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Facing the pension mess
NY Post ^ | December 20, 2010 | STEPHEN B. MEISTER

Posted on 12/21/2010 2:42:02 AM PST by Scanian

AS politicians at all levels of government look to cut spending, taxpayers need to make sure that public employees don't get a free pass -- particularly when it comes to pensions.

Most of the nation's 107 million private-sector workers are forced to accept 401(k) plans and other

defined-contribution pensions -- in which the employer makes a fixed contribution to the employee's retirement account, rather than guaranteeing a fixed payout.

By contrast, nearly all of the more than 22 million federal, state and local public employees enjoy defined-benefit pensions -- with payouts fixed at some percentage of the individual's pay for the last year or two they worked (often including overtime and payments for unused sick or vacation days).

But funding of public pensions has been woefully short of what's needed to make good on those promises. The shortfalls are "off balance sheet" liabilities that run into the trillions of dollars.

Here's the bad news as reported by Professors Robert Novy-Marx (University of Rochester) and Joshua Rauh (Northwestern's Kellogg School of Management):

* Unfunded liabilities for public pensions run by the 50 states total $3.23 trillion -- $21,500 per household.

* Underfunded pensions for municipal and local government employees add another $574 billion of hidden debt -- $14,000 per household.

The data from federal sources is also grim:

* Unfunded US military-retirement obligations now amount to $30,000 per household.

* Unfunded federal civilian-employee pension obligations represent another $16,000 per household.

That means every US household (including the half that normally pay no taxes) would have to kick in $81,500 today to enable federal, state and local governments to meet just their cur rent pension commitments.

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


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: pension; publicemployees; retirementplans; spending; taxes

1 posted on 12/21/2010 2:42:05 AM PST by Scanian
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To: Scanian

Just take more from the union workers pay and let them pay for it.


2 posted on 12/21/2010 2:45:41 AM PST by EQAndyBuzz (Remember March 23, 1775. Remember March 23, 2010)
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To: Scanian

Congress needs to change the laws to allow the States to go bankrupt. In this way the States can restructure the retirement of their employees and retirees. There is no other way. Maybe if the states did their job 10-15 years ago the States would not have been in this mess.


3 posted on 12/21/2010 2:48:25 AM PST by truthguy (Good intentions are not enough.)
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To: truthguy

We are living in a house of cards, it will soon crash down around our necks.


4 posted on 12/21/2010 2:54:36 AM PST by exnavy (May the Lord grant our troops protection and endurance.)
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To: Scanian

Companies are not allowed to run underfunded pensions like that. They must file annually with the Dept of Labor and their funding level is defined by law.


5 posted on 12/21/2010 3:11:47 AM PST by Old_Grouch (63 and AARP-free. Monthly FR contributor.)
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To: truthguy
Maybe if the states did their job 10-15 years ago the States would not have been in this mess.

Like Galveston County, Texas did in the early 80s

6 posted on 12/21/2010 3:19:23 AM PST by OBXWanderer (I'm up against a hard break...)
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To: truthguy
Ditto! We've got to have the guts to let states go bankrupt!

Taxpayers are told ad infinitum that government workers' pensions and benefits are "protected" by the state constitutions. No one can do anything to change them. They are guaranteed!

Well, how come my rights aren't protected by the constitution? How come, while our own retirement funds are dwindling, we are told we need to plan on paying more in taxes to cover the retirement funds of government workers. In other words, even in retirement, we will be paying out of our own funds to pay for theirs.

7 posted on 12/21/2010 4:07:45 AM PST by REPANDPROUDOFIT (General, sir, it is perfectly ok to call me "ma'am"!)
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To: truthguy
Ditto! We've got to have the guts to let states go bankrupt!

Taxpayers are told ad infinitum that government workers' pensions and benefits are "protected" by the state constitutions. No one can do anything to change them. They are guaranteed!

Well, how come my rights aren't protected by the constitution? How come, while our own retirement funds are dwindling, we are told we need to plan on paying more in taxes to cover the retirement funds of government workers. In other words, even in retirement, we will be paying out of our own funds to pay for theirs.

8 posted on 12/21/2010 4:07:53 AM PST by REPANDPROUDOFIT (General, sir, it is perfectly ok to call me "ma'am"!)
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To: REPANDPROUDOFIT

Disgusting. Let’s the states and govt collapse.


9 posted on 12/21/2010 4:11:21 AM PST by GlockThe Vote (Who needs Al Queda to worry about when we have Obama?)
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To: Scanian

What a lot of people are forgetting is that the reason most private sector companies dropped their defined benefit plans is that government regs since ERISA have made the administration and funding of them too expensive.

The government plans are not subject to ERISA rules for actuarial soundness or nondiscrimination.


10 posted on 12/21/2010 4:52:53 AM PST by Daveinyork
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To: Scanian

The model cannot sustain itself. Either changes have to be made, or it will collapse like a house of cards. Yet, the unions cheer everytime change is defeated. I think it is beyond time for the membership to wake up. Those in charge of the unions care for no one but themselves.


11 posted on 12/21/2010 4:58:50 AM PST by joe fonebone (The House has oversight of the Judiciary...why are the rogue judges not being impeached?)
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To: joe fonebone

If you’ve ever been to a union meeting, you know the peer pressure and coercion that is used against the members to get them to not only go along with but to believe in the leadership. When you promise an unending gravy train, you are always going to find plenty of suckers to keep you in power.


12 posted on 12/21/2010 5:05:12 AM PST by Scanian
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To: Daveinyork

Dave:
You are correct. However, each person here can insure that their local governmental units are properly funded. I know many east coast states are a statewide system. However, in Michigan, many are local systems. There is a statewide system also called MERS (MI Employee Retirement System). I am SO glad I am not a part of that system.

Last I checked, my pension was fully funded and is local. However, the definition of fully funded is less clear. Fully funded means that, if all contributions meet or exceed payouts. But this is based on a future model and not a static model.
I am one of those government golden parachute guys. I concur that our system is no longer sustainable and I encourage departments to move away from them. I will not work under a defined benefit system again. It is great for the recipient, not so much for the taxpayers.

The single biggest difference I can see between my pension and most others is that I contributed 8%+ over my years of service. Many contribute nothing with the average of about 3%. Teacher unions in Michigan contribute even less. My pension is wholly locally owned, funded and managed. I would not have it any other way and neither should anyone else. We need to get away from state and federal systems and keep everything local.

I have over 30 years in law enforcement and I am aware of some financially questionable decisions made by our electeds and appointed people. We must hold these people accountable and vote them out.


13 posted on 12/21/2010 5:08:38 AM PST by midcop402
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To: Bullish; CJ Wolf; houeto; Quix; B4Ranch; Whenifhow; Silentgypsy; blam; FromLori; Lurker; ...
Laughing-while-we-starve-to-supply-their-feast ping.

"Economic Holocaust" ping.

Increasing volume ping list watching the slow motion Economic Holocaust.

FReepmail me if you want on or off
The Comedian's "Economic Holocaust" ping list...


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

14 posted on 12/21/2010 5:32:34 AM PST by The Comedian (Government: Saving people from freedom since time immemorial.)
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To: The Comedian
Believe it or not here in IL these 'benefits' are Constitutionally guaranteed. I couldn't believe it at first so I actually read the damned thing.

Yep, it's right there in the IL Constitution. There's no way we can get out of paying these public sector leeches without amending the IL Constitution.

25 months and counting....

15 posted on 12/21/2010 6:14:05 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Lurker
Yep, it's right there in the IL Constitution. There's no way we can get out of paying these public sector leeches without amending the IL Constitution.

I don't care if the IL Constitution says the speed of light will be 2 x c, physics will not be legislated against.

When there's no money, they will not be paid.


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

16 posted on 12/21/2010 6:18:55 AM PST by The Comedian (Government: Saving people from freedom since time immemorial.)
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To: The Comedian
When there's no money, they will not be paid.

Oh I agree. But that doesn't mean the bastards won't try to bleed us even more white than we are now. I read a very interesting thing the other day.

In the city of Chicago every single nickel of property tax collected goes for one thing and one thing only. That's to pay for the pension benefits of retired city 'workers'. Every nickel.

Talk about stuning your beeber....

17 posted on 12/21/2010 6:29:09 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: truthguy
Congress needs to change the laws to allow the States to go bankrupt. In this way the States can restructure the retirement of their employees and retirees. There is no other way. Maybe if the states did their job 10-15 years ago the States would not have been in this mess.

Why would the Politicians change the current laws? They are able to buy votes today, with little money down. They simply promise lavish pensions to Fed, State, and municipal workers in lieu of pay increases, and they get the union votes. They figure, we the voting public, won't figure it out until they are long gone from office. We need to let each of them know that their personal assets are at risk, as well as those of their immediate family, much as the assets of Bernie Madoff and family are. After all, there is little difference between what Bernie did and what our current politicians are doing, other than the size of the pyramid scheme is much larger with our politicians (Social Security is soon to be bankrupt also, for the same reasons).
18 posted on 12/21/2010 7:03:17 AM PST by krogers58
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To: The Comedian

My Pension is The Lord.

I understand he sends quail and manna in deserts and water from rocks.


19 posted on 12/21/2010 7:25:45 AM PST by Quix (Times are a changin' INSURE you have believed in your heart & confessed Jesus as Lord Come NtheFlesh)
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To: EQAndyBuzz
"Just take more from the union workers pay and let them pay for it."

You're kidding. Do you thing these lazy thugs are going to let you stop paying? They'll bleed you dry until you fight back...and, that may eventually include shooting.

Parasites don't like losing their host.

20 posted on 12/21/2010 8:34:00 AM PST by blam
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To: midcop402

When you retire can you take it all at once or must you accept monthly payments?


21 posted on 12/21/2010 10:08:17 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: blam

When the host dies, the parasite does too.


22 posted on 12/21/2010 10:11:08 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: B4Ranch

Correct! And the parasites finished off the host November 4, 2008. They had been nibbling and harassing the host for years, but, November 4, 2008 was when the fatal bite delivered. It will take a while for the actual death to occur as the host was strong and had a high resistance, but, the nibbles finally took their toll. At this point in time, the parasites are rejoicing and gleeful for the freebies that their saviors gave them for killing their opposition, but, that will be short lived and the sounds of weeping and wailing will replace the grins and smiles.


23 posted on 12/21/2010 10:20:35 AM PST by sport
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To: B4Ranch

“When the host dies, the parasite does too.”

Not neccessarily... the parasite just networks to a new host. Parasites are survivors... we should emulate them.


24 posted on 12/21/2010 10:23:13 AM PST by Mashood
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To: Scanian
Nobody EVER asks how these pension liabilities were allowed to happen without funding. “Unfunded pension liabilities.” Who sold our idiot legislators that plan? Was it “The Golman Sax?” Think about this... unfunded... pension... liabilities. How DOES that happen?
25 posted on 12/21/2010 12:32:18 PM PST by April Lexington (Study the Constitution so you know what they are taking away!)
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To: Scanian
This simple solution is to funnel all of these pension beneficiaries into Obamacare where they will quickly die off...
26 posted on 12/21/2010 12:34:33 PM PST by April Lexington (Study the Constitution so you know what they are taking away!)
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To: Scanian

actually, when I was a young lad, I was a member of the International Laborors Union. I did not like the idea of someone telling me I was unhappy......


27 posted on 12/21/2010 12:40:34 PM PST by joe fonebone (The House has oversight of the Judiciary...why are the rogue judges not being impeached?)
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To: Lurker
"In the city of Chicago every single nickel of property tax collected goes for... the pension benefits of retired city 'workers'. Every nickel.

Not doubting you for a second, but I'd love to know where you read that.

28 posted on 12/21/2010 3:41:33 PM PST by oprahstheantichrist (The MSM is a demonic stronghold, PLEASE pray accordingly - 2 Corinthians 10:3-5)
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To: oprahstheantichrist

The city of chicago budget website. You have to dig for it but it’s there.


29 posted on 12/21/2010 3:45:36 PM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Quix
My Pension is The Lord.

I understand he sends quail and manna in deserts and water from rocks.

Bumper sticker and T-shirt material right there!


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

30 posted on 12/21/2010 7:51:03 PM PST by The Comedian (Government: Saving people from freedom since time immemorial.)
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To: The Comedian

TRUE.

THX THX.


31 posted on 12/21/2010 7:59:16 PM PST by Quix (Times are a changin' INSURE you have believed in your heart & confessed Jesus as Lord Come NtheFlesh)
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