Posted on 04/24/2017 1:06:39 PM PDT by 2ndDivisionVet
Millions of Americans are expecting to receive a pension from the city or state that employs them. Many will be in for a terrible surprise, according to the nonprofit organization Truth in Accounting.
It surveyed 237 municipal pension plans across the country, using newly required reporting data about pension underfunding. Although it has taken decades for many of these pension funds to get into such bad shape, only now are the details being revealed, says Sheila Weinberg, president of Truth in Accounting and a CPA who has dedicated her life to requiring full and useful disclosure of federal, state and local debt obligations. (I am a board member of Truth in Accounting.)
This newly collected data should be frightening to those counting on a state or municipal pension. The latest numbers are available at http://www.statedatalab.org/pensiondatabase. There you can search by state to find both state and local pension statistics. The report for each city and state includes the amount of pension plan assets, the amount of plan promises, and the dollar amount and percentage of pension underfunding. Every plan also receives a letter grade, from A to F.
Of the 237 cities studied, 29 received an "F" grade, reflecting a funding ratio of less than 35 percent. Those plans cover many thousands of workers who cannot possibly be paid their full promised pensions, absent a huge tax increase (which would also come out of their pockets as workers).
Based on the size of its unfunded pension liabilities, Chicago is in the worst shape, with more than $62 billion worth of unfunded pension promises. Chicago has less than 33 cents set aside for every dollar promised.....
(Excerpt) Read more at chicagotribune.com ...
More like look for a Tremendous increase in property, income and gas taxes as well as any others the local or state government can get their hands on.
Then expect mass exodus of the likes not seen since The Bible.
This has been coming, the police on the Second City Cop blog often talk about it. But now the Tribune is going to play it up to their low-info readers, and I’d bet try to tie it in to AG Sessions cutting off federal funding from “sanctuary” cities.
Without reading this report, I am willing to wager big bucks that the majority of these ‘F’ grades (and many others) involve ‘government unions’ and that explicitly corrupt contract that the politicians agreed to the contracts in exchange for the member’s votes. The politicos knew that by floating bonds and other such delaying devices, they would be long dead before this expense came due! Now the victims are the workers and the taxpayers of the current time, they did not participate but they now bear the burden of the inexorable squeeze between promised retirement and taxpayer dollar.
Most government employee unions will go on strike if they are even asked to contribute a few more dollars to their own pensions. The Chicago teachers union loves to go on strike.
Government employees should never have been organized.
TX has millions of illegal aliens. We don’t want Democrat refugees from failed Socialists states.
I like the idea of truth in accounting.
We should apply the same accounting principles to the federal government, to the Social Security program.
Any pension or retirement plan needs to be in balance, in order for the promised benefits to be paid out.
Simple economic laws, such as the idea that the budget must be balanced, cannot simply be ignored long term.
Lol.
But late on this one.
This isn’t news.
Unions of all kinds and cities/states run by Democrats. Virginia started making employees kick in some scratch. I get charged 5% for my pension.
That’s the way to do it.
The link to the pension database is broken. 404 error.
Corrupt Union officials bargained with corrupt Dem city and state leaders to secure pie in the sky pension promises in exchange for votes.
These same pols and union thugs should answer to these pensioners who believed their fuzzy math. You can find many of these officials and union bosses golfing 5 days a week already retired in FLorida.
Unions will be forced to accept lower pensions. Dems will blame Republicans, even tough these cities and states have been under Dem control for decades.
Unions are owned by the Democrats. But the Democrats could gain ground by promising them free money if they get control.
Of course they will “stealth” them if they get control.
Retired firefighters and cops from Detroit took it up the shorts when they filed for bankruptcy.
Right there with the GM bondholders when Obama backdoored them to “save” Government Motors. MI embodies the suck...
The problem is not merely “under funding” because that issue is manifest in more than one way.
One simple way it has occurred is stated levels of contributions were not paid by governments based on budget decisions. A lot of politicking went into why, and how they pledged to make up the difference, in time, and then for the same reasons - the budget - kicked the can down the rode, multiple times.
A second way involves the estimates for the contributions needed for over generous benefits, when the benefit formulas were made and changed proved to be less than how much ADDITIONAL contributions would actually be needed. The result was more budget problems and often enough more under funding.
Keeping up with a contributions level needed would never have resulted in any big unknowns, if the pension plans were defined contribution PENSION PLANS (not 401ks), instead of defined benefit plans to begin with.
With a defined contribution pension plan benefits are merely an actuarial calculation at time of retirement - in the manner of [A} pension account accumulated balance at date of retirement, [B] actuarial assumption of expected mortality (how long will they live) for the retiree, [C] number of likely payments that must be made based on [B], and [D] an earnings assumption on the account balance over the rest of the retiree’s lifetime. There is no predetermined benefit such as “x% of average of final fives years salary” (for instance). The benefit is what the balance can be expected to pay out, month by month, over the balance of the lifetime - nothing more.
A third way the funds have been underfunded, most often in large defined benefit pension funds like Calpers in California, is that the funds’ stewards over estimate what they expect the earnings rate of invested funds will experience. To the extent that is over estimated, the projections for the contributions levels is less than winds up being necessary, and again shortfalls and under funding conditions occur. Had the earnings assumptions been more conservative, the contributions would likely not have been needed to be increased to make up for uber rosy earnings estimates.
The place to start would be to make illegal defined benefit pension plans, and move those than already existed to new defined contribution plans with the pensioner’s account balances imputed with calculations involving the fund’s balance and what were, for each person, the contributions that were collected to fund their benefit over the years. From that they’d have a starting balance in a defined contribution plan and additional contributions paid to fund their benefit would go into their own accounts.
Yes, that solution WILL mean some will get lower benefits than promised. And if the fund goes belly up??
It also is much simpler from the accounting standpoint.
Every payday they put so much into their 401k and you put your bit in and you are done. No need to calculate how many years they have left to work and/or live. It is not your business. You have put your half in and it is done.
“I like the idea of truth in accounting.”
The problem is the private plans are not in too good of shape either. Pension plans need to earn interest in order to work and the Fed has been killing them. You can go into stocks but stocks are overpriced because of low interest rates.
Low interest rates also make it cheaper for companies to convert to robots.
Good they don’t deserve it.
Put them on 600/month SS like the rest of us.
Dallas has screwed up the police pension fund and some parasite State Rep is trying to put all Texas taxpayers on the hook for it.
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