A pension domino falls

[fosterscik]

The new pension law used for the first time:

A pension fund in Cleveland became the first plan to approve benefit cuts for current retirees — before the plan has run out of money.

https://www.washingtonpost.com/news...-retired-iron-workers/?utm_term=.9f874012f60a

This only applies to multiemployer pension plans but does IMO set a precedent.

 

[Sunset]

Sounds like the members themselves voted for it:

"The fund’s proposal was green-lighted by the Treasury Department late last year. The plan was then put up for a vote by the members of the pension fund."

Which is probably smart when you are not going to get any bailout.
Take a haircut now or starve later.

 

[ownyourfuture]

The Washington Post link requires you to sign up for emails.
Here's a different one.
NewsDiffs | Diffing: In unprecedented move, pension plan cuts benefits promised to retirees

 

[Just_Steve]

I guess they are not to big to fail.

 

[pb4uski]

Sen. Sherrod Brown (D-Ohio), who is critical of the cuts, called on Congress to find a long-term fix. “Too many retirees across Ohio face uncertainty over the benefits they’ve earned,” he said. “We need to work on a bipartisan solution to protect Ohio workers from the mistakes made by those managing their funds.”

And why should I (as a US taxpayer) contribute to bailing out these Ohio workers for mistakes made by those managing their funds? Why not clawback management fees from those who mismanaged the funds? Sorry, but I don't see why taxpayers should pay for this mess.

 

[Midpack]

And why should I (as a US taxpayer) contribute to bailing out these Ohio workers for mistakes made by those managing their funds? Why not clawback management fees from those who mismanaged the funds? Sorry, but I don't see why taxpayers should pay for this mess.

+1.

If the US Congress helps, the floodgates will open, so I assume they won't. Why reward any pension plan that quit paying in (e.g. Illinois) or kept overcommitting benefits when there are plans that are (more) solvent?

That it will come as a surprise to anyone that some public and private pensions will have to enact cuts in the years ahead is ridiculous. But people have been consciously burying their heads in the sand in Illinois and Chicago re: underfunded pensions for decades. The evidence has been publicized for many years. Another example of kicking the can down the street, those in charge knew a) that their programs were becoming increasingly underfunded and b) but they'd be long out of office before the reckoning. And if a politician told the truth, he/she couldn't get elected. Catch-22.

 

[Just_Steve]

And why should I (as a US taxpayer) contribute to bailing out these Ohio workers for mistakes made by those managing their funds? Why not clawback management fees from those who mismanaged the funds? Sorry, but I don't see why taxpayers should pay for this mess.

What song were you singing when wall street was bailed out?

 

[pb4uski]

The same song... I was not in favor of taxpayer bailouts, like many Americans.

However, as I recall, a lot of the TARP funds were forced on some banks... many of them did not want or need the capital and paid it back within a year or two... however the higher capitalization served to calm markets.

Finally, all TARP funds were paid back and the federal government made a tidy profit on the whole deal... the bailout proposed by Senator Brown is a totally different animal... taxpayers will never ever see any money back on that bailout.

 

[euro]

T\

Finally, all TARP funds were paid back and the federal government made a tidy profit on the whole deal... the bailout proposed by Senator Brown is a totally different animal... taxpayers will never ever see any money back on that bailout.

Totally agree on that one!

 

[ERD50]

I'll just mention that these multi-employer pension plans are a very different animal. Lots of different rules under the PBGC. Complex, and since I'm not directly affected by them, I didn't do a deep dive into the information, but what I saw looked like it would really take some work to figure out.

-ERD50

 

[bclover]

And why should I (as a US taxpayer) contribute to bailing out these Ohio workers for mistakes made by those managing their funds? Why not clawback management fees from those who mismanaged the funds? Sorry, but I don't see why taxpayers should pay for this mess.

and the reality may be that the taxpayers will have to contribute either way. if most of the retirees use that pension as their sole means of support, and they don't have money, they could possible need social programs (food stamps) to survive.

lol, I don't understand why I have to pay for a lot of junk I'll end up paying for with my tax dollars.

 

[Just_Steve]

The same song... I was not in favor of taxpayer bailouts, like many Americans.

However, as I recall, a lot of the TARP funds were forced on some banks... many of them did not want or need the capital and paid it back within a year or two... however the higher capitalization served to calm markets.

Finally, all TARP funds were paid back and the federal government made a tidy profit on the whole deal... the bailout proposed by Senator Brown is a totally different animal... taxpayers will never ever see any money back on that bailout.

My problem with this is the govt found the money to bail out the megas and continues to find money for the welfare recipients but tells the working man to go to hell.

 

[HadEnuff]

this thread ain't gonna last very long.

abidee-abidee...abidee........

 

[REWahoo]

this thread ain't gonna last very long.

abidee-abidee...abidee........

He's on the way!

 

[Midpack]

My problem with this is the govt found the money to bail out the megas and continues to find money for the welfare recipients but tells the working man to go to hell.

We're using the term government broadly here (Fed, State) but this is reportedly the first example of a pension cut like this. The "working man" won't be singled out, other dominoes must fall - or I agree with you. Other programs will have to be reconsidered too, but retirees may also have to work longer, spend less, etc. something has to give, no way around it. The more broadly the sacrifices are shared, the more equitable IMO.

We're all going to have to come to grips what on balance we want to pay in taxes and what we expect our governments to pay for - such that they zero out. We can't just say reduce taxes and increase services, and elect politicians on that basis. Too many people are hoping unrealistically someone else is told to "go to hell." And too many people complain without bothering to understand how difficult these decisions are, the easy answers they give are nonsense.

Since you don't like the pension cuts, what's your alternative?

 

[Just_Steve]

Since you don't like the pension cuts, what's your alternative?

Not really a solution but just a thought that if taxpayer dollars can bail out the rich donor corporations surly the same should be done for those pensioners.

 

[audreyh1]

Not really a solution but just a thought that if taxpayer dollars can bail out the rich donor corporations surly the same should be done for those pensioners.

Do you expect those pensioners to pay back the bail out funds like the corporations did?

I don't think it would work that way.

It's not an equivalent situation.

 

[Just_Steve]

Do you expect those pensioners to pay back the bail out funds like the corporations did?

I don't think it would work that way.

It's not an equivalent situation.

But that is why the pension insurance corp should have been properly funded.

Lets try this idea: If your bank went belly up and you were counting on FDIC to cover their loss but the govt said "So sorry we didn't properly fund fdic you only get 50%" What would say to that?

 

[Sunset]

My problem with this is the govt found the money to bail out the megas and continues to find money for the welfare recipients but tells the working man to go to hell.

After some of those "working Man" folks become welfare recipients, they will be eligible for govt money which is really MY TAX DOLLARS.

How about me: I don't get any pension ! - So really I'm the worst off.

 

[razztazz]

After some of those "working Man" folks become welfare recipients, they will be eligible for govt money which is really MY TAX DOLLARS.

How about me: I don't get any pension ! - So really I'm the worst off.

That was a personal decision. Or just bad luck if your pension got converted to a 401k. That would make it "the free market."

 

[pb4uski]

and the reality may be that the taxpayers will have to contribute either way. if most of the retirees use that pension as their sole means of support, and they don't have money, they could possible need social programs (food stamps) to survive.....

If as a result of these pension reductions they qualify for food stamps or whatever based on their income I don't have any issue with them getting benefits that they are entitled to based on their income... so I guess I don't have a problem with a back door subsidization of those in need but am not keen on direct support to the ailing pension plan.

 

[ERD50]

But that is why the pension insurance corp should have been properly funded.

Lets try this idea: If your bank went belly up and you were counting on FDIC to cover their loss but the govt said "So sorry we didn't properly fund fdic you only get 50%" What would say to that?

Like I said earlier, I think it is more complicated than that with these multi-employer pensions. PBGC rules are different - I don't understand them, and I'm not sure why they are different, maybe thinking not all the employers would go belly up at once? Maybe someone here is under one of these plans and can explain.

While there are concerns about PBGC funding, I doubt that they wouldn't be able to cover this particular pension. But it sounds like the rules say it just doesn't apply, or coverage is limited, or .

I think it is more like they are getting the coverage they paid for, and this is it. Again, maybe someone has fuller info they can share.

-ERD50

 

[pb4uski]

Not really a solution but just a thought that if taxpayer dollars can bail out the rich donor corporations surly the same should be done for those pensioners.

What is a donor corporation? What in the world are you talking about?

 

[Just_Steve]

What is a donor corporation? What in the world are you talking about?

The ones who line the pockets of the politicians.

 

[ERD50]

OK, I reread the article, not a lot of info there, but I'll take a stab at how I think this is working.

First, my single-employer pension (different rules) is insured by PBGC. MegaCorp and I have/are paid/paying into the insurance fund. My pension is guaranteed, but there is a cap on the amount (and no COLA). If my company cannot fund my pension, PBGC is there (hopefully) to fill in the difference between what MegaCorp can pay and my pension - up to the cap.

So, if my pension exceeded the cap (it doesn't), and MegaCorp went belly up, I could be in a news article saying my pension was cut.

What I think is happening here is, the PBGC guarantees for these multi-employer plans may be low relative to the pensions, and there may be COLA involved (my pension, or any PBGC payments are non-COLA). So they are cutting what is being paid from the corp fund, in order to stretch it out, so they don't run out of funds. If they run out, the pensioners would fall all the way down to the PBGC caps.

This is mostly guesswork on my part, but I have a feeling that's close. In made-up numbers, say a pensioner is now getting $70K, and PBGC cap is $35K. If they keep paying $70K, they run out in X years, and the pensioner is down to $35K. But if they cut to $50K now, they can hold out longer, maybe indefinitely, before they have to turn it over to the PBGC and the pensioners get cut to $35K.

So this law allows them to make that stretch cut, before just running out. And members need to approve it, so they can decide if that is in their best interests. But I would not be surprised if some hold out, hoping for some other form of relief.

I hope someone can confirm/deny this.

-ERD50