Skip to comments.$1.4T in states' pension fights foreshadowed in RI
Posted on 10/07/2012 8:32:50 AM PDT by Uncle Chip
PROVIDENCE, R.I. (AP) Retired social worker Jim Gillis was told his $36,000 Rhode Island state pension would increase by $1,100 next year to keep up with inflation. But lawmakers suspended annual increases, leaving Gillis wondering how he'll pay medical bills and whether he'd been betrayed by his former employer.
"When you're working, you're told you'll get certain things, and you retire believing that to be the case," Gillis said. He and other retirees are challenging the pension changes in a court battle that's likely to have national implications as other states follow Rhode Island's lead.
Cities and states around the country are shoring up battered retirement plans by reducing promised benefits to public workers and retirees. All told, states need $1.4 trillion to fulfill their pension obligations. It's a yawning chasm that threatens to wreck government budgets and prompt tax hikes or deep cuts to education and other programs.
The political and legal fights challenge the clout of public-sector unions and test the venerable idea that while state jobs pay less than private-sector employment, they come with the guarantee of early retirement and generous benefits.
The actions taken by states vary. California limited its annual pension payouts, while Kentucky raised retirement ages and suspended pension increases. Illinois reduced benefits for new employees and cut back on automatic pension increases. New Jersey last year increased employee retirement contributions and suspended pension increases.
Nowhere have the changes been as sweeping as in Rhode Island, where public sector unions are suing to block an overhaul passed last year. The law raised retirement ages, suspended pension increases for years and created a new benefit plan that combines traditional pensions with something like a 401(k) account.
(Excerpt) Read more at finance.yahoo.com ...
Or is that not enough of a tear jerker for the masses?
Even if the plaintiffs “win” in court, they’ll still lose due to accelerating dollar devaluation undertaken by the Fed in its attempt to save the big banks by pumping up the nominal value of their assets and derivatives through QE to Infinity.
Jim Gillis the well has run dry
RI..because of its small size, geographically and demographically, is feeling the pinch first. Normally a very blue state, former Providence Mayor David Ceceilline, now running for a House seat, would normally be a lock..but he may well lose, because it appears he **GASP** lied about a huge budget deficit the city faces...RI is basically a city-state...so the state doesn’t have any $$..and they have an idiot as a governor to boot..
Funny thing how if you look at pensions from states run by conservatives over decades their pensions are fully funded and doing quite well. In all cases the funds are invested by independent boards and the politicians are not allowed to raid them for their pet projects and political cronies and most of them have fairly small union participation. Granted most retiree in these states don’t draw near the pensions of the more liberal states but that is kinda what this is all about. The liberal states chickens are coming home to roost. They will try to get the rest of us to bail them out....sadly there is a possibility that will happen!!!
What has to happen is some type of financial reorganization for the states.. tolet them abrogate union contracts, and also cut the pensions and medical benefits to existing retirees..Look take California..likely to go belly up first..the Dems completely run the state..So you have cops, firemen, and other state employees currently retired on $100K+ pensions, with COLA AND full medical benefits for them and their families. So some GOP congressman in, say, Georgia, where the median income of his constituents is $50k, is gonna vote for a bailout for California>
The first political party that implements the austerity measures required to get us out of this 'mess' will be promptly dispatched to never never land.
Now, I expect the Republicans to win everything this coming election...they'll start cutting and the pain will be so great that they'll lose the house and the senate in two years. Not long after the Democrats win...we'll see hyperinflation and a civil war.