Detroit may be just the first of many cities and states to face financial problems due to unfunded pension obligations.
If I recall correctly, I’ve heard that pension and retirement obligations are not accounted for as liabilities according to their financial reporting. Anybody who is a CPA or financial manager, please let us know if that’s true. Because if that’s true, it means that cities and states are not correctly setting aside funds now to meet the obligations later. And that they are getting away with it, if they are not required to report these as liabilities on their financial reports.
I’m not quite as pessimistic as Shedlock. My analysis indicates approximate 3% returns over the next 8-10 years followed by returns averaging around 7% for twenty years or so after that.
There will be adjustments made to most pensions, but I doubt 80% will “fail”.
Newer employees will pay more into the funds, and payouts will be adjusted down. The worst of it will be the howling from the above-mentioned players.
Not mine....because we are one of the half dozen or less nationwide that are funded fully.
Reasonable and prudent management combined with cooperative forward looking actions by the police union and legislators. Hard to believe it but there actually used to be responsible legislators.
Now we have to fight them to keep them from raiding our plan to spend the money on their mistakes elsewhere.
It helps that we do not have crazy benefit like retire at 50% after twenty and pain medical (not that I didn’t wish for such fantasies to come true) but reasonableness makes reality much more palatable.
Already workers in Germany are balking at working longer in order to allow workers in Greece to retire earlier than them
Workers across the US will be faced with much the same choice. Jurisdictions will increasingly reach into general funds, to supplement unfunded liabilities for retired workers’ retirements, quite plush ones compared to most private workers’ arrangements.
When a town needs more police today, it will claim it is unable to afford them, because it pays so much to the retired officers, who often retire at age 55 or younger, have lucrative 2nd career in or out of government.
Those retirees have rich lobbies. They hand out huge campaign donations to city council, county supervisor, state legislator candidates.
Politicians at all levels over promised these workers years ago, and have left current taxpayers “holding the bag” so to speak.
Current taxpayers get to pay for these local promises, in addition to federal promises for social security, medicare and Medicaid, not to mention Obamacare.
Eventually American citizens will simply be unable to afford all the promises, political opinions and sides notwithstanding.
This sad situation was ONE of the main reasons for the Tea Party movement, as I recall.
Pension law must be amended to state no one can receive a pension until 70 years of age. Eliminate 20 year work pensions and retiring at 40 Years old. This is financial suicide exactly what we are experiencing NOW!
The Post Office might be the only organization to survive. Whoever demanded that the post office ensure their pension funds are funded are brilliant. I think very agency and company should be required to put money away for future pensions. If they have them then they are required to provide lifetime payments. If they don’t want to then stop all pensions for those being hired tomorrow. If not shut up and pay the dang money you promised. It is NOT the fault of the workers who did what they were supposed to do. I wish conservatives would stop blaming the workers on this issue.