Unfunded pensions for cities, counties, states and the feds are a serious pitfall in our future. Unsustainable. No palatable solution available. Government accounting makes it easy to hide their bs, until the cash flow/taxation crisis. I think many, many civic pensions will be reduced or not funded at all as the choice becomes to pay for current services or pensions for past services.

The one thing the feds have going for them in regards to pensions is that they can print the money (leaving aside that whole inflation thing, of course ;-). Cities, counties and states can't. But I agree with you about public employee pensions and the coming "haircut" they'll take, where allowed. I think the Illinois Supreme Court basically put the kibosh on such haircuts by the state, however, saying any changes to existing pension plans were unconstitutional.

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"Politics is just show business for ugly people."

"The one thing the feds have going for them in regards to pensions is that they can print the money"

Actually the one thing the Feds have going for them is that the Federal Government switched to a 2-tier pension system in 1984/1985. Anyone hired before that date is on the old CSRS system (no social security but 2% per year of worked), anyone hired after is on the new system (only 1% pension, but entitled to Social security).

The Federal CSRS system is similar to how most state pension are set up. Illinois can't switch to a 2 tier system until it changes the state constitution.... which won't happen until it declares bankruptcy (or at least threatens to do so).

Do public pensions pay into the PBGC (Pension Benefit Guaranty Corporation)?

My wife is under that post-1985 system (FERS). She likes it. Together with that, her coming National Guard pension after she finally hangs it up and retires and her social security (assuming it's still around ;-), plus our other savings and investments (plus half my military pension under the survivor benefits plan), she'll do just fine -- even with offsets -- once I finally bite the bullet and succumb to a life well-lived.

From what I understand, the feds aren't under the kind of pressures many state, county and municipal pensions are, such as out in California (CalPERS and other pension plans) and in Illinois. You live there, so you'd know more about the ins and outs when it comes to just what Illinois can do to escape the vice grip, that's for sure.

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"Politics is just show business for ugly people."

I don't think so. It's mostly for private pension plans. I think there's a county in Alabama or somewhere down South that went bankrupt and left their retired civil servants with a huge haircut as a result. My father, a retired Detroit employee, lost about $500 monthly from his pension payout after the city went bankrupt. There are other cases for sure, but I don't think any were able to resort to PBGC protection.

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"Politics is just show business for ugly people."

Also countries............

They stopped paying anything to their pensioners in 2010 in spite of a state law that prohibited them from doing that. In 2013, they reached a settlement and resumed the pension payments. The settlement was for roughly 33% funding of the pensions.

https://www.nytimes.com/...ness/23prichard.html

PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders,

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.

Current city workers could find themselves paying into a pension plan that will not be there for their own retirements. In Prichard, some older workers have delayed retiring, since they cannot afford to give up their paychecks if no pension checks will follow.


A lawyer representing the city, R. Scott Williams, said that the city simply did not have the money. “The reality for Prichard is that if you took money to build the pension up, who’s going to pay the garbage man?” he asked. “Who’s going to pay to run the police department? Who’s going to pay the bill for the street lights? There’s only so much money to go around.”

I think it is naive in the extreme to think a government is going to continue to provide when insolvent

Look at Greece......

There was the law. Then there was german debt........we know how that worked out

It’s unrealistic to think a system designed to support people for a few infirm years at the end of their lives will scale to support them for 20 years of golfing and traveling and then a few infirm years.

I'm very interested in the pending pension crisis. I feel for everyone who was promised something and isn't going to get it. However, the pension model is bad and the people running it are worse (The people behind the CA pension, CalPERS, ran their numbers assuming an 8% return annually). The writing has been on the wall for a long time and everyone involved refuses to compromise and now they're suggesting the general public bail them out. At the end of the day the problem is simple--too many people are riding in the wagon and not enough people are pulling the wagon.

Who's going to fund my retirement?

No, that's for private employer pensions. Public pensions aren't subject to the same rules as private ones either such as freezing benefits when assets drop to a certain level. That's how you get to the point of actually not having enough money to pay out benefits. On the private side, if you get below 60%, workers don't accrue extra benefits and other things happen too which lengthen the death spiral and hopefully buys enough time to correct.

Private sector pensions are really rare these days, the numbers don't make sense. Where I am, we closed the pension to new entrants a few years ago and made extra 401(k) contributions instead. It costs a lot more in cash up front, but is more predictable in the long term from a funding standpoint. But no one really understands how pensions are funded or calculated so on the public side, it's easy for promises to get made as the cash isn't due today and you can just make up some assumptions. By the time the cash is due, the politician is long gone.

The plans will be changed when the state goes bankrupt. There is no good solution.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

I wonder if states are willingly going bankrupt with the hopes Uncle Sam steps in kind of like the bank and automaker bailouts a decade ago.

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The secret of a long life is you try not to shorten it.
-Nobody

It would cost each household in the state nearly $26k to fund California's union.

Check this guy out, Los Angeles firefighter earns $300k in overtime. Apparently he never slept and has a time machine that allows him to work more hours than are in a year.

2017 was a quintuple leap year.

I'm sure the official explanation is that he worked virtually every day and cashed in vacation time to make up the rest. But I would question how effective someone could be working every day and why they should pay firefighter 150% of the going rate.

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I'm beginning to think that we are much more fucked than I thought.

Consequences of the baby boom retiring. Sure, you've got more people now working and paying tax. But you had that glut of people on the pensions hitting the system now.

The government should move to the private style 401k contributions instead of agreeing to rob Peter to pay Paul's pension in cash once Paul retires at 58.

Better the money gone instantly in the contributions to 401k's than hedging bets on having to pay the cash 30 years later. Not as many budgetary gymnastics you can do with that. You either have it NOW or you don't. You can't claim to have it later and then you don't.

For many of us, Now is Later.

Many, many people that I know are living paycheck to paycheck, some of them by necessity and others because they can't make the lifestyle and disciplinary changes to save for retirement. Either way, they're going to be hurting units during their retirement years if they're not careful, or exceedingly lucky.

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"Politics is just show business for ugly people."