Posted on 04/18/2018 5:52:35 AM PDT by reaganaut1
Same thing happened to Soviet Union pensioners after the inevitable collapse of their country. Funny how that works out.
This liability was the centralized governments debt but the individual states picked up the liability for reasons you might guess.
Nothing changes until the money runs out.
I have worked with business headed toward bankruptcy, but they don’t listen. Until one day, the bank decided not to lend them anymore money. Then it was the bankers fault.
Just like we got up one morning and learned the USSR was kaput, it happens overnight........................
A number of these state pension authorities use historical investment return models in determining actuarial solvency. That is permitted but not realistic. At one point, California was assuming 8% to 10% returns on investment. If you reduced those to say, 5%, a number of CA municipal pension plans would have been deemed insolvent. A lot of other states play the same games. So the situation probably is a lot worse than even articles like this make them out to be. The next prolonged market downturn will probably doom a number of them unless state legislatures wake the Hell up and make some changes — meaning reducing benefits.
We should also know there is a government agency dealing with this.
https://www.pbgc.gov/about/annual-reports/pbgc-annual-report-2017
The good news is the problem is covered by insurance.
just retired Oregon Health Sciences University President gets $913,335 annually....retired university football coaches get a lot too...there should be a MAXIMUM...
A fat retirement pension is a public service?
No. All defined benefit pensions should be eliminated. All pensions should be fully funded and individually owned, like a 401(k).
If you make a decision to hitch your wagon to the government, don’t come crying to the rest of us if things don’t work out.
Virginia changed their pension plan to make employees kick in 5%. It was actually a very smart move because it basically matches the ROI and the state gets to pocket the money that employees “lose” if they leave within 5 years. “Lose” means they get taxed heavily for the refund, like cashing in a 401k.
They don’t care. Remember many of these folks at this late stage can barely perform basic arithmetic, thanks in large part to public pensionized teachers, but I digress. The ones that can keep their mouth shut.
Seriously they don’t care because lawmakers have also poisoned the well, state constitutions often require that these be paid regardless of solvency. The judiciary - whom also receive a state pension it should be noted - are not going to rule differently. “There is no money” will not be an adequate answer. Stealing from those who don’t have a pension is acceptable. Count on it. Remember the infrastructure and economy that existed when these arrangements were setup died and blew away a long, ling time ago.
The debt remains. The obligations remain. There is no way to pay for it. Another scheme that is used apart from confiscatory tax rates is the rise of “fees” and fines. Put your garbage can out on the wrong night? Ok buddy. That’ll be $150 .... pay up.
As a practical matter it always works the same. States cannot issue currency or print money, so they tax and tax and tax some more until even the guy living under the bridge thinks things are getting out of hand.
National governments on the other hand will print, lop of zeros, print, lop off zeros, etc, until the people are out flamingo rustling at the Zoo like down in Venezuela, which incidentally has the largest proven oil reserves on the planet. Still they can’t provide even the simplest, basic services or materials. This is of course, the Republicans fault.
Leftists, mostly responsible for this type of mess, myriad other fiscal disasters not to mention the death of countless millions over the years, successfully brand normal people as being “greedy”.
Soviet Union was in some ways much MUCH better prepared. For one thing, everyone had a side business going, they were are all very resourceful and scrappy as a result of a basically ineffective government. They also had free housing. Not very nice housing. A cement high rise apartment building, say. But they had a place to go, and no rent to wordy about.
Well, yes, but getting that will be impossible....START with a monthly maximum......that way those INSIDE the system (unions, govt bureaucrats) may start being more realistic about retirement funding...and figuring out how their members could create their OWN retirement plans.
When they start looking to the Fed to bail them out it will cause massive civil revolt. Just tell the millions of govt workers in states which live within their means that they will have to start subsidizing the lavish benefits of other government workers, benefits they can never dream of, well...then it’s gonna get ugly.
And the media dutifully ignores this ticking time bomb as it was caused by DEM politicians and DEM union thugs. But it will explode, you can't pay cops, for example, 90% of their last 3 years salary after only working for 25 years, math doesn't work. To compare it to a 401k, one would have to defer 25% of their salary each year. The pension plans are not adding that equivalent each year for union workers so it's about to blow as Kesha sings.
Because instead of lowering pensions, they will tax the heck out of non-union workers to bail it out. Or at least that's want they hope for but it will cause a revolution.
They demonize Trump because their only option is a Federal bailout. And that is NEVER going to happen while Trump is in charge.
“The worst fear I have is that the property owners of the state will have to foot the bill that the corrupt politicians have incurred.”
a legit fear ... sadly enough you might want to consider beating the rush to move to a better managed state before a ginormous property tax or income tax increase sends real estate values into the basement ...
I often try to explain to true believer lefties, that think communism helps the poor, that about 90% of money collected by the gov goes to their own employees and infrastructure, not the poor.
I start off by asking “Would you donate to a charity that has 90% overhead?” When they answer no, I ask why on earth would you want gov to do charity?
I stumbled upon a GAO report years ago that gave these numbers but haven’t been able to find it again.
For reasons you stated major increases in property taxes would be an exercise in futility.
This will end the way it always has in history—the debts will not be paid, law or no law, state constitution or no state constitution.
I can easily see states saying they are broke and asking the Fed to take over their finances. Then the feds will start taking the axe to the local pensions.
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In fact, the situation here is a microcosm of why I’ve said, for decades, that we are in this ride all the way to the bottom for the simple reason that any politician that actually tries to make the hard decisions will be tarred and feathered or, at the very least, a one termer.
That is why I lay the blame for our fiscal situation squarely at the feet of the voters.
And when we hit bottom it’s gonna hurt. A lot. It will be epic when the most powerful and interdependent civilization (i.e. it’s not just the US) ever to grace this planet collapses.
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You’re dead on point.
Unfort., those that allowed the process to begin (aka ‘they got “theirs”) will (long) be buried and forgotten.
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