Posted on 02/12/2015 2:14:19 PM PST by ThethoughtsofGreg
State pension plans across the country continue to face significant fiscal challenges. In fact, nonpartisan fiscal watchdog State Budget Solutions estimates that state pension unfunded liabilities now total $4.7 trillion. The latest Reason-Rupe national telephone poll of more than 1,000 adults reveals that state pension unfunded liabilities have captured public attention. Americans strongly support pension reform in order to help governments keep their pension promises to retirees and current employees, while protecting taxpayers.
Americans are rightly concerned about unfunded liabilities in state pension systems. According to the Reason-Rupe poll, absent pension reforms, 72 percent of Americans believe that their state and local government will not be able to keep their pension promises to government workers. As Utah Sen. Dan Liljenquist discussed in Keeping the Promise: State Solutions for Government Pension Reform, the outdated defined-benefit pension model used by state governments is not fiscally sustainable. With a defined-benefit plan, the government promises to pay retired employees set payments per year, throughout their lifetime, regardless of actual market returns. When governments are unable to keep the promise, due to poor market returns, or other factors, retirees, employees, and families are put at risk. Nearly three quarters of Americans surveyed are concerned that their state government would have to raise taxes to fulfill their pension promises to government workers, and 77 percent oppose reducing services in order to pay public pension debt.
(Excerpt) Read more at americanlegislator.org ...
Pension reform....or union reform??
As one of those that contributed to my pension, I sure would like to get what I was promised. What will they do? Just say whoops! We screwed up, you lose! I’d be pretty unhappy(understatement)
“We screwed up, you lose!”
Probably. The scum at the top will certainly collect 100% of what they feel they are entitled to. The rest will have to man up and take the haircut. Then, after intense debate, nothing will change and the same thing will happen a few years down the road.
I don’t think anyone should get screwed by the current system should this happen despite being fiercely against publicly funded pensions. That was the system you agreed to upon taking a position. A deal is a deal.
However, should these retirement plans be overhauled, not one single line item in the agreement should involve any kind of pension that involves tax payers making up any difference. You could give those closer to retirement a similar deal with the remaining balance paid in the form of a 410K like account. Those new to the system could be converted to a 401K. Those in between would be hybrids of sorts.
No union will agree to that plan (or similar) though regardless of the amount contributed to a 401K by the state/local government ... you could max out the benefit and the unions will scream bloody murder as they’d not be able to get their filthy fingers on that money.
In 2001, Grey Davis promised State of California employees that they would be as well off as Silicon Valley tech company founding employees. “they didn’t build that” was not yet a phrase applied to private wealth.
Then the downturn. Oracle Corp for example suffered 13 years of no growth in value. Employees holding that in their 401K did not advance.
Not so with state employees. Figure 8% growth each year. Gaps paid for by the taxpayers. They are sitting pretty.
The private sector role model: not so much.
I would say that the first thing to do is pass a federal act, that to receive disability that does not involve a missing limb, a person must have their disability reviewed on an annual basis.
“The share of the U.S. population receiving SSDI (disability) benefits has risen rapidly to the point where it threatens to bankrupt the Social Security system. Republican have already propose curtailing its abuse.”
The list of Cal public pensioners receiving >100k and >200k per year is truly impressive.
Taxpayers there have to be proud they can compensate their retired public servants in such at such deluxe levels.
precisely....
It’s funny, I was forced to become a part of the retirement scheme as a condition of employment. I contributed half. the university the other half. If I start collecting, I’ll get all of the money I contributed in about 4 years. No wonder these systems are going belly up. Some of these public retirement schemes don’t even require the employee to contribute. Hope I don’t get shafted(not optimistic though)
“the outdated defined-benefit pension model used by state governments is not fiscally sustainable.”
Never was meant to be “fiscally sustainable”.
This pension reform just might be the foot in the door in
keeping or preventing states from going bankrupt by massive
federal bailouts. If I were a bond holder in any of these
states I would be worried.
I half agree with you. It will be used to backstop unfunded liabilities but I just don’t see the feds guaranteeing $100K pensions. I suspect many municipal & state retirees will eventually be getting very bad news regarding pension caps, eliminated COLA adjustments, etc.
The question is how large the cuts will be.
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