"I Guess It's Food Stamps": 400,000 Jeopardized As Giant State Pension Fund Plans 50% Benefit Cuts

Zero Hedge ^ | 02/19/2016 | Tyler Durden

[SeekAndFind]

Dale Dorsey isn't happy.

After working 33 years, he's facing a 55% cut to his pension benefits, a blow which he says will "cripple" his family and imperil the livelihood of his two children, one of whom is in the fourth grade and one of whom is just entering high school.

Dorsey attended a town hall meeting in Kansas City on Tuesday where retirees turned out for a discussion on "massive" pension cuts proposed by the Central States Pension Fund, which covers 400,000 participants, and which will almost certainly go broke within the next decade.

"A controversial 2014 law allowed the pension to propose [deep] cuts, many of them by half or more, as a way to perhaps save the fund," The Kansas City Star wrote earlier this week adding that "two much smaller pensions also have sought similar relief under the law, and still more pensions are significantly underfunded."

"What's happening to us is a microcosm of what's going to happen to the rest of the pensions in the United States," said Jay Perry, a longtime Teamsters member.

Jay is probably correct.

Public sector pension funds are grossly underfunded in places like Chicago and Houston, while private sector funds are struggling to deal with rock bottom interest rates, which put pressure on expected returns and thus drive the present value of funds' liabilities higher.

Illinois' pension burden has brought the state to its knees financially speaking and in November, Springfield was forced to miss a $560 million payment to its retirement fund. In the private sector, GM said on Thursday that it will sell 20- and 30-year bonds in order to meet its pension obligations. 

"At the end of last year GM's U.S. hourly pension plan was underfunded by $10.4 billion," The New York Times writes. "About $61 billion of the obligations were funded for the plan's roughly 360,000 pensioners." Maybe it's time for tax payers to bail themselves out. 

Speaking of GM, Kenneth Feinberg - the man who oversaw the distribution of cash compensation to victims who were involved in accidents tied to faulty ignition switches - is now tasked with deciding whether the Central States Pension Fund's proposal to cut benefits passes legal muster. "Central States' proposal would allow the retirees to work and still collect their reduced benefits. But some are no longer able to work, and the idea didn't seem plausible to others," the Star goes on to note.

"You know anybody hiring a 73-year-old mechanic?" Rod Heelan asked Feinberg. "I'm available."

"I'll have to go find a job. I don't know. I'm 68," Gary Meyer of Concordia, Mo said. "It would probably be a minimum-wage job." 

To be sure, retirees' frustrations are justified. That said, the fund is simply running out of money. "We simply can't stay afloat if we continue to pay out $3.46 in pension benefits for every $1 paid in from contributing employers," a letter to retirees reads. 

The fund is projected to go broke by 2026. Without the proposed cuts, no benefits at all will be paid from that point forward. 

According to letters shared with The Star, cuts range from around 40% to 61%. "[The] average pension loss was more than $1,400 a month," the paper says.

As for what will become of those who depend upon their benefits to survive, the above quoted Gary Meyer summed it up best: "I guess food stamps. Hopefully not. It would be a last resort."

Don't worry Gary, you aren't alone...

Read more here: http://www.kansascity.com/news/business/article60760061.html#storylink=c...

[Lockbox]

Gee, I thought that the Union and Government was there to protect worker! Welcome to Hope & Change MF’er!

[Mouton]

I don’t recall the pension funds loosing money on their casino investments through the mob...then the government helped them to avoid that problem by chasing Hoffa and the guys out of office.

[Buckeye McFrog]

According to standard Liberal economic theory you SHOULD retire at 51, because that is creating a job for some young person.

[HamiltonJay]

How is one able to be of an age to retire if they have a 10 year old kid? Not saying its not possible, but seriously. I’m 44 and just had a child and I certainly at the top of the range of folks having children... have met a few older than me, but not too many... to be retired at a typical age of 65 and assuming he literally just retired, that means he had his kid at 55.... not impossible, but something makes me suspect he might not be over 65.

I’ve never understood the public union/pension... you can retire after 20 or 25 years of services with a lifetime pension and benefits, so you are “retired” at 45 or 50 and taxpayers are on the hook for you for the next 30 years?

I am not saying that’s this guys case, but it sure makes me wonder if it is.

[yuleeyahoo]

It has been known for decades, that pensions are unsustainable. That is why responsible corporations started phasing them out back in the 80’s and replacing them with 401k’s.

The gravy train is over folks. You had ample warnings.

[jimtorr]

Geez.....I was retired by my company after 24 years, at age 60. My pension is less than half what these GM retirees are getting.

I expect they also have a free-ride medical plan, as well. I have to pay the full cost of my retiree group medical plan.

[IllumiNaughtyByNature]

If he had saved even $200 a month in a mutual fund, a crappy ROI would have netted him $1500 a month without even touching the principle.

[Fhios]

I don’t understand the table. The more you earn the less you’re compensated? That’s a very progressive schedule and I don’t understand it and what I think I understand I simply don’t believe.

[Buckeye McFrog]

You are describing my father-in-law, who is a UAW retiree.

Retired at 55, has free ride medical, and yet he STILL does nothing but bitch.

[Rusty0604]

CALPERS is molding their investments to fit a social agenda, I wonder how that’s working out.

[Buckeye McFrog]

You know Obama recently changed ERISA rules to force pension funds to use CLIMATE CHANGE as one of the criteria they MUST use when selecting investments, right?

[alloysteel]

The presentation still does not seem to be a viable business model. Most of the “fixes” offered by the clever Liberal “economists” seem to include either diverting funds from other even more basic needs, like repair of crumbling infrastructure, or reduction in police and fire services, or by simply expropriation of the financial instruments of “the wealthy”, by whatever rationale they can come up with. Of course, “the wealthy” reaches down a long ways, to people who may have as little as $50,000 gross income a year.

[Obadiah]

So basically she proposes a more Communist form of Social Security, forcing you to hand over even more money to the government, beyond what we already have provided, and the government has spent, and regardless of how much or how little you hand over, you get at least a $600 payout. Do I have this right?

So, really, I should aspire to be nothing more than a WalMart greeter all my life.

[Mad Dawgg]

"Before anybody lines up for those they may want to check how bad bondholders got screwed in the GM Obama bankruptcy."

Yeppers. The way it is supposed to work is Bond Holders are usually first in line or at least very near the beginning of it when the Bankruptcy or sell off happens. But Obama sent them to the back and they ended up with bupkiss on the GM deal, reportedly less than 10 cents on the dollar while the FEDGOV and the UAW got most of it.

I haven't purchased any bonds after that incident and sold off all I had.

We just don't spend money now and paid off all our debt and put the rest locally where we can get to it quick with the best return we can find.

I am done with the Federally Rigged markets.

[Anitius Severinus Boethius]

It’s simple, he hit the magic number for retirement for his company, whatever it was. Let’s say his companies magic number is 85, he started working for the company at 19. He became fully vested in their pension plan at 29. Married a girl at 32 and had his first kid at 38, second child at 43.

9 years later, he is 52 and he has hit the magic number “85” (age plus years worked) so he can retire with his full pension and enjoy his golden years... and his silver years... and a good portion of his prime productive years... in retirement.

All because whoever set up the pension plan believed that they could pay for it decades ago when they designed it.

[Logical me]

Hey, Guy, join the rest of the Country. I have two daughters, one retired at 65 (health reasons) and the other working two jobs is 63. Both can't make it financially and my wife and I are in our 80s. I have worked hard for years and managed to make a good retirement. I am now partially supporting my kids. I could go on and on since now we are baby sitting a almost year old kid. Shi! man, you are lucky.

[blueunicorn6]

I had to settle my Dad’s financial affairs after he died. He had worked in a factory and had been a union man for quite some time.

I was shocked at how small his retirement was. It was nothing like the retirement figures mentioned in this story.

I guess his retirement was based on reality.

[pie_eater]

There is no reason I, as a non-union private sector worker, have to wait to retire at 67 while union guys and public sector employees retire at 50. There should be no pensions paid until social security age. That would solve 90% of our problems

[IYAS9YAS]

Maybe he married late and had kids when he was in his 50's or 60's. Trump has a 9 year old son and he is 69.

Not even that old. The article didn't mention his age, just that he'd worked at the company for 33 years before retiring. If he started at 18, that's only 51 years of age, if he just retired. That would mean his kids were born when he was in his thirties. Fourth grade is 9-10, so maybe he was in his early 40s for the second kid. Who knows, maybe they're not kids, but grandkids. My daughter is friends with a girl who was in her class (before we started homeschooling). They're both 8, but her friend is living with her grandparents, who are only a few years, at best, older than me. They started young, I started late.

If I had kids at 18 or 19, and my kids did the same, I'd easily have an 8-year-old (possibly 10-year-old) grandkid today, and I'm only 46, soon to be 47.

[Obadiah]

Uh, I think I might know how your F-I-L might vote. And as to requiring pensions to fund the climate scam, how is that even legal. And why hasn’t there been untold numbers of lawsuits. Where are the class action chasers?