http://www.bloomberg.com/news/artic...rn-cities-as-1-trillion-shortfall-set-to-grow
Decades of luxurious union retirement benefits are coming home to roost.
Decades of luxurious union retirement benefits are coming home to roost.
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Features
The public pension problem
- Thread starter Loren Pechtel
- Start date
arkirk
Veteran Member
It is simply the result of an entire system that fails to prioritize priority needs of its employees and its public. This is not helped in any way by freak outfits that constantly lie like Moody's and Standard and Poors....These rating agencies acted clueless just before the 2008 blow up...They really should be replaced with some standard government rating system tied to performance. Perhaps you could consult with Senator Warren on that one. As usual, you blame the unions and the common man for the mess. The main problem with the common man is one of being cut off from any kind of factual information by outfits who find it profitable to keep the public in the dark about nearly everything.
untermensche
Contributor
Pensions tied to the performance of the stock market have done badly?
How is that?
Of course the solution is to tie Social Security to the performance of the stock market as Republicans have cried for those same decades.
That will be a great help to retirees.
Horatio Parker
Veteran Member
They can look after themselves.
Why do we need people to have a society, anyway?
Why do we need people to have a society, anyway?
laughing dog
Contributor
Shortfalls are the numerical consequence of two forces: benefits which exceed funds, and under-funding. If the benefits were bargained in lieu of current pay raises, then the problem is under-funding. Under-funding has three sources: inadequate contributions by employees (defined as inadequate at the time of the deal) and/or under funding by the employer (defined as inadequate at the time of the deal) or unrealized expected gains.
I think the causes of the underfunding should help dictate the solutions. If the problem was inadequate employee contributions, then employees should bear most of the cost. If the problem was inadequate employer contributions, then the employer should pony up most of the cost. If the problem was unrealized expected gains, then both should share equally.
Why would a union bargain for benefits far off in the future, instead of cash right now?
It's pretty simple. They agreed to work for less than was due, in return for payments in the future. A responsible government would make sure there was money to pay these obligations when the time comes. Is that an oxymoron?
A pension is deferred compensation, not charity or welfare. It's popular these days in conservative circles to blame unions for this, but the real problem is the public will not allow a government entity to amass a reserve for pension funds. The Mayor says "We need money to replace the roof on the Civic Center," and a teabagger shows up to say, "You've got $22million sitting in savings account and you want more of out money? No way."
Corporations can declare bankruptcy and escape their pension benefits, but that is a special kind of treachery. A government could do it too, but how would any one of us look ourselves in the mirror again, knowing we had been a part of something like that?
DBT
Contributor
We pay taxes in order to get benefits such as infrastructure, universal health care and the safety net of social security benefits such as a pension.
boneyard bill
Veteran Member
Again, you can thank Ben Bernanke and Alan Greenspan for ridiculously low interest rates that have not only created bubbles but have also left pension funds starving for return. They've had to turn to the stock market to get any kind of yield at all, but that involves greater risk and the risk will soon be realized when the Bernanke-created stock market bubbles crashes.
But I think the unions are definitely at fault here as well. It was the pension problem that bankrupted General Motors and, ultimately, Detroit as well. Union members need to wake up. Their union leaders negotiate huge pension benefits that can't be met but assure that they'll get re-elected. Meanwhile, the workers are left holding the bag when the pension funds go belly up.
boneyard bill
Veteran Member
You asked the right question, but I disagree with the answer. Personally, I rather have the money up front, and I suspect that most union members would too. So why DO they negotiate high pension benefits? Because the money's not there. The union leadership can't any higher wages because the money isn't there to pay them so they negotiate for higher pensions. The politicians they're dealing with know the money won't be there in the future, but that's a problem that their successors will have to deal with. So the union leaders and the politicians get re-elected, but the promised benefits prove to be ephemeral.
Yeah, I blame the recipients of the money for taking too much out of the system.
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You're missing the fundamental issue--cooked books.
Because future benefits don't cause current spending. Give them dollars now and the taxpayers/the stockholders will scream. Give them pension dollars and cook the books and it's somebody else's problem.
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There's been a huge stock run-up, the market isn't at fault. The cooked books are.
T.G.G. Moogly
Traditional Atheist
I don't know why I should care about people who are my age and have been retired for years with great pensions and healthcare while I still have to work to literally fund their retirements. If their pensions go belly-up it's no fault of mine.
Public sector union contracts are not like private sector contracts. It's not in either party's interest to contain costs in the public sector. Both are going to retire comfortably on the public dole when a lack of money is someone else's problem. In the end it's a dog and pony show every step of the way. There is no accountability and both parties know it.
Public sector union contracts are not like private sector contracts. It's not in either party's interest to contain costs in the public sector. Both are going to retire comfortably on the public dole when a lack of money is someone else's problem. In the end it's a dog and pony show every step of the way. There is no accountability and both parties know it.
Jimmy Higgins
Contributor
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They can just sell those lear jets they got as part of their union job I suppose.
barbos
Contributor
So, when will US turn into Greece?
It's a rhetorical question. The point is, a pension is deferred compensation. Anyone who threatens a pension is stealing money from working people. It's easy to obscure the issue by making noise about unions, but the crux of the matter is this is money already earned for work already done.
Is there any city or state where people would agree to a retroactive tax hike, going back years? I don't know of any. Would it be any different?
untermensche
Contributor
There is nothing more cooked than the US stock exchange.
Corporate earth is running on cooked books.
But union books were openly negotiated and transparent. They could not be cooked.
Once again if we just believe the opposite of what you say we will know the truth.
marc
Veteran Member
Part of the public pension problem is mismanagement. Take for example Chris Christie. According to the article, the year before he took office financial fees for managing pension funds amounted to $125 million. For 2014 the fees were over $600 million. I don't recall him ever complaining about the fees quadrupling during his tenure, unless he is somehow blaming the unions for the financial fees.
Well, let's see: Suppose you've got a Democrat mayor negotiating with Democrat public union bosses who fund his campaign over other people's money which is currently tight. What do you do? Give away future money. Future people won't even vote in the next election. Their money is easy to give away.
Just like privatisation of public assets and public services. You can get some money up front, you don't have to budget to fund any associated services directly any more, and the liabilities are pushed into the future.
Can anyone remind me what the huge difference is between pushing pay liabilities into the future, and pushing cost liabilities into the future? Or should we just tell private companies who have bought public assets that it was unrealistic to expect that they could actually keep them, now that we've spent their money?
T.G.G. Moogly
Traditional Atheist
That happens certainly (what dismal said) but everyone involved is on the public dole. The larger problem is that everyone is on the public dole and no one is accountable for their decisions in the long term. They're all getting their bennies in the end.
Public pensions are not deferred compensation. That's horseshit. They're more like golden parachutes. If all public sector employees were working for minimum wage all their lives that might have some validity. But that is hardly the case.
Public pensions are not deferred compensation. That's horseshit. They're more like golden parachutes. If all public sector employees were working for minimum wage all their lives that might have some validity. But that is hardly the case.