Keyword: pension
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Calling the Chicago pension crisis the worst in the nation is saying something - like, how bad can it get? The city's underfunded pension system for teachers, firefighters, police, and transit workers threatens to punch a hole in the city budget that would devastate city services. The teachers' alone are $1 billion short of funds, while the city as a whole is looking at a whopping $27 billion shortfall. The state of Illinois is even worse off with more than $100 billion in unfunded pension liabilities. Where is the money going to come from to fix the problem? Financial Times:...
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A global retirement crisis is bearing down on workers of all ages. How retirement systems vary, country to country Associated Press Spawned years before the Great Recession and the financial meltdown in 2008, the crisis was significantly worsened by those twin traumas. It will play out for decades, and its consequences will be far-reaching. Many people will be forced to work well past the traditional retirement age of 65 — to 70 or even longer. Living standards will fall, and poverty rates will rise for the elderly in wealthy countries that built safety nets for seniors after World War II.
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As someone who is constantly researching retirement, I find the recent funding cuts to military retirees very disheartening. Worse yet, I see this as a move to establish ground zero for the testing of changes to Social Security benefits. On Wednesday, the Senate passed a bipartisan budget that scales back cost of living adjustments for working age military retirees starting in 2015. Several sources including Military.com suggests that qualified participants could lose between $3,700 and $6,200 per year, or an aggregate between $83,000 and $124,000 before they retire based on rank, age and years of service. Despite some protests, a...
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The Illinois Retired Teachers Association filed suit Friday challenging the constitutionality of the state’s historic but controversial plan to deal with the nation’s most underfunded public employee pension system. The lawsuit is the first of what could be many filed on behalf of state workers, university employees, lawmakers and teachers outside Chicago. The legal challenge argues the law, which limits cost-of-living increases, raises retirement ages for many current workers and caps the amount of salaries eligible for retirement benefits, violates the state Constitution. The lawsuit, filed in Cook County Circuit Court on behalf of eight non-union retirees, teachers and superintendents...
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House Budget Committee Chairman Paul Ryan admitted on Wednesday evening that cutting the pensions of disabled and injured U.S. military veterans as part of the deal he forged with Senate Budget Committee Chairwoman Sen. Patty Murray (D-WA) was a mistake. Apparently, Ryan knew the mistake was in the legislation for at least two full days before the House vote. He has not, however, provided any explanation for why he did nothing to fix it. While interviewing him on Kudlow Report on CNBC Wednesday evening, Larry Kudlow asked Ryan if he agreed with a statement Murray made on the Senate floor...
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Sen. Patty Murray is distancing herself from a cut in military pensions in the budget deal she brokered with Rep. Paul Ryan. Her unease about a key element of her own deal, which passed the Senate on Wednesday and is now headed to President Barack Obama, comes amid a backlash from veterans groups and Senate defense hawks that has put her and her colleagues in a tough spot going into an election year. Murray’s response: The pension cut isn’t final. “We wrote this bill in a way that will allow two years before this change is implemented so that...
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For Chicago lawmakers who thought Tuesday's pension vote was politically dangerous, just wait until next year. Then on the docket in Springfield: gravely needed reforms for the retirement systems that benefit Chicago teachers, city workers, laborers, firefighters and police. **SNIP** Combined, the city of Chicago's four pension funds are $19.5 billion in the hole and only 36 percent funded. Add another $9.5 billion in unfunded liability from the Chicago teachers' fund for a grand total of $29 billion.
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Officially, the City of Detroit is the largest municipality in U.S. history to enter Chapter 9 bankruptcy.
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**SNIP** At stake is Illinois' $100 billion pension shortfall that affects teachers outside Chicago, public university employees and state government workers. The worst-in-the-nation deficit is gobbling up tax money that otherwise could go to education and other programs, and has resulted in Illinois holding the lowest credit rating among the states. Illinois' pension problem also is being blamed in part for the state's struggling economy and high unemployment. **SNIP** The measure would have offered pensioners a choice of keeping their 3 percent yearly compounded cost-of-living increases in return for giving up access to state health care. Cullerton maintained that such...
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Michigan Radio reports that the City of Kalamazoo saved $7 million by offering an early retirement incentive to workers in 2012. The figure is fictitious. The city simply shifted costs from current operations to its pension fund, and not at a savings, either. Early retirement incentives boost employee's future pension payments in exchange for leaving the city's workforce prematurely. Employees near retirement age tend to have the longevity and experience that make them cost more than their younger colleagues. As these costlier employees are replaced by cheaper, younger workers the city's operating funds save some cash. This calculation, however, ignores...
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Scranton could be headed towards another fiscal crisis like the one that resulted in city workers having their pay cut to minimum wage in 2012... Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. The city is supposed to approve a new budget by Nov. 15, which would have to close that deficit to balance the budget. ... A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum...
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America’s public pension funds are in trouble because sketchy Mr. Wall Street sold some slack-jawed pension fund managers on risky investments with promises of high returns that may never materialize. Or so Matt Taibbi seems to believe. In a recent piece in Rolling Stone, Taibbi blames public pensions’ current woes on “Gordon Gekko wanna-be’s” (sic), “scorched-earth takeover artists like Bain Capital,” and “Wall Street,” who used the financial crisis to lure weakened pension funds into investing in “alternatives.” Alternatives are investment vehicles that are different from stocks, bonds, and commodities in that they are typically traded by individuals without the...
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Even before she retired last week, scandalized IRS official Lois Lerner's compensation was already attracting attention. While on administrative leave, federal rules allowed her to keep collecting a salary, one that reportedly totaled $177,000. So it was no surprise when speculation arose over how much Lerner could collect in federal pension benefits. Unfortunately, that speculation, which initially projected a benefit of over $50,000, might be off by about half ... and in the wrong direction. National Taxpayers Union calculations show that Lerner could qualify for a starting pension at the annual equivalent of as much as $102,600, and up to...
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Even before she retired last week, scandalized IRS official Lois Lerner´s compensation was already attracting attention. While on administrative leave, federal rules allowed her to keep collecting a salary, one that reportedly totaled $177,000. So it was no surprise when speculation arose over how much Lerner could collect in federal pension benefits. Unfortunately, that speculation, which initially projected a benefit of over $50,000, might be off by about half ... and in the wrong direction. National Taxpayers Union calculations show that Lerner could qualify for a starting pension at the annual equivalent of as much as $102,600, and up to
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Pensions: In Chile, a major study shows the nation's private retirement accounts provide workers pensions worth 87% of their salaries, 73% of that from profits on savings. So much for the canard about the perils of markets. The story was front-page news in Chile's largest newspapers, El Mercurio and La Tercera, on Sept. 3, a powerful affirmation of what former Republican presidential candidates Newt Gingrich and Herman Cain called "The Chilean Model" of private retirement accounts. The study of 28,000 households by Dictuc, a consultancy affiliated with the Catholic University of Chile, showed that male workers who contributed just 10%...
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A corruption conviction doesn’t necessarily stop elected officials from profiting at the taxpayers’ expense. But a new effort led by U.S. Attorney Preet Bharara aims to go after politicians’ public pensions when the courts find them guilty. “Our primary mission is to address and to undo injustice, and, in the public-corruption context, a galling injustice that sticks in the craw of every thinking New Yorker is the almost inviolable right of even the most corrupt elected official — even after being convicted by a jury and jailed by a judge — to draw a publicly funded pension until his dying...
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Quietly, as the looming possibility of a U.S. military attack on Syria dominated news internationally, the government of Poland announced a decision to confiscate half of the nation’s pension funds in an attempt to delay an impending government debt crisis. While details remain hazy, Reuters reported Sept. 4 that Polish Prime Minister Donald Tusk announced a government decision to transfer to ZUS, the government pension system, all bond investments in privately owned pension funds within the state-guaranteed system. For now, private pensions in Poland will be allowed to keep equity investments that in the Polish state-guaranteed pension system tend to...
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The American Legislative Exchange Council Center For State Fiscal Reform’s latest publication, Keeping the Promise: State Solutions for Government Pension Reform, offers a solution-based perspective that should be valuable even for high-tax and higher-debt Illinois in its search for Illinois pension reform. Illinois pensions face a liability of at least $97 billion, with some estimates much higher. Gov. Pat Quinn has gone so far as to deny paychecks to the state legislature in attempt to put a more immediate cost on inaction. The governor’s office projected the defined-benefit liability will grow by $5 million per day, an improvement over last...
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The School District of Philadelphia's financial woes became a national story last week when the New York Times featured a piece on the district's efforts to borrow $50 million to make up a significant funding shortfall that actually threatened the start of the school year. In that piece the reporters attributed the district's problems to a range of issues, including rising pension costs and cuts to state education aid, but the piece also noted that it was unclear exactly what the system owed on pensions. However, a research piece earlier this year (mentioned in this June PSI blog item)...
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Having a pension plan has been part of the American Dream for millions of workers. Put in thirty or thirty-five years with a company, retire, and then the company will send you a check every month for the rest of your life—an attractive prospect. The amount of the check is pre-determined. It is a “defined benefit” promised to the worker. Unfortunately, this simple vision has proved difficult to implement. The basic problem has been that pensions are a promise for the future, but nobody can guarantee the future. In our dynamic economy, the Schumpeterian process of “creative destruction” relentlessly weeds...
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