Skip to comments.Public Pensions After Detroit
Posted on 08/03/2013 4:16:02 PM PDT by Libloather
Detroits bankruptcy and the problems facing its pension funds offer two important lessons to other communities. One is that state and local governments need to do a much better job managing retirement funds. The other is that they should not pre-emptively reduce hard-earned benefits at the first sign of trouble.
Several state and local pension systems around the country are under serious stress. Not surprisingly the hardest hit retirement funds are in places devastated by global economic forces like Detroit, as well as inland cities in California like Stockton, which was battered by the real estate collapse and has also sought bankruptcy protection. Other troubled funds include state-employee and teacher retirement systems in Illinois and Connecticut, where government officials have long mismanaged public finances.
The biggest problem is that officials have repeatedly failed to set aside enough money to cover the benefits they have promised workers, according to a recent report by Moodys, the credit ratings firm. Some states and cities have compounded their problems by trying to compensate with risky bets, like investing heavily in hedge funds in hopes of earning high returns. (And hedge funds are hardly surefire winners.) Or, like Detroit, they borrowed money to sustain their pension systems without having a solid plan for repaying the new debt.
(Excerpt) Read more at nytimes.com ...
I have a better one. Defined contributions. Stop the crazy defined benefits.
They’re going to need to do more than manage them better. At the very least every city in the country should be calling their unions in for contract re negotiations like yesterday and making those contracts sustainable.
I’ve got a better idea. For every pension, cut a position from the size of the government. Maybe theyll have a shot at actually paying out the pension, but at this level of economic depression I doubt it.
Pensions should not be expected to last longer than careers. If you retire after 20 years on the job, don’t expect to draw a pension for 40 or 50 years.
How about public employees convert to 401K’s like us working stiffs.
Sure. There are lots of solutions.
with matching employee contributions
The New York Times has never let reality get in the way of their editorials.
The real lesson is this is what happens to cities when run by Democrats for 50 years.
You read this crap and then, you read this:
Not sure how the people of Chile and Galveston, Tx are doing now, as you don’t hear all that much about them. Could it be that they’re doing ok, without any help from the government, and Reid/Pelosi/Hoyer, etc etc don’t want anyone to know about them. Anyone have any insight on this, b/c I’d love to know how they can do it and we can’t? With the understanding that the Dems/Liberals would never go for it.
The private sector is like the ant; the public sector unions are like the grasshoppers (or maybe the locusts). They eat and eat all summer, and when the predictable winter arrives, expect the ants to feed them.
I think Obama will do his best to have the SEIU pensions picked up, first at the expense of Detroit’s bondholders, even the secured ones, and then at the expense of all US taxpayers. He’ll try to do the same for Chicago, and California, when the time comes.
The goal is to have a well-off, disproportionately Democrat and non-white Apparatchik class which supervises and profits from all economic activity.
Like at GM they will steal the pensions of non-union workers and retirees.