Free Republic

Only weeks after the White House made headlines with a directive urging prosecutors to get tougher on corporate crime, the Obama administration has moved to protect a convicted financial firm from punishment. The bank, Credit Suisse, has donated hundreds of thousands of dollars to President Barack Obama’s political campaigns. It also employs the Podesta Group, a lobbying firm with family connections to the Obama administration and Hillary Clinton’s 2016 campaign. In 2014, Credit Suisse pleaded guilty to criminal charges for operating “an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and...

Wall Street has only recently ended the third-longest bull market in history. But in July, when stocks were still near their 2015 high, the Pew Charitable Trusts reported that state and local pension debt nationally had barely fallen since 2009, despite years of market gains. Now, with markets down more than 12% since summer, new pension debt is piling up... Absent some startling development — like an even bigger runaway bull market, which few market watchers anticipate — the crisis will worsen. At the root of the problem is a change in the financial structure of public pension funds... Another...

The high cost of government pension plans are often dismissed by blaming them on either employees abusing the system for plush benefits or poor investment returns due to a temporary market blip. Neither is correct. The real problem is the assumptions used to prefund future retirement benefits. To keep pension costs from draining resources meant to fund current services, Michigan politicians at all levels should address the pension underfunding crisis in 2016. The government retirement system for school employees is the largest pension program in Michigan, and it has accumulated $26.5 billion of unfunded benefit promises. The plan for state...

It is unfortunate that government employees are often blamed for underfunded government pension systems. When concerns are raised that retirement systems owe members billions more than has been saved, high-earners and early retirees are viewed as the culprits. Policymakers in return cut the generosity of the plans. Yet these policy reforms will not fix the basic problems faced by pension systems. In 2010, Michigan’s school employee pension system was underfunded by $12 billion, not including the value of promised retiree health care benefits. Lawmakers sprang into action. They increased employee contributions to the system and made new employees' benefits less...

The costs of defined benefit pension systems are meant to be paid as pension credits are earned by employees. For government workers, paying these costs as they are earned is a state constitutional requirement. But this has not happened, a failure that has generated billions in unfunded taxpayer liabilities. Moreover, a lack of understanding of how pension funding actually works leads to incorrect reform prescriptions from lawmakers and others. Consider this letter to the editor in The Detroit News: "Once new employees were frozen out of MSERS [the state employee retirement system] the average age of enrollees increased rapidly. Systems...

According to the Detroit Free Press, the city of Detroit must make a $195 million balloon payment to its pension systems in 2024, which is some 71 percent higher than the amount approved in city’s bankruptcy plan. New hiring, delayed pension cuts, and longer life expectancies have left the city responsible for a growing retirement-benefit liability. Statewide, the situation is not much better. Recent financial statements for pension plans covering Michigan’s state employees, teachers and police officers indicate that those plans are underfunded by some $33 billion, an increase of about $1.5 billion over last year. Adding insult to injury,...

Last month the Obama administration's Labor Department issued Interpretive Bulletin 2015-01, which tells pension funds what factors to use when choosing investments, including climate change. Only a few tax lawyers noticed, but with U.S. pensions at $9 trillion, this is a gross power grab that will hurt the retirees it claims to protect. This government is essentially saying: Don't you dare invest in anything that causes or is hurt by climate change, or you'll be sued for failing your fiduciary responsibilities. Energy, utilities and industrials are 20% of the market. How can pension funds now own any of them? Pushing...

The school pension system is in dire need of reform. It owes school employees and retirees $26.5 billion — 13 times more than the state owes its general obligation bondholders. Yet some policymakers think that they have already solved the problem with changes to the system made in 2010 and 2012. What has happened since shows why the state needs to get out of the defined-benefit pension business entirely. Back in 2012, legislative fiscal agencies modeled what would happen to contribution rates — the percentage of schools’ payroll required to meet the costs of the system — with and without...

Companies with corporate pensions will end up paying a price if a sweeping budget and debt deal proposed by Congress becomes law. The House of Representatives is expected to pass legislation as soon as Wednesday that would eliminate the risk of a government default until after 2016 and increase government spending for the next two years. But the plan proposes steep increases to fees that companies pay to the nation's pension insurer, to help fund the added budget spending. According to the proposed budget, companies that have defined benefit pension plans would have to increase the fees they pay to...

Colorado’s pension plan is on track to be fully funded by 2055 — 14 years after the 2041 target date set by the Colorado Legislature in 2010. Now, lawmakers will need to decide if they want to stick to the 2041 target date, or agree that it will take longer than they planned for the Colorado Public Employees’ Retirement Association to have the money to pay for the promised benefits to PERA’s 529,000. The probability of the financial projections, as well as other variables, were discussed today with members of the Colorado Legislative Audit Committee, who heard the results of...

No wonder Tom Minerath is angry. Sixty-eight years old and retired since 2007, the Town of Merton man is about to have about $20,000 taken away from his annual pension — money he earned, money that was promised him, money guaranteed in contracts negotiated by one of the country's strongest labor unions. "I'm going to make it through this, but it's just not right," he said. "It's just not right." Which probably sums up the feelings of more than 270,000 people, including thousands in Wisconsin, who have been told by the financially troubled Central States Pension Fund that their pension...

A husband and wife who were both Ann Arbor police officers retired within a year of each other. The husband, a lieutenant, retired in 2009 at age 46. His wife, whose job title was telecommunicator, started collecting pension checks in 2010 at age 51. Since 2009, the city of Ann Arbor has seen 43 individuals age 51 or younger retire and begin collecting police pensions. Early retirements — many of which occur with employees still in their 40s — are not uncommon in municipal public safety departments. The practice is justified on the grounds that the high stress and sometimes...

Illinois won't make its next pension payment; Comptroller Leslie Munger Wednesday announced she can't, because the state doesn't have the cash. Illinois' government pensions are already the worst-funded in the nation. The massive liability grew thanks to the lawmakers shorting the funds. They used the money to pay other expenses instead. Now, Illinois is set do it again. This time, the payment will be delayed because Comptroller Munger says there isn't money in the bank to make it. "The monthly pension payment of $560 million is the largest consistent expenditure that we have throughout the year, and it is one...

Chicago Mayor Rahm Emanuel has disclosed that his record property tax hike plan entails significant cuts for nearly 300,000 homeowners, leaving Chicago businesses predicting they will face hikes of up to 50 percent. The second-term mayor last week proposed a $544 million property tax increase, the city's biggest ever, to help fix one of the worst-funded city pension systems in America ... Emanuel's office, which has said one in four dollars of the tax hike would come from the city's central business district, did not contest the 50-percent figure. But a mayoral aide insisted Emanuel's plan is his best effort...

Leaked Audio: Hillary Clinton Calls at Private Fundraiser for Infrastructure Bank to Resemble Clinton Global Initiative Hillary Clinton told donors at a private fundraiser in New York last Thursday that she plans as president to create a “national infrastructure bank” modeled on the Clinton Global Initiative, according to a recording of her remarks obtained by the Washington Free Beacon. This was the first time that Clinton, who has long supported the formation of a government-controlled bank to invest in national infrastructure projects, cited the Clinton Global Initiative—the flagship arm of her family’s controversial foundation—as an investment model for her proposed...

CHICAGO – Mayor Rahm Emanuel pitched a massive property tax hike Tuesday as a "last resort" to correct Chicago's financial footing, suggesting the only alternative for the nation's third-largest city would include severe cuts to police and fire services, recycling programs, pothole repair and even rodent control. Emanuel, who needs approval from state lawmakers and the governor for at least part of his sweeping plan, outlined a $543 million property tax over four years, a $45 million tax to modernize schools, and other new fees for residential garbage pickup, e-cigarettes and ride-sharing services. The property tax revenue would go toward...

At a recent event related to the Grand Ledge school district, teachers and parents expressed concern over the loss of departure of some teachers. A TV station report on the meeting said the district is losing 19 teachers, 12 to retirement. Yet most attendees were unaware that just the increase in the district's costs for the school employee pension system over the past five years could have paid the salaries of about 140 new teachers (not including benefits). To put this context, state figures show that Grand Ledge had 280 teachers in 2013-14. The Grand Ledge school district shares a...

In the spring of 2011, when Gov. Rick Snyder proposed what was characterized as a $470 per pupil reduction in public school funding, media reports described this as so “massive” that it left school officials “in a state of shock.” "This is going to be potentially devastating," declared David Martell, the executive director of the Michigan School Business Officials organization. Yet, those who advocate for spending more on public schools have been nearly silent about a growing and far more severe threat to budgets — the skyrocketing cost of the school employee retirement system. In 2010, the pension system cost...

State law requires the managers of Michigan’s school employee retirement system to base annual pension contributions on an assumption that its investments will generate an average return of around 8 percent per year. If the actual returns don’t reliably meet or beat that level over time, it means contributions into the pension fund will be insufficient to pay for the retirement benefits of employees. The result is a long term unfunded liability that taxpayers eventually have to pay. Michigan’s school pension system has put taxpayers on the hook for a $26.5 billion unfunded liability. The 6.5 percent return earned by...

Grand Rapids’ public bus system, The Rapid (or Interurban Transit Partnership), and its union are negotiating over a plan to freeze and close its employee retirement system. Union president Larry Hanley is adamant that the plan remain open. "This is not contract negotiation; this is a political attack on working people with no good financial reason. It's not that the agency's in trouble," Hanley told the Grand Rapids Press. "The system's not in any state of crisis. The benefits have been established for many years." It is discouraging when union officials that are supposed to be protecting their members ignore...