It seems to me that one of the worst problems that America faces in the coming decades, is paying out pensions that have been promised, but not funded.
Whether Private, Federal, State or Municipal, the amounts quoted in the media are staggering. This sentence from Wikipedia caught my attention:
While we know that the world will not come to an end, I am concerned that despite hundreds of news articles, just here in Illinois there doesn't seem to be any answer that will not result in very serious changes in the well being of those who have paid into plans, or have forgone pay raises for pension promises. At this point, the breaches of trust are almost immaterial, as solutions are sought. The money is not there, and there is no means of replevin.
As much as I have read on the general subject, and the proposals that have been made by different members of Federal and local government, there are no solutions that make sense to me. While I only have a small dog in this fight... (maybe 10 more years of SS) I wonder how others feel the overall problem will resolve.
Some of the "solution" proposals that I don't see happening are:
-Increasing the working age to 70 or later.
-Continuing to pay out as promised until the fund money is exhausted, leaving the younger people with no safety net at all.
-A return to the ultra high return rates of the derivatives boom era.
What is left is:
- A change from defined benefits to adjusted defined contribution
- Increased taxes and increased contribution
- Unlocking protected wealth
----progressive taxation
----sale of public owned assets
- A general lowering of federal and local government provided protections and services
We all look at this in view of our own situation, but whether we have a pension or not, and even if Social Security is not part of the retirement plan, the effects of the Pension Problem will have a major impact on the overall economy, and the health and welfare of all citizens.
We can address the Federal debt, and things like the future of the student loan program or healthcare, as all of these are part of the gloom/doom scenario, but pensions crises are becoming very common in more and more private firms, local municipal governments, states like Illinois. The implied government guarantee (Pension Benefit Guaranty Corporation) which covers 44 million workers, has a current estimated current funding shortfall of nearly 300 Billion.
One area of help could come from growing inflation, but COLA's could obviate much of this.
There are many members here on ER who know a lot more than I do about this subject. What do you see happening? More specifically, do you see a way (or a time) when promised pensions will simply NOT be paid.
Looking for some light at the end of the tunnel.
Whether Private, Federal, State or Municipal, the amounts quoted in the media are staggering. This sentence from Wikipedia caught my attention:
Pensions crisis - Wikipedia, the free encyclopediaAs an added factor, the Wiki article includes Social Security as a "pension" entity.On average, pensions consume nearly 20 percent of municipal budgets. But if trends continue, over half of every dollar in tax revenue would go to pensions, and by some estimates in some instances up to 75 percent.
While we know that the world will not come to an end, I am concerned that despite hundreds of news articles, just here in Illinois there doesn't seem to be any answer that will not result in very serious changes in the well being of those who have paid into plans, or have forgone pay raises for pension promises. At this point, the breaches of trust are almost immaterial, as solutions are sought. The money is not there, and there is no means of replevin.
As much as I have read on the general subject, and the proposals that have been made by different members of Federal and local government, there are no solutions that make sense to me. While I only have a small dog in this fight... (maybe 10 more years of SS) I wonder how others feel the overall problem will resolve.
Some of the "solution" proposals that I don't see happening are:
-Increasing the working age to 70 or later.
-Continuing to pay out as promised until the fund money is exhausted, leaving the younger people with no safety net at all.
-A return to the ultra high return rates of the derivatives boom era.
What is left is:
- A change from defined benefits to adjusted defined contribution
- Increased taxes and increased contribution
- Unlocking protected wealth
----progressive taxation
----sale of public owned assets
- A general lowering of federal and local government provided protections and services
We all look at this in view of our own situation, but whether we have a pension or not, and even if Social Security is not part of the retirement plan, the effects of the Pension Problem will have a major impact on the overall economy, and the health and welfare of all citizens.
We can address the Federal debt, and things like the future of the student loan program or healthcare, as all of these are part of the gloom/doom scenario, but pensions crises are becoming very common in more and more private firms, local municipal governments, states like Illinois. The implied government guarantee (Pension Benefit Guaranty Corporation) which covers 44 million workers, has a current estimated current funding shortfall of nearly 300 Billion.
One area of help could come from growing inflation, but COLA's could obviate much of this.
There are many members here on ER who know a lot more than I do about this subject. What do you see happening? More specifically, do you see a way (or a time) when promised pensions will simply NOT be paid.
Looking for some light at the end of the tunnel.
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