Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
More State Pension Problems
Old 09-04-2017, 04:59 AM   #1
Recycles dryer sheets
 
Join Date: Nov 2006
Posts: 337
More State Pension Problems

How would you like to receive 30.9% of your state pension (NJ funding levels)?

The news continues to worsen for America’s public pensions and for the people who depend on them. The median funding ratio—the percentage of assets states have available for future payments to retirees—declined to 71.1 percent in 2016, from 74.5 percent in 2015 and 75.6 percent in 2014.

https://www.bloomberg.com/graphics/2...unding-ratios/
__________________

Tekward is offline  
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 09-04-2017, 07:13 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 15,351
WOW... two worse than Illinois!!!!



I wonder what happened to Minnesota.... that is a huge drop for one year...
__________________

Texas Proud is offline  
Old 09-04-2017, 07:20 AM   #3
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Funding levels are different than payout levels. There is always room to create a bond issue or raise taxes to cover the gaps. And there are plenty of reasons why the above funding levels happen.

In the end, cutting pension levels is not any worse than states raising taxes on retirees. Raising property taxes, sales taxes, income taxes, etc. all add up to a lower spendable amount.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline  
Old 09-04-2017, 07:34 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,425
Quote:
Originally Posted by Senator View Post
In the end, cutting pension levels is not any worse than states raising taxes on retirees. Raising property taxes, sales taxes, income taxes, etc. all add up to a lower spendable amount.
If a state increases taxes, not only will state pensioners will be taxed, but everyone else too. That is assuming the state does not create a tax only on state pensions. So there is a difference between cutting pensions and raising taxes everyone... at least to the pensioners.
bingybear is offline  
Old 09-04-2017, 07:52 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 2,827
Quote:
Originally Posted by bingybear View Post
If a state increases taxes, not only will state pensioners will be taxed, but everyone else too. That is assuming the state does not create a tax only on state pensions.
I doubt everyone else will be. I think some will say enough & move elsewhere.
gerntz is offline  
Old 09-04-2017, 08:14 AM   #6
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: 25,151
Keep in mind that few pensions are 100% funded....the average funding of the 100 largest corporate defined benefit pension plans is 83.7% according to Milliman.

Pension Funding Index - Milliman - United States

Quote:
The funded status of the 100 largest corporate defined benefit pension plans increased by $4 billion during July as measured by the Milliman 100 Pension Funding Index (PFI). The funded status deficit declined to $282 billion from $286 billion at the end of June due to strong July investment gains. The funded status improvement came as the benchmark corporate bond interest rates used to value pension liabilities continue a decline that began in April. As of July 31, the funded ratio rose to 83.7%, up from 83.5% at the end of June. The funded ratio has been teetering between 83% and 84% over the first seven months of the year.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is online now  
Old 09-04-2017, 08:21 AM   #7
Thinks s/he gets paid by the post
euro's Avatar
 
Join Date: Oct 2015
Posts: 1,341
Quote:
Originally Posted by pb4uski View Post
Keep in mind that few pensions are 100% funded....the average funding of the 100 largest corporate defined benefit pension plans is 83.7% according to Milliman.

Pension Funding Index - Milliman - United States
Yeah, but 30.9%? That doesn't sound good.
euro is online now  
Old 09-04-2017, 08:23 AM   #8
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: 25,151
Agreed, definitely a slacker.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is online now  
Old 09-04-2017, 09:20 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 10,167
Since 2008 the stock market has gone up, Up, and UP!

What in the world are these states doing that they can't fund at least 75% of their pension obligations at such times? Maybe they need to fire the money managers and put it all into the Psssst....Wellesly fund?
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline  
Old 09-04-2017, 09:28 AM   #10
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Quote:
Originally Posted by bingybear View Post
If a state increases taxes, not only will state pensioners will be taxed, but everyone else too. That is assuming the state does not create a tax only on state pensions. So there is a difference between cutting pensions and raising taxes everyone... at least to the pensioners.
At least when your pension is cut in half, your income taxes will be less... That is the risk and benefit of working for an employer. You are dependent on them.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline  
Old 09-04-2017, 09:30 AM   #11
gone traveling
 
Join Date: Nov 2011
Location: The Deep South Bay
Posts: 744
The old saying "trust no one" applies to everything including your retirement, I don't trust anyone that's why my retirement fund is in my own hands. Nobody making a bad move and nobody with sticky fingers, I make my own decisions and transactions, nobody to blame but myself
97guns is offline  
Old 09-04-2017, 10:54 AM   #12
Recycles dryer sheets
 
Join Date: Aug 2013
Location: New Jersey
Posts: 362
Speaking of NJ pensions - old news. They've only been 35% funded for the past 9 years. Governor Christie removed the COL increases in 2009 until the pension fund is healthier - I don't expect that to happen in my lifetime. New change this year was to divert lottery proceeds to fund the pension plan. Wall street says this isn't a significant change - bond ratings still in the dumps. Plan for the worst, hope for the best
Al18 is offline  
Old 09-04-2017, 11:07 AM   #13
Thinks s/he gets paid by the post
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 4,277
If I had a public pension or a pension from a multiemployer plan and had to rely on it to cover a substantial portion of my expenses, I would be somewhere between worried and terrified, depending on the specifics of the plan.

There is a Eugene Fama video here that I keep going back to due to the huge breadth of his comments: https://www.top1000funds.com/feature...the-moon-fama/ His discussion of public pensions begin about 9:10 and run to about 11:30. Among the things he says is "Illinois will crash. Chicago will crash."
OldShooter is offline  
Old 09-04-2017, 11:10 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by euro View Post
Yeah, but 30.9%? That doesn't sound good.
Hahahah, When I retired my pension was allegedly 100 % funded. I was told by the actuary, That my employer next year will put in 2.4 million dollars into the pension fund. The assumption was 7.5 % returns. They have since lowered the expected returns to 7 %. I might be off on the numbers it was 10 years ago, but that was the substance of the conversation. My brother in law took a scalping(not a haircut) on his pension it went from thousands to hundreds. He entered his retirement years having to move to North Carolina and now has a full time jib. Till he gets to social security age. Then Im sure he will be greeted by the 23 % soc sec haircut.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline  
Old 09-04-2017, 11:12 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by Chuckanut View Post
Since 2008 the stock market has gone up, Up, and UP!

What in the world are these states doing that they can't fund at least 75% of their pension obligations at such times? Maybe they need to fire the money managers and put it all into the Psssst....Wellesly fund?
My pension is a 50/50 fund, ill double check but thats what their AA was. After the 2000 crash everyone got panicky and I think they went 25/75.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline  
Old 09-04-2017, 11:14 AM   #16
Thinks s/he gets paid by the post
Just_Steve's Avatar
 
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,490
New York 94.5% funded.

I sleep well every night, keep those pension checks coming.
Just_Steve is online now  
Old 09-04-2017, 11:18 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by OldShooter View Post
If I had a public pension or a pension from a multiemployer plan and had to rely on it to cover a substantial portion of my expenses, I would be somewhere between worried and terrified, depending on the specifics of the plan.

."
Thanks shooter, my scream therapy will be from this post ,hahah. This is why I have a nest egg. Pension goes sour, I got to nest egg, nest egg goes sour, I live on pension, they both go sour, Im 6'6" and have a black suit, Ill either be a greeter at Walmart, or a bouncer at a night club. My city will have soon $15 Fast food minimum wage, let me practice. "hello Sir would you like fries with that order?" Yeah Ill survive, It not on my top 10 list of how to spend my retirement years, but neither was staying home will millions and sitting on the couch tending to my mother.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline  
Old 09-04-2017, 11:20 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by Just_Steve View Post
New York 94.5% funded.

I sleep well every night, keep those pension checks coming.
Yeah, we did something good. Let me order one of those "my Pillows" to enhance the dreams.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline  
Old 09-04-2017, 11:25 AM   #19
Thinks s/he gets paid by the post
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 4,277
Quote:
Originally Posted by Just_Steve View Post
New York 94.5% funded. ...
Yup. Looks good.

The common situation is that the bold print (% funded) giveth and the fine print (assumed % yield) taketh away.

I saw this story last week. It appears that the fine print for MN and several other states was making the bold print look far too good. https://www.bloomberg.com/news/artic...hit-in-the-u-s
OldShooter is offline  
Old 09-04-2017, 11:25 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 10,937
Quote:
Originally Posted by Chuckanut View Post
What in the world are these states doing that they can't fund at least 75% of their pension obligations at such times?
In Illinois:

1. No contributions made to the funds other than the employees' portion.

2. Bad deals with investment firms and corruption resulting in some state officials resigning and running (but, of course, no prosecutions).

3. State borrowing from the funds which can not now be accurately accounted for.

It's really sad. It's likely most retirees will not collect pensions that even reflect their own contributions when this all blows up. That is, they will have purchased the most expensive annuities ever. They would have been so much better off being on SS where the Feds would have insisted that Illinois pay their half every year. Left unsupervised, Illinois just didn't kick in and, in fact, took out.

A bargain for Illinois tax payers I guess. They have not had to pay into SS for their employees and now it's being shown they never really paid into the state fund or provided any 403b/401k matching. The amount that's in the funds is easily accounted for by just considering the employees' 9.5% contribution.
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is online now  
Closed Thread

Tags
state 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
State-by-state exchange rate data Htown Harry Health and Early Retirement 10 09-30-2013 02:09 PM
Net impact of living in no-state-tax state ? Delawaredave5 FIRE and Money 46 01-06-2013 08:01 PM
State residency for Armed Forces personnels for in-state college tuition. Sam Other topics 9 07-30-2007 05:06 PM
Why does health insurance vary state to state teejayevans Health and Early Retirement 130 04-22-2007 09:21 AM
I'm 51 y.o., female, state employee with 30 yrs state service 82577 Hi, I am... 4 03-26-2007 05:21 PM

» Quick Links

 
All times are GMT -6. The time now is 01:06 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×