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A costly way to address the pension crisis: Why federal bailouts are a bad idea
Washington Times ^ | 01/24/2019 | Joshua Rauh

Posted on 01/24/2019 9:29:21 AM PST by SeekAndFind

When both Democratic and Republican lawmakers recently joined together to support a taxpayer-funded, multibillion-dollar bailout of big union pension funds, you didn’t need to be a “swamp” creature to know something has gone terribly wrong in Washington, D.C.

But that is exactly what happened when U.S. Rep. Richard Neal, Massachusetts Democrat, chairman of the Ways & Means Committee, offered a so-called bipartisan plan to address the pension crisis. However, this proposed bailout of organized labor’s retirement plans would cost federal taxpayers billions — while setting a dangerous precedent that would expose taxpayers and laborers to more financial mischief.

The expectation for this type of bailout is presumably why labor unions as well as the public sector still offer traditional pensions, while the rest of the United States has largely moved to 401(k) plans.

In a pension plan, employees earn pension benefits and receive monthly checks when they retire. Corporations have long understood that “over-promising” pensions to their employees is financially reckless and will come back to bite them, and so have embraced 401(k) plans instead. Yet neither labor unions nor state and local governments seem to care as much about the risks of making irresponsible and unfunded pension promises.

(Excerpt) Read more at washingtontimes.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: bailouts; crisis; pension
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To: SeekAndFind

Corporations have long understood that “over-promising” pensions.


It a little more than just that. Accounting rules changed under FASB 81 and FASB 106. Companies now had to account for retiree benefits (health and pensions). Before this rule many pensions and retiree health plans were allowed to be pyramid schemes where the workers were essentially funding the retirees. It works okay as long as costs don’t go up too high, the company stays in business and there are more workers than retirees. Too many corporations either went belly-up, had big layoffs and retirees lived long into their 80’s. Pensions are a fairly new institution most received them after World War II. Prior to World War II only the military, railroad industry and police and fire received pensions. All dangerous jobs where the odds of dying on the job was high.


21 posted on 01/24/2019 10:21:35 AM PST by outpostinmass2
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To: FrdmLvr
And government employees don’t pay into Socialist Insecurity.

Government employees under the FERS retirement system DO pay social security. CONgress probably doesn't.

22 posted on 01/24/2019 10:34:21 AM PST by mountainlion (Live well for those that did not make it back.)
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To: akalinin

And when the money is gone, it’s gone. Defined benefit pension plans were a really bad idea.


23 posted on 01/24/2019 10:38:46 AM PST by NorthMountain (... the right of the peopIe to keep and bear arms shall not be infringed)
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To: akalinin
"Blame politics and money managers, not the retired blue collars. AND, while we're giving free shit to illegal immigrants, our fathers deserve to be supported."

This is first and foremost, a UNION problem, to be resolved between the UNION and those greedy bastards who worked for it in the hope of getting a filthy rich pension on the back of the taxpayers. Those retired blue collared types helped this come about by joining and supporting that union and buying into it's deception and lies and contributing to it's damaging politics. NOT.MY.PROBLEM.

Asking for taxpayers to bail out a corrupt union is unconstitutional. Our taxes are paid to be representative of our interest. We were never given a chance to vote our interest as it pertains to unionized federal/state work forces.

24 posted on 01/24/2019 10:42:46 AM PST by Uncle Sham
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To: akalinin

Your Dad was a fool for believing the promises of union leaders and politicians.

Not my problem.

L


25 posted on 01/24/2019 10:47:22 AM PST by Lurker (President Trump isn't our last chance. President Trump is THEIR last chance)
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To: akalinin
I sympathize with your dad. I worked fulltime until 73, but had no expectations of a funded requirement. My Mother told me the truth: never trust the government with your money, because they will cheat you.

This is no dark secret: it was laid out explicitly by Samuel Smiles in 1875 in a book called "Thrift". But far too many people were seduced and deceived by the "welfare state". For which I hope the deceivers pay in blood, and pay in full.

26 posted on 01/24/2019 10:47:40 AM PST by John Locke
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To: Uncle Sham
100% agree with you.

I've got the means to support my parents when the money runs out. Many do not. At that point the pension problem becomes the taxpayer's problem whether you like it or not.


27 posted on 01/24/2019 10:51:49 AM PST by farming pharmer
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To: akalinin
"I've got the means to support my parents when the money runs out. Many do not. At that point the pension problem becomes the taxpayer's problem whether you like it or not."

Those who have stolen the money know that this will not happen. That's why they are doing everything possible to destroy this country and anger it's citizens to the point of anarchy and geopolitical division. Once the good ole USA no longer exist, they are off of the hook with all of the stolen money and none of the responsibilities associated with where it came from. The baby boomers were great to steal from but now, as they are retiring in larger and larger numbers, the thieves are unable to meet the promises they made thus the never ending attempt to break this nation apart. No nation, no promises delivered.

28 posted on 01/24/2019 11:01:52 AM PST by Uncle Sham
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To: morphing libertarian
already LOCKED into the contract

Federal Bankruptcy judges often don't give a damn about what goodies some contract promised, as Detroit pensioners discovered

29 posted on 01/24/2019 11:09:09 AM PST by PapaBear3625 ("Those who can make you believe absurdities, can make you commit atrocities." -- Voltaire)
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To: PapaBear3625

The constitution of Cal protects the pensions of public employees. So the state has to find the money because their pensions, once approved, are ‘locked” in.

I also believe I recall judges upholding pensions in other states. But can’t cite.


30 posted on 01/24/2019 11:30:01 AM PST by morphing libertarian (Use Comey's Report; Indict Hillary now; build Kate's wall. --- Proud Smelly Walmart Deplorable)
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To: Lurker
Not my problem.

If.You.Pay.Taxes.It's.Going.To.Be.Your.Problem.Whether.You.Like.It.Or.Not.

Unless you're evading taxation, of course. If you are, let us know your secret...
31 posted on 01/24/2019 11:56:10 AM PST by farming pharmer
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To: John Locke
I sympathize with your dad. I worked fulltime until 73, but had no expectations of a funded requirement. My Mother told me the truth: never trust the government with your money, because they will cheat you.

Yeah, I kind of wondered about that too in my 20s - I've been putting away 15% of my gross in a 403(b) since about age 27.

There's no retirements in my profession unless you make your own.
32 posted on 01/24/2019 11:59:26 AM PST by farming pharmer
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To: akalinin

Nope.

Not.
My.
Problem.

Sorry your dad did something really dumb. But as my grandad used to say “Stupid is supposed to hurt.”

L


33 posted on 01/24/2019 12:43:15 PM PST by Lurker (President Trump isn't our last chance. President Trump is THEIR last chance)
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To: morphing libertarian
The constitution of Cal protects the pensions of public employees. So the state has to find the money because their pensions, once approved, are ‘locked” in.

Michigan Constitution also guaranteed pensions. Didn't matter. Federal bankruptcy law, and the judges who administer it, supersedes state constitution.

34 posted on 01/24/2019 2:37:38 PM PST by PapaBear3625 ("Those who can make you believe absurdities, can make you commit atrocities." -- Voltaire)
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To: PapaBear3625

good luck with that


35 posted on 01/24/2019 3:37:30 PM PST by morphing libertarian (Use Comey's Report; Indict Hillary now; build Kate's wall. --- Proud Smelly Walmart Deplorable)
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