Free Republic

Instead of looking to policymakers and accountants for help with state pensions, reformers across the country realize they need to hire a few more lawyers. Illinois Gov. Bruce Rauner has to deal with serious pension problems after a unanimous state Supreme Court shot down the 2013 reforms of his predecessor. The Illinois Constitution does not allow cutting promised pension benefits, but Rauner seems willing to take the legal steps necessary to make the reforms stick this time around. Illinois is not alone. Reforms made by Oregon's state legislators in 2013 included a reduction in cost-of-living increases. But Oregon's Supreme Court...

The national pension system has been hacked, leading to 1.25 million cases of personal data being leaked, the Japan Pension Service announced Monday. In a scandal reminiscent of the nation’s botched handling of pension records about a decade ago, people’s pension IDs, names, addresses and birth dates have been stolen through illicit accesses to fund workers’ personal computers, fund officials said. The data were leaked when agency employees opened an attached file in their email containing a virus.

The United States government could start seizing 401(k) plans, says one economist who believes a recent Supreme Court ruling sets the stage for Washington to initiate any such plans. Economist Martin Armstrong published a blog post Monday that took a look at the recent Tibble v. Edison case. The court concluded that employers have an obligation to protect their workers’ 401(k) plans from mutual funds that provide deplorable returns. Armstrong thinks this could give the federal government the arsenal to begin seizing private funds and take companies to court if mutual funds perform poorly. This comes as the Obama administration...

Recently the bond rating company Moody’s Investor Service cut their ranking of Chicago to junk status. The move ticked off a lot of people in the Windy City who think Moody’s overstated the case. I agree that Moody’s is wrong… not because they went too far, but because they didn’t go far enough. Chicago is not close to bankrupt. It’s completely bankrupt. People are just afraid to say this out loud. The city’s pensions are underfunded by $20 billion. Moody’s gave a rating that reflects how the city is performing. City officials are just angry Moody’s called them out. The...

One of every four retired workers from the state of Illinois, the city of Chicago and the Chicago Public Schools is getting a pension of more than $60,000 a year. That’s 80,365 people in all. For 13,240 of them, those checks provide a yearly income of $100,000 or more, a Chicago Sun-Times/Better Government Association analysis of pension records has found. An additional 20,004 have pension incomes totaling between $80,000 and $100,000 a year. ... the root of the problem is that government officials kept promising lifetime benefits to workers — and, in many cases, to their surviving spouses should they...

TRENTON, N.J. (AP) — New Jersey's top court weighed the budget repercussions of ruling on a pension dispute between Gov. Chris Christie and public workers' unions on Wednesday while one justice wondered if the state had engaged in a "bait and switch." The state Supreme Court probed whether the state has a contractual obligation to pay what it agreed to in a 2011 pension overhaul law and tried to get lawyers from both sides to explore whether such a finding would represent an overstepping of the courts' role and put it in the middle of the state budget process every...

Chicago has a simple financial choice: Stay in frying pan or get in the fire. That in simple terms is what Moody's Investors Service said in a report today about the difficult options the Emanuel administration faces over the city's woefully underfunded pension funds. The city must cut spending and raise taxes now or the risks of becoming insolvent will grow, forcing even harsher decisions later. The credit rating agency offers a sobering reminder of what's at stake in the eight-page report, which focuses on the pensions problems. ... A CUT ABOVE JUNK. Moody's, typically the most conservative of the...

The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal. The rates lured investors to buy the bonds, which CPS says it will use to pay off recently completed construction projects. But they also mean Chicago taxpayers will pay more over the life of the borrowing deal, financial analysts said Wednesday. The main bond issue — for $280 million to be repaid over 25 years —...

I've done a lot of thinking about this and I'd like feed back

Scott Walker Wins the Accountants’ Primary - Wisconsin’s rock-solid pension system makes him presidential material. Wisconsin governor Scott Walker’s signature legislative achievement, Act 10, was one of the most polarizing and galvanizing pieces of state legislation in recent memory. The law, which severely weakens public-union powers and mandates public-pension sanity, is providing a blueprint for other Republicans around the country. Walker’s public-pension stewardship also demonstrates why he is on the short list of serious presidential contenders....... [snip] ...As states have become more sensitive to burgeoning pension costs in recent years, and with increasing regulatory scrutiny and media attention on possible...

To the outsider, CalPERS — the largest U.S. pension fund, created by California state law and run by an arm of the state of California — may seem like the champion of the working man, fighting for the rights of municipal employees and pensioners. But that perception may be undeserved, per the Chapter 9 bankruptcy of Stockton, Calif., where CalPERS sought to shift to taxpayers (an even larger and more sympathetic party than CalPERS) the financial burden to support what some consider CalPERS' outrageous costs. U.S. Bankruptcy Judge Christopher Klein openly opined, "CalPERS has bullied its way about in this...

Moody’s Investors Service on Friday announced it had reduced its rating on Chicago Board of Education debt to one level above junk bond status. Moody’s downgraded the rating to Baa3 from Baa1 on the board’s general obligation debt. That rating applies to a total of $6.3 billion in outstanding debt held by Chicago Public Schools. That lowered rating, according to Moody’s, “reflects CPS’s continued reliance” on its reserves to cover ongoing operating expenditures, “particularly pension contributions, which will steadily increase in the coming years.” ... the lowered CPS rating also takes into account the city’s own credit rating, which also...

Michigan House Republicans recently released a reform agenda that calls for closing the state-run school employee retirement system to new employees. Senate Majority Leader Arlan Meekhof, R-West Olive, reiterated the proposal. The necessity of closing the current defined-benefit pension system and instead offering new employees a defined-contribution plan is simple: the state underfunds pensions. According to the legislative auditor general, the system has been underfunded in all but one of the past 30 years. The system carries a $25.8 billion unfunded liability. Michigan taxpayers are now on the hook for 13 times more in unfunded school pension liabilities than the...

John Mauldin February 16, 2015We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time. A defined-benefit pension fund is a promise to pay a certain amount of income over time. The value of either is determined by the ability of the government or the...

The University of California’s Board of Regents recently voted to increase student tuition up to 25 percent over the next five years. UC president Janet Napolitano said the tuition hike was necessary “to maintain the University of California in terms of academic excellence.” But the real reason for the tuition increase is that the UC system needs funds to bail out the mismanaged pension system that covers retired employees of its ten campuses. Let this be a lesson to the rest of the country: Public officials rarely take responsibility for the messes they make. Rather, they deny culpability and send...

EXCERPT—--the WH wants you to consider a retirement plan that will invest in nothing but US government debt. Any financial professional who advised this—would be sued for malpractice. But asset allocation is merely one of the problems with the new “myRA” fund rolling out this month. A form of Roth IRA that allows people to save after-tax dollars and watch them grow tax-free until retirement, the new myRA offers a single investment option. It’s a private version of the G Fund that is available to federal workers and has lately been delivering annual returns of about 2% on its portfolio...

California public employees now enjoy the highest benefits of any state in the nation. To pretend to fund this largess, California State Teachers’ Retirement System (CalSTRS) is an “outlier” among public pension plans in using creative accounting to blur its grossly underfunded status. This has allowed its school district clients and unionized employees to short-check their annual payment for the nation’s most lucrative teachers' pension benefits. But pressure from Moody’s credit rating agency is causing CalSTRS clients and unionized teachers to make big increases in pension and benefit funding. The latest “hokey-pokey” drama is the California State Teachers’ Retirement System...

Once upon a time, the world's biggest government pension fund, Japan's $1.1 trillion Government Pension Investment Fund, or GPIF, was apolitical, and merely focused on preserving the people's wealth. Then everything changed, and with the reckless abandon of a junkie on a crack cocaine binge, aka Abenomics, the GPIF management was kicked out, and its entire mandate was flipped from preserving wealth, to gambling on #Ref! P/E stocks, in hopes of recreating the wealth effect of the super-rich (the only problem: Japan has reached its breaking point and the higher the USDJPY, and thus the Nikkei rises, the more...

When the November election was still a long way off, Sacramento-area streets were already plastered with campaign signs for a little-noticed political race: candidates are running to serve on the board of the California Public Employees’ Retirement System, better known as CalPERS. While not as high-profile as the statewide and congressional races, these seats are arguably of equal importance to Golden State taxpayers. CalPERS, the largest state pension fund in the country, not only manages more than $257 billion in assets, but also loves to use its political muscle to prod corporate America into “socially responsible” (read: leftist-friendly) investing. Sacramento,...

Colorado’s schools and governments have about $10 billion in hidden pension and health-care benefit liability, a “sinkhole” that could cost many individual taxpayers $10,000 or more to fill, a report from the Chicago-based nonprofit Truth in Accounting found. Sheila A. Weinberg, TIA founder and CEO, said the Colorado Public Employees Retirement Association hasn’t collected enough from school districts and local governments to cover retirement costs for all the local employees. “It is pushed off year after year until these plans don’t have enough money to pay for retirees,” she said. “They’re either going to have to raise taxes or cut...