances decent benefits for federal workers without the potential for runaway costs that can't be managed effectively.

 

[Texarkandy]

nothing against defined benefit pensions but when people are getting $100,000 a year pensions after retiring before they hit 50 because they didn't take any vacation the last 2-3 years to raise their income and the company is going bankrupt or the local government is raising property taxes to insane levels then something is wrong

Al, here is a well-meaning comment: It is a mark of respect for your readers to at least make an attempt at standard punctuation, capitalization and sentence structure. Your readers will appreciate the effort. Thanks.

.....

looks like the internet grammar police is out on patrol ....

Don't worry Al, I understood every word you wrote. I don't get too wound up about punctuation on an internet forum either.

Here's a little something that was e-mailed to me a while back (allegedly from Cambridge University ):

Olny srmat poelpe can raed tihs.
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt! if you can raed tihs psas it on !!

 

[Texarkandy]

.... I think the feds did a pretty good job of sensible pension reform a while back that balances decent benefits for federal workers without the potential for runaway costs that can't be managed effectively.

You can thank Ronald Reagan for that.

 

[Leonidas]

The amount that is paid into our public pension fund is 100% controlled and set by the fund's elected trustees. It is a flat percentage of the employee's gross pay....the employee pays (IIRC) 4.5% of his/her gross pay, and the employer pays ~7% of the employee's gross pay. The percentages haven't been raised in about 30 years!

The union's only hand in the matter, is bargaining for actual employee wages and benefits....they have NO say whatsoever about pension funding, nor does the employer. The only say that either the employers or the employees, or for that matter the retirees, have is through the 9 trustees the were elected by the employers (4), the employees (4), and the retirees (1). And since each of the 9 trustees are all active participants in the plan themselves, they're going to be looking out for the best interests of their respective groups....since all of their decisions have a direct impact on each of them also.

Ours is similar, but it wasn't always that way. Before we had meet and confer, the city and the pension fund agreed on what the fund could afford to do and the auditors had to bless it. But after meet and confer the city only met with the union as the MBA and their decisions on salary had an impact on the pension. When the city started trying to push current expenses off into the future by piling it all into areas that impacted future pensions, the pension fund was negatively impacted and fell below 100% funded. The union acquiesced because all they saw were benefits to their members. The pension board started screaming because they saw benefits to their members that were actuarially unsound. They finally filed a lawsuit against the city - all of which was settled when a new administration came in and negotiated amendments to the contract with the pension board. Now, the city negotiates with both the MBA and the pension to make sure that they don't screw that up again.

It seems to be working well. The union and the city negotiate salary, work conditions, etc., and the pension board is there to say "we can pay for that", or "the only way we can pay for that is if you give us more money." Of course they had to modify or kill off a few programs that had created funding problems in the first place - but not before I snuck out the door with my money