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By Rob Johnson, originally published on Next New Deal

The following is adapted from Johnson's forthcoming paper on the public pensions crisis.

Since the beginning of the Great Recession, policymakers and reporters have spoken of a growing crisis in public pensions. Many state and local governments are struggling to meet their obligations to retirees, and the easiest explanation is that government workers are overpaid and their pensions are unaffordable. But the evidence suggests that the pensions crisis is both less pervasive and more complex than that. Beyond the economic crisis, which put enormous pressure on state and municipal budgets, a range of factors including poor decision-making and the influence of big money interests has led to the underfunding of some state and city public pensions. With a clearer understanding of the problem, we can begin to take steps to solve it and keep our promises to public workers.

Contrary to public perception, pension underfunding is not a widespread issue. There is wide variation in pension performance across states, and underfunding is concentrated in particular states (for example, Illinois and Kentucky) and cities (Chicago and Providence). Where underfunding does occur, it seems to stem largely from the internal problems of those governments, which existed well before the recent economic crisis put additional pressure on their budgets.

Stressed Senior Couple Calculating Budget
There is also little basis for the conclusion that state and local employees are significantly overcompensated. On the contrary, pay is comparable at lower skill levels, and private-sector employees are significantly better paid at higher skill levels. According to Alicia Munnell, Director of the Center for Retirement Research, “Pension and retiree health benefits for state and local workers roughly offset the wage penalty, so that total compensation in the two sectors is roughly comparable.” There are surely examples of extreme individual pension obligations that warrant scrutiny, but they do not appear to contribute significantly to the total level of underfunding reported by analysts.  

The evidence suggests that pension underfunding is at times associated with choosing an unreasonably high discount rate. The discount rate is the expected rate of return on invested pension funds. A lower discount rate means governments must provision more now in order to meet future liabilities. Politicians tend to prefer a higher discount rate, which reflects a better “expected” yield on assets in the pension fund, since it allows them to justify provisioning less for pensions now. Unfortunately, a higher yield also means more investment risk. If the pension fund loses money, the pension liability does not go away; instead, taxpayers are forced to make up the difference or the government defaults on its obligations. This approach may help to mask the true cost of providing public services, but it is the public financial equivalent of the Hail Mary pass in football: you score a touchdown or you lose.

Please read below the fold for more on this story.

This may explain why governments are increasingly attracted to investment alternatives that have a record of substantial returns and are not closely correlated with the stock indices. Alternative asset investments (primarily hedge funds, venture capital funds, and private equity) averaged just below a combined 5 percent share of U.S. public pension funds’ portfolios between 1984 and 1994, but they averaged nearly a 20 percent share from 2008 to 2011. These more volatile assets may provide substantial benefit, but in times of stress, it is unclear if “reaching for yield” is a prudent strategy or simply reflects desperation. It also raises ethical concerns due to a lack of transparency and the potential for “pay to play” schemes, in which placement agents offer financial incentives, such as campaign contributions, to the people responsible for making decisions about pension fund allocations. This appears to be a system prone to abuse, and significant reforms must be enacted to realign the incentives of pension officials with the incentives of taxpayers and pensioners. This could include immunizing some pension investment boards with financial compensation, requiring disclosure of all outside income, and prohibiting individuals and firms that manage assets for a particular government from making campaign contributions to local representatives.

Even when there is no direct corruption, big money can have a powerful influence over pension funding decisions. It becomes very difficult for the political process to defend the common interest when ambitious politicians are under pressure from concentrated interests. Policymakers may be reluctant to adequately provision for pensions if doing so requires them to raise tax rates on high-income individuals, cut corporate subsidies, or otherwise drive away capital. Just look at the case of Detroit, where restructuring pension obligations is on the table at the same time the state is approving money to build a new hockey arena. This is not antiseptic technocracy at work; this is politics.

Relief could come from reforms in the political systems to lessen big money's influence and empower small donors. To accomplish this, states could establish systems of public campaign financing. Maine, Arizona, and Connecticut already have such systems, as does New York City, and New York State is on the cusp. Though the mechanics differ, all of these systems would change incentives to make candidates responsive to average people, not just big donors. As a result, policy is more likely to be oriented to the public interest.

The pensions crisis has far-reaching implications for the future of the U.S. economy: the state and local government sector is about 14 percent of the American workforce. Failure to uphold the promises we’ve made to current workers and retirees would create a brain drain in the public sector, drive down private-sector wages, exacerbate inequality, and lead to more economic volatility. The good news appears to be that there are a large number of pension plans that are solvent thanks to prudent management. The real problem rests with the governments of a few states that have historically failed to provision adequately for their pension obligations and are increasingly turning to riskier investment assets. These problems can be solved, but it will require substantial reform and swift and collective action.

Robert Johnson is a Senior Fellow at the Roosevelt Institute.

Originally posted to Daily Kos Economics on Tue Feb 25, 2014 at 12:42 PM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  My thoughts (1+ / 0-)
    Recommended by:
    Egalitare

    1a...Politicians bought labor peace and maybe votes with big pension promises.
    1b...Politicians didn't have the backbone to correctly fund those pensions.  It was always easier to defer....

    These days public jobs often do pay better, along with much better job security and pension than private jobs, due to the decline in pay and benefits for the private jobs.  In my state the Repubs want to switch state workers to 401(k) plans, 'cuz all the private companies are doing it to their workers.

    •  ...which is what they should do. (1+ / 0-)
      Recommended by:
      Sparhawk
      In my state the Repubs want to switch state workers to 401(k) plans, 'cuz all the private companies are doing it to their workers.
      Defined benefit plans are a disaster, and assume a perfectly functioning government/corporation that almost never occurs in real life.

      Defined contribution assures worker compensation comes off the books immediately and workers aren't left trying to convince the populace to take a massive tax hike to cover their retirement.

    •  Substantially untrue (12+ / 0-)

      Public workers were provided with pensions and better benefits because they're public workers and, as such, don't get the perks that private employees do.  Things like bonuses, holiday pay (that's right, you work your holiday at straight time), profit sharing, holiday parties, etc.  

      Public workers also put up with a whole lot of stuff from the public, too.  People irate at elected leaders take it out on the public worker.  

      When was the last time you complained cashier for a price increase in something vs. the last time you complained about your road not getting plowed or pothole getting fixed?  Do you tell a public worker that you're "paying their salary" without realizing you also pay the salary of the grocery store cashier, cable TV technician, or every employee of every company you do business with?  I'll bet not.

      Public employees have taken it in the teeth for the past 30 years from declining wages to declining benefits.  Things have gotten worse because public workers are the easiest to subject to cuts.  And not just salaries and benefits, but refusing to fill positions so a public worker is now doing the job of at least 2 other workers.

      By the time I retired I was making $5 - 7 less than a comparable nurse in the private sector.  But this was tolerable because we all knew we would have a well-run and funded pension to count on.

      Politicians of all stripes are now looking at that pile of pension money with the greedy eye of the private sector CEOs who grabbed all they could.  They want their hands on that the way that politicians in Washington want their mitts on Social Security.

      Don't think public workers have life easy.  If you do, you're another one falling for the Divide and Conquer Strategy that is speeding up the race to the bottom.  

      It shouldn't be a race to the bottom.  Every worker should have good pay and benefits and  pension to support them in retirement.

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Sat Mar 01, 2014 at 11:44:11 PM PST

      [ Parent ]

      •  How do make it sustainable? (2+ / 0-)
        Recommended by:
        Sparhawk, Puddytat
        It shouldn't be a race to the bottom.  Every worker should have good pay and benefits and  pension to support them in retirement.
        That is the problem.

        New Republic: So are the left-wing blogs as bad as the Tea Party ones in this case? -------------------------Chuck Schumer: Left-wing blogs are the mirror image. They just have less credibility and less clout.

        by AlexDrew on Sun Mar 02, 2014 at 03:23:48 AM PST

        [ Parent ]

        •  It's made sustainable by funding (3+ / 0-)
          Recommended by:
          AlexDrew, HM2Viking, Mostel26

          the pensions and ensuring that there's good oversight over them and the investments they're used for.  

          Pension failure to date is the result of lack of funds being deposited, poor investments (or investments in pet projects of the business), or lack of oversight.

          There already is class warfare in America. Unfortunately, the rich are winning.

          by Puddytat on Sun Mar 02, 2014 at 12:35:36 PM PST

          [ Parent ]

        •  Every study I have seen for defined contribution (1+ / 0-)
          Recommended by:
          Mostel26

          Plans shows them to be both higher cost and an inadequate retirement savings vehicle.

          The investment fees of dc plans eats at least a third of the gains that are meant to pay for pensions.

          Wall Street loves dc plans for this reason

          It strips the last little bit from the carcass of American savings

      •  Kick the can dow the road (0+ / 0-)

        The problem with public pensions is that elected officials used pensions as a way to keep public-sector wages low in the short term in exchange for generrous pension benifits to be paid at some future date. Conveninetly those elected officials didn't have to make the unpopular decision of raising taxes to fund those pensions as they would be out of office by the time the bill came due.

        We are dealing with the consequences of decisions made by people who are now dead.

        "For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives and the dream shall never die." --Senator Ted Kennedy

        by Blue Silent Majority on Sun Mar 02, 2014 at 11:12:54 AM PST

        [ Parent ]

        •  Depends on the pension (1+ / 0-)
          Recommended by:
          HM2Viking

          The pension fund that I and other retirees are drawing from is overseen by a group of people who are not appointed by political leaders and includes 2 representatives of workers.  Careful strategy was employed to ensure that the monies were invested properly and for many years in the 1990s so much was made on those investments that the County didn't have to even deposit funds at all.

          But with politicians using those required deposits for pet projects or tax breaks or greedily eyeballing that pile of money, the unscrupulous will, of course, come up with any number of schemes to use that money for their own political purposes.

          I feel badly for taxpayers in areas where deposits weren't made or where there wasn't good management, but to victimize those who planned their retirements on those funds is unfair to the maximum.

          There already is class warfare in America. Unfortunately, the rich are winning.

          by Puddytat on Sun Mar 02, 2014 at 12:41:04 PM PST

          [ Parent ]

          •  My Minnesota state pension (2+ / 0-)
            Recommended by:
            Puddytat, Mostel26

            Is an elected board

            Minnesota participants comtribute a salary percentage which is matched by the employer

            This is held in trust and invested on behalf of the workers

            The model is designed such that 68% of benefits is paid for by investment earnings

            A dollar in benefits costs the taxpayers a out a penny per month

    •  Not at all accurate (0+ / 0-)

      As a federal nurse I make about 5% less than comparable RN in the private sector.

      As a psychiatric NP in a not for profit hospital I will make 10000 more than I would make working for the federal government.

      As a state employee I made about 6% less than comparable private sector positions. My pension contribution was about 11% of salary with an assumed 8% discount rate which was usually exceeded in normal years. Add in 15% for ss and I contributed 25% of salary to retirement programs at much lower costs to taxpayers.

      Pension moderation steals 30% of the returns from beneficiaries and taxpayers.

  •  What broke the system? In the quarter century (2+ / 0-)
    Recommended by:
    Andrew Lazarus, The Nose

    preceding the financial crash pension funds were routinely underfunded in an effort to reduce, or hold the line on taxes.  At least those which weren't converted to 401k.  The financial crash simply ballooned the unfunded liability past a point which it could be ignored.

    "Because I am a river to my people."

    by lordcopper on Tue Feb 25, 2014 at 01:05:51 PM PST

  •  An odd position to take. (1+ / 0-)
    Recommended by:
    Sparhawk
    Relief could come from reforms in the political systems to lessen big money's influence and empower small donors. To accomplish this, states could establish systems of public campaign financing. Maine, Arizona, and Connecticut already have such systems, as does New York City, and New York State is on the cusp. Though the mechanics differ, all of these systems would change incentives to make candidates responsive to average people, not just big donors. As a result, policy is more likely to be oriented to the public interest.
    By Big Money here, you mean Public Service Unions, right?  That's who lobbies for these pension plans.  That's... an odd position to take on this blog.
    •  The unions were willing to hide the expense (0+ / 0-)

      In many cases (not, e.g., New Jersey; I remember the objections, but Detroit and California), unions were willing to lowball pension funding to make contract sizes look smaller. What this diary points out is how the result is riskier investing. That was probably a bad idea.

    •  Who died and made you the thought police MGross? (0+ / 0-)

      You don't own this blog. You don't get to smear people for being out for being out of what you think is this blog's mainstream. Not to mention that you misunderstood the whole paragraph. It's not public sector unions that caused the underfunding and it's not public sector unions that called for tax cuts and it's not public service unions that are pushing for campaign finance reform. The public sector unions are not winning big new concessions from the cities and states. They haven't for a long time. What they are doing is helping public sector workers get what they were promised and getting more people to join Public sector unions (while private sector union membership continues to fall). There are states and cities with severe self-inflicted pension problems. Either the pensioners will get ripped off or the taxpayers will bail them out. Either way there will be much gnashing of teeth. But your solution is to move everybody into 401Ks that aren't set up to be underfunded (so they can't be hurt by the state or city underfunding them) but which, with their fees and the fortunes of the stock market and people's tendency to borrow against them are going to be in the long-term inadequate for most people. Poverty among the elderly was almost eliminated by the New Deal but the New Deal is now a shoddy 401K plus a cut Social Security so old people are going to be poor again. I am a state employee who is forbidden by state law to engage in collective bargaining. My 401K has a zero percent match. I pay 6% of every paycheck into the pension fund. The state is supposed to pay 2% in every year but in the 19 years I have worked here they have never once lived up to that. Fortunately, it was invested conservatively and my state's pension is not in trouble. You can have your 401K. Take it and shut up and go away.

      •  Tell it like it is (10+ / 0-)

        As a financial officer and accountant who never even made $50,000 working for small cities, at least I was promised a defined-benefit pension. I contributed 6% of every paycheck, and I think my employers contributed 12%. If I had elected to do so, I could have quit my job and removed my own money from the pension fund, but my employers' contributions would remain.

        Those who rail against defined-benefit pensions have drunk the Kool-aid: it's 401Ks that are stupid. All pensions should be defined-benefit, and all workers should have them. With a 401K, each employee has to guess how long he will live and how the market will perform. In a defined-benefit pension, those calculations are done by actuaries; the fund knows how many will die at what ages, it doesn't matter who, and all are provided for in their old age.

        This switching of employees from pensions to 401Ks is the great rip-off of the 20th Century. Employees need to get their backbone back and take to the streets if necessary to get these back.

        As for the politicians who promised this to their underpaid workers and then reneged on their responsibilities: that's what hell is for, and may they all go there.

               

        "You can observe a lot just by watching." ~ Yogi Berra

        by dandy lion on Sat Mar 01, 2014 at 09:10:17 PM PST

        [ Parent ]

        •  when I left the state of MN (1+ / 0-)
          Recommended by:
          Darth Stateworker

          If I would have pulled my contributions I would have received 4% interest with the state retaining everything above that number.

          If I died before starting my annuity my heirs would have received a refund of contributions plus interest but not the annuity.

          What the antipensioners fail to understand is that pensions are like a mortgage. The unfunded portion of the liability has a 30 year time window for payment.

          The deck is stacked in favor of the house and against wall street with the pension plans. Low invest fees due to pooled funds plus its a forced savings vehicle with the benefit of time to grow due to compunding etc.

          The deferred compensation model just doesn't work as a plan. People wait to long to start saving, they don't save enough and they chase last years winners.

          If the DC model had mandatory employer match plus mandatory participation it might work. As it is employers often don't have a matching plan or defer making their matches until the end of the year or even worse fail to deposit the employees contributions on a payroll cycle basis. All of these are easy ways for employers to steal the long term savings and earnings of their employees.

          I don't like that my soon to be new not for profit employer has a DC plan but they have a 5% automatic match built into the plan with mandatory 3% of salary employee participation. As a highly skilled worker with a good salary this system works but lower skilled workers need even more systemic protections.

    •  If this is the reality based coummunity (0+ / 0-)

      why is this an odd position?

      By Big Money here, you mean Public Service Unions, right?  That's who lobbies for these pension plans.  That's... an odd position to take on this blog.

      New Republic: So are the left-wing blogs as bad as the Tea Party ones in this case? -------------------------Chuck Schumer: Left-wing blogs are the mirror image. They just have less credibility and less clout.

      by AlexDrew on Sun Mar 02, 2014 at 03:27:01 AM PST

      [ Parent ]

    •  It's only an odd position to take (4+ / 0-)
      Recommended by:
      jbsoul, poitbrain, FrY10cK, HM2Viking

      because it's actually more of a blanket statement about what exactly prevents us from making many of the progressive changes we'd like to make.  The problems with campaign financing are nearly an unstated "given" at the beginning of most of our conversations on any topic at all.

      Yours is also an odd position to take, (and comes straight from the mouth of every lunatic conservative you care to ask), that public service unions, or indeed, any union is the Big Money that drives elections and legislation in this country.  

      That position smacks of the kind of right-wing victimization we see far too much of these days.  While unions are in the weakest positions they've ever been in, and people like the Kochs buy America, people like you whine and complain about Big Money Unions buying elections.  Next you'll be telling us there's a war on Christians.

      Pensions, both public and private, are deferred salary, and need to be treated as such, and until we actually get some legislation restricting what the masters of the universe on Wall. St. are allowed to do, dumping individual Americans into the 401k shark tank nearly guarantees a generation of seniors that will need to be bailed out.  We can either pay the price now or pay the price later, and for those of you that are happy with just throwing the US workforce to the sharks, you should know you're taking exactly the same approach as the people who willfully underfunded public pensions.

      When the 401ks have been eaten by Wall St., and the bill comes due in 20 years, what will you suggest then?  Poorhouses?

  •  Re (0+ / 0-)
    Politicians tend to prefer a higher discount rate, which reflects a better “expected” yield on assets in the pension fund, since it allows them to justify provisioning less for pensions now.
    Public unions prefer them for the same reasons. They can figure, hey, if the fund doesn't meet its expected performance then taxpayers will eat the difference anyway, so who cares?

    I would gladly give back the "wage penalty" if it meant public workers were in 401ks like the rest of us going forward.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Tue Feb 25, 2014 at 04:14:37 PM PST

    •  Do you like your 401K plan? And if you do, (2+ / 0-)
      Recommended by:
      poitbrain, Chi

      why do you prefer it over more traditional pension plans?  Also, what percentage of your salary goes into it, and do you also particpate in Social Security?  

      Plutocracy (noun) Greek ploutokratia, from ploutos wealth; 1) government by the wealthy; 2) 21st c. U.S.A.; 3) 22nd c. The World

      by bkamr on Sat Mar 01, 2014 at 08:55:59 PM PST

      [ Parent ]

      •  Who cares (1+ / 0-)
        Recommended by:
        AlexDrew

        I am willing to offer public workers the same deal most private workers get: a matched 401k and Social Security. Whether I "like" it or not is not really relevant: what is relevant is that public workers get the same deal private ones (who pay their salaries) get.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sat Mar 01, 2014 at 09:33:15 PM PST

        [ Parent ]

        •  Just because private employers have abandoned the (9+ / 0-)

          social contract of a defined pension, it doesn't mean that public entities must automatically do the same.  There has been a deliberate effort by private industry to raid their pension funds and stiff their retirees that clearly breaks the social contract that existed after WWII to about some time in the late 70's or early 80's, when the courts let them get away with it.  

          And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

          by MrJersey on Sat Mar 01, 2014 at 10:41:04 PM PST

          [ Parent ]

          •  Yes that's exactly what it means (0+ / 0-)

            Every dime of public sector compensation is paid for by private workers. It is only fair to give private workers the most economical return on the money they pay, which means making pay and benefits the same in both spheres.

            Public workers always have the option of quitting and getting private jobs if they think they can make more elsewhere. That's what they told me in my private job when they cut our health plan last year.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Mar 02, 2014 at 08:28:18 AM PST

            [ Parent ]

            •  But they can't quit retroactively (3+ / 0-)
              Recommended by:
              MrJersey, dandy lion, Mostel26

              which is what they'd need to do when they find the pension they've worked 25 years for is being taken away from them.

              Also , this -  

              It is only fair to give private workers the most economical return on the money they pay, which means making pay and benefits the same in both spheres.
              isn't very logical.  An "economical return" on an investment has nothing whatsoever to do with equity in pay.  Taxpayers deserve to get value for the tax money they pay.  Workers deserve to get paid for the value they produce.  Neither of those things has any direct tie to pensions at all, although pensions may be part of the pay received by workers.
              •  Covering legacy pension obligations... (0+ / 0-)

                ...provides zero value to the taxpayer. It's paying again for work done years ago. Smart private sector workers avoid localities with significant legacy pension obligations like the plague.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sun Mar 02, 2014 at 12:08:00 PM PST

                [ Parent ]

                •  We've had this argument before. (3+ / 0-)

                  I know your opinion is that no taxpayer should ever have to pay taxes for something that happened before they arrived or were born, and no taxpayer should ever have to pay taxes for something they personally didn't vote for.

                  I think it's crazy.

                  If a city mismanages its pension funds so that taxes have to be raised to cover the pensions, then the taxpayers get to pay for that whether or not they think they're receiving any value.  (They are, but that's another argument.)  The taxpayers elected people who didn't handle these properly.    Therefore, they get to pay for their mistake.

                  And it's not paying AGAIN for work done years ago...it's paying what you promised some worker years ago and withheld until a future date.  Pension money is deferred salary.  it's not some magical gift.

            •  Public workers pay taxes too, and they make sub (2+ / 0-)
              Recommended by:
              Mostel26, HM2Viking

              stantial contributions to their pension plans as well.  They make the trade off for stable benefits and lower immediate salaries.  I'll tell you what, since every public employee's salary and benefit package is a matter of public record, I would go along with your agenda if we were to allow the IRS to make everyone's salary and benefit package a matter of public record so we could truly assess who was being paid more or less for the same type of work.

              And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

              by MrJersey on Sun Mar 02, 2014 at 10:46:42 AM PST

              [ Parent ]

        •  I see (4+ / 0-)

          So public employees are now eligible for bonuses, holiday pay, and all those private sector things they don't get now?  

          There already is class warfare in America. Unfortunately, the rich are winning.

          by Puddytat on Sat Mar 01, 2014 at 11:47:04 PM PST

          [ Parent ]

          •  Don't forget (5+ / 0-)
            Recommended by:
            Chi, Mostel26, jbsoul, FindingMyVoice, Puddytat

            The company car, travel to conventions, professional association memberships, being permitted to have outside employment, being permitted to accept gifts (no lunches - if you drop cookies off at Xmas - they go to the homeless shelter) oh - and being allowed to be part of the electoral process?

            In my city - you can't even lend your name to support a candidate outside of work hours. Can't run for office. Can't be a delegate - be a party official etc.

            Certainly can't ever fire a rude customer.

            And - who's going to make up that 30 years worth of 401k match & appreciation at say a straight Dow market basket rate?

            They've never put in more than the legally required minimum by state law - not what was needed by contract. But - you can be sure the hedge fund guys running the pension fund - those contracts were fully paid out.

          •  Assumption is wrong (1+ / 0-)
            Recommended by:
            Sparhawk

            Every ounce of productivity is wrung from most in the private sector, and the perks you mention are relics of an earlier, more prosperous time.  Such job amenities are fiction for many of us who are not at the very top of management in corporate America.

            My husband and I are professionals. Our income plunged 40% during the recession and hasn't returned to previous levels.  We were lucky to keep our jobs! Neither of us gets our business expenses paid by our employers. I get a paid vacation but my husband does not. My husband is eligible for profit-sharing but there is no guarantee that there will be profit to share, and management is hinting that things aren't going so well. I consider us to be doing well but we

            What is worse: I can't think of anyone I know who is in their 20s who aren't working overtime in the form of a 2nd or 3rd job.

            Dementia, you better treat me good. ~Conor Oberst "Slowly (Oh So Slowly)"

            by NotActingNaive on Sun Mar 02, 2014 at 09:41:58 AM PST

            [ Parent ]

            •  So, instead of expecting to be raised up (2+ / 0-)
              Recommended by:
              HM2Viking, Darth Stateworker

              you'd rather have everyone be forced to join you?  At that rate, you'll end up working at a minimum wage job with no benefits because you will be forced to accept their standards.

              I don't support joining the race to the bottom.

              There already is class warfare in America. Unfortunately, the rich are winning.

              by Puddytat on Sun Mar 02, 2014 at 12:44:03 PM PST

              [ Parent ]

              •  Yes that's exactly what we support (0+ / 0-)
                you'd rather have everyone be forced to join you?  At that rate, you'll end up working at a minimum wage job with no benefits because you will be forced to accept their standards.
                And yet most people in the private sector make more than minimum wage. How is that possible by your theory?

                Public compensation and benefits should always generally follow private compensation and benefits. Declines or increases in private pay should drive similar changes in public pay. There is no earthly reason why it should be otherwise. Private workers pay all of public salaries.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sun Mar 02, 2014 at 08:08:20 PM PST

                [ Parent ]

        •  No (0+ / 0-)

          What is the right thing is to get rid of the 401k model and replace it with guaranteed retirement accounts

          Your ignorance about the public pension system shines through in every comment

          The db plans when properly managed save taxpayers money in the long run

    •  A little more about the 401 k theft scheme (0+ / 0-)

      5. 40 Cents of Every 401(k) Dollar Goes to the Banks

      Saving $1,000 a year for  30 years in a non-fee 401(k) fund and then holding the accumulated sum for another 20 years would net an investor $269,000. With a smallish-sounding industry average fee of 1.3%, the same investor would net just $165,000, a 39% reduction.

      6. Two Dollars: The Approximate Wealth of Black Families for Every $100 of Wealth for White Families

      http://www.alternet.org/...

  •  Underfunding is easy to fix. (0+ / 0-)
    The evidence suggests that pension underfunding is at times associated with choosing an unreasonably high discount rate.
    Given that states have the power to issue bonds, simply require that they must issue bonds to the pension fund which pay interest at the discount rate.

    There is no excuse for allowing pension underfunding.

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Tue Feb 25, 2014 at 05:12:03 PM PST

  •  Who the F has a defined benefit pension? (0+ / 0-)

    All I have is a 401(krippled).

    The PTB want me to tell you that you are lucky ducks. I want to be a lucky duck.

    Apologies from the great unwashed.

    Be sure to hand me a dollar or two at the freeway entrance ramp.

    •  So instead of fighting for pension equity, you (9+ / 0-)

      want everyone to be in the same leaky lifeboat that you find yourself in now.  Public workers traded wage increases for health benefits and a defined pension.  While the private sector was out there getting the big bonuses in the boom-boom years of the 90's and buying those second homes, public workers were getting 1-3% wage increases by trading wage hikes for pension security.  And now that times are bad for those who put their faith in the private sector, you want to forget about all that and strip public workers of the pension benefits that they have earned.  

      And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

      by MrJersey on Sat Mar 01, 2014 at 10:47:27 PM PST

      [ Parent ]

    •  You want everyone to join you (6+ / 0-)

      in the race to the bottom?  Everyone should get no more than minimum wage with no benefits?  

      They've already pretty much killed the American Dream and have far too many enablers to help them completely bury it.

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Sat Mar 01, 2014 at 11:49:06 PM PST

      [ Parent ]

  •  You forgot to add that Politicians tend to... (5+ / 0-)
    Recommended by:
    MrJersey, Puddytat, jbsoul, Chi, Mostel26

    strip pension funding to fund pet projects. That's what happened to New York pensions when an old GOP Mayor used the money to fund tax cuts.

    •  As NJ Governor Christine Todd Whitman bonded (4+ / 0-)
      Recommended by:
      Puddytat, Chi, Mostel26, FindingMyVoice

      pension money to give unnecessary tax cuts and Christ Christie failed to make mandatory state contributions to the pension fund in order to grant tax cuts to his corporate friends.

      And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

      by MrJersey on Sat Mar 01, 2014 at 10:49:30 PM PST

      [ Parent ]

      •  Gov. Whitman left office in 2001 (1+ / 0-)
        Recommended by:
        Sparhawk

        Gov. Christie entered office in 2010. What was done by the three Dem Governors from 2002 to 2010 to fix it? Are you letting Corzine and company off the hook?

        New Republic: So are the left-wing blogs as bad as the Tea Party ones in this case? -------------------------Chuck Schumer: Left-wing blogs are the mirror image. They just have less credibility and less clout.

        by AlexDrew on Sun Mar 02, 2014 at 03:36:24 AM PST

        [ Parent ]

  •  Thank you. I learned valuable things (3+ / 0-)
    Recommended by:
    ratcityreprobate, Puddytat, jbsoul

    from this diary. This is an example of why I read dKos. I have a few Republican nervous-Nellie associates to whom I may send a link :)

    •  Me too. I'm even more worried, now. I'm one of (6+ / 0-)
      Recommended by:
      pixxer, MrJersey, Puddytat, jbsoul, Chi, FrY10cK

      those KY employees.  I'm seriously thinking that I may not be able to afford working as a teacher for much longer.  It's breaking my heart.  In KY, the teachers are not allowed to participate in Social Security, by state law, so the pension is all that we would have upon retirement.  We pay in over 10% of our income, but year after year, the state doesn't honor the contract.  

      I'm vested in Social Security from the 20+ years I worked in the private sector, but due to a Federal Law, I won't get my full SS since I'm a teacher.  

      I may have to leave teaching to go back into the private sector, and if I go, then I have the option to roll my pension contributions into a 401K.  It's horrible to have to be thinking about leaving teaching, but my Husband and I can not afford to risk being in our 70's and have my pension fail.

      Plutocracy (noun) Greek ploutokratia, from ploutos wealth; 1) government by the wealthy; 2) 21st c. U.S.A.; 3) 22nd c. The World

      by bkamr on Sat Mar 01, 2014 at 09:05:26 PM PST

      [ Parent ]

      •  It's bullshit... (4+ / 0-)
        Recommended by:
        pixxer, MrJersey, Chi, FrY10cK

        ...that some public employees do not participate in SS. All should regardless of their circumstances.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sat Mar 01, 2014 at 09:39:33 PM PST

        [ Parent ]

        •  It's certainly not their choice (2+ / 0-)
          Recommended by:
          pixxer, jbsoul

          And not something they have control over.

        •  At UC Berkley the faculty decided some years ago (0+ / 0-)

          to pay into some fund other than SS, so when I taught there briefly, that was my experience. I was unhappy about it, but it was not up to me to choose.  

        •  You know, you are full of bullshit! (2+ / 0-)
          Recommended by:
          Mostel26, Darth Stateworker

          There are a number of states where teachers are precluded by state law from participation in Social Security.  The state doesn't want to have to make their contribution into the stystem.  

          With a state pension, they can decide how much to put in each year -- regardless of how much they are supposed to put in by contract.  That is why the fund is underfunded!

          CA, IL, TX ... KY have state laws precluding it.  It's not up to KY teachers if they want to.  

          Have you EVER met a public employee you didn't hate?  And, here is what your beloved state's rights scenarios can lead too.  

          Just shove it, Sparhawk.

          Plutocracy (noun) Greek ploutokratia, from ploutos wealth; 1) government by the wealthy; 2) 21st c. U.S.A.; 3) 22nd c. The World

          by bkamr on Sun Mar 02, 2014 at 03:05:07 PM PST

          [ Parent ]

          •  Re (0+ / 0-)
            With a state pension, they can decide how much to put in each year -- regardless of how much they are supposed to put in by contract.  That is why the fund is underfunded!
            Can you point out a situation where a state was supposed to make pension contributions by a contract, then failed to do so?
            CA, IL, TX ... KY have state laws precluding it.  It's not up to KY teachers if they want to.  
            Teachers have unions, do they not? I have never once heard of a public employee union lobbying for inclusion in Social Security. Can you point out such a time?
            Have you EVER met a public employee you didn't hate?  And, here is what your beloved state's rights scenarios can lead too.  
            I like public employees. But economics are economics. There is no reason why any of them should get better benefits than those in the private sector. None at all. We don't get pensions, you shouldn't either. Because we pay you.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Mar 02, 2014 at 06:20:30 PM PST

            [ Parent ]

            •  REALLY? (2+ / 0-)
              Recommended by:
              Mostel26, HM2Viking
              Can you point out a situation where a state was supposed to make pension contributions by a contract, then failed to do so?
              How many fucking examples do you want, Sparhawk?

              New Jersey has skipped making any payments at all for years.  California short changed payments for years.  Illinois.  

              Basically, every fucking pension plan with problems right now did not make the actuarially required payments either in whole or in part for extended periods of time.  

              And I KNOW you're well aware of that fact - since we've gone over it at length in the past, so why pretend to be ignorant of those facts?

              You really are a piece of work.

              "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

              by Darth Stateworker on Sun Mar 02, 2014 at 08:34:43 PM PST

              [ Parent ]

              •  Link please (0+ / 0-)

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sun Mar 02, 2014 at 08:51:32 PM PST

                [ Parent ]

                •  Oh (1+ / 0-)
                  Recommended by:
                  Mostel26

                  go blow it out your ass.  Asking for a fucking link?  Seriously?

                  Just fucking Google it.  Start with Jersey.

                  Or continue to be an obstinate jerk that refuses to acknowledge things you've acknowledged in our prior conversations...

                  Really, I know you've been here for ages, but you really do come across about the same as a right wing troll.  Feel free to HR the comment, I don't care, but I have no fucking respect for you, and I want to make that PERFECTLY CLEAR that I think you are a piece of trash.

                  "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

                  by Darth Stateworker on Sun Mar 02, 2014 at 09:19:41 PM PST

                  [ Parent ]

                  •  What you think of me is irrelevant (0+ / 0-)

                    To my knowledge, claims of violation of contracts with public employee unions by underfunding have never been substantiated. Public unions would have sued the state at the time if that had actually happened. Why didn't they?

                    If by "underfunding" you mean assuming a higher discount rate than the fund actually performed at, that's definitely an issue. But one that public employees were directly complicit in.

                    Again, if I'm wrong, prove it rather than posting nonsense as hominems. Post a link.

                    And if you think that arguing that public employees should get the same compensation and benefits as private employees makes a person a "piece of trash", prepare to make a lot of enemies in your state. You are going to be forced to work with people that think as I do.

                    (-5.50,-6.67): Left Libertarian
                    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                    by Sparhawk on Sun Mar 02, 2014 at 09:31:10 PM PST

                    [ Parent ]

                    •  STOP. PLAYING. DUMB. (2+ / 0-)
                      Recommended by:
                      Mostel26, HM2Viking

                      Who gives a flying fuck about "contractual obligation" or no "contractual obligation?"

                      Have governments nationwide NOT placed into their pension trust funds what the fund actuaries have stated was needed for full payment every year?  Has this NOT been a widespread issue for a long, long time?

                      Who the fuck cares if the unions sued them over it?  The fact of the matter is, politicians in many states have not even come close to meeting their fiduciary duties and made the annual actuarially required payments.

                      Here's a recent NY Times article discussing the phenomenon:  http://www.nytimes.com/...

                      But you don't need the link, because you already knew this, and you're just splitting hairs to be a dick, mainly because you loathe pensions and you loathe government employees.

                      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

                      by Darth Stateworker on Sun Mar 02, 2014 at 09:37:50 PM PST

                      [ Parent ]

                    •  PS (2+ / 0-)
                      Recommended by:
                      Mostel26, HM2Viking
                      And if you think that arguing that public employees should get the same compensation and benefits as private employees makes a person a "piece of trash", prepare to make a lot of enemies in your state. You are going to be forced to work with people that think as I do.
                      You even use bullshit right wing talking points word for word - just like what I quoted.

                      Are you that stupid that you think there is a homogenous "everyone" that you can point to to illustrated how "public sector workers get something others don't", or however the fuck you phrased it?

                      Let me clue you in on something Sparhawk:  the "everyone" strawman is a vacuous piece of shit.  We've covered this before as well.  Pensions are not unique only to the public sector - most larger corporations tend to still have them, especially if their employees are unionized; nor can one point to public sector salaries and say "they make more than everyone", because that's trash too.

                      So take your self-righteous right wing libertarian nonsense and take a really long fucking walk off a very short pier.

                      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

                      by Darth Stateworker on Sun Mar 02, 2014 at 10:21:54 PM PST

                      [ Parent ]

                •  But for good measure (1+ / 0-)
                  Recommended by:
                  Mostel26

                  Here's Politifact, discussing how Christie hasn't made any payments... From 2011:

                  http://www.politifact.com/...

                  NJ started skipping payments years before Christie even got elected, going back to Corzine, or even Whitman.

                  You've acknowledged that there has been significant underfunding issues nationwide in our past conversations - so to refuse to acknowledge it now - you're just being an asshole.

                  "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

                  by Darth Stateworker on Sun Mar 02, 2014 at 09:27:01 PM PST

                  [ Parent ]

            •  Public employees (0+ / 0-)

              Also pay taxes.....

              The real problem is the failure of the private pension and retirement savings system

              As a public employee my compensation has always tilted towards health insurance and pension savings plans

              As a state employer I contributed to

              Msrs
              Ss
              Deferred comp

              Each of these are forced savings vehicles

              As a federal employee

              I contribute to

              fers
              Ss
              Tsp

              Again all forced savings vehicles

              All of these programs are not optional

              I am leaving federal employment in June for a not for profit hospital

              I will join a retirement plan that is dc based but I will have forced savings of about 10%

              It's not a matter of better compensation

              These plans do not allow employees to save less than 25% of salary towards retirement

      •  That is a horrible situation to be in, for sure. (0+ / 0-)

        Maybe another possibility is to  leave Kentucky (which would be very sad) and teach somewhere where your pension would be safe(r)? But I'll bet you wouldn't be able to transfer your existing pension there, hm.. still the same problem of losing what you've already paid in... That is really sad :(

  •  Reading some of the comments (9+ / 0-)

    to this article, I have to wonder - is the the Daily Kos?  Or fucking Red State or Breitbart??

    "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

    by Darth Stateworker on Sat Mar 01, 2014 at 09:00:51 PM PST

    •  Thank you (6+ / 0-)

      I was wondering the same thing.  Had to respond to a few of the most egregious.

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Sat Mar 01, 2014 at 11:51:29 PM PST

      [ Parent ]

      •  This is one of the few moments that I have (1+ / 0-)
        Recommended by:
        Sparhawk

        recognized this as the reality based community that we claim to be. The pension crisis is real and in the real world most know that it is not sustainable.

        New Republic: So are the left-wing blogs as bad as the Tea Party ones in this case? -------------------------Chuck Schumer: Left-wing blogs are the mirror image. They just have less credibility and less clout.

        by AlexDrew on Sun Mar 02, 2014 at 03:40:34 AM PST

        [ Parent ]

        •  The pension "crisis" was created by (3+ / 0-)
          Recommended by:
          Clues, Mostel26, Darth Stateworker

          underfunding and mismanagement.  It is a scheme to kill defined benefit pensions and the more people buy into that meme, the more they succeed.

          There already is class warfare in America. Unfortunately, the rich are winning.

          by Puddytat on Sun Mar 02, 2014 at 12:45:38 PM PST

          [ Parent ]

        •  Bullshit. (2+ / 0-)
          Recommended by:
          Puddytat, HM2Viking

          The pension "crisis" is as astroturf-y as any other right wing talking point.

          Yet a subset of you are seemingly too bamboozled to recognize that.  And you call yourselves "liberals?"

          Pensions fail for 2 reasons, and 2 reasons only:

          1.  Underfunding.

          2.  Mismanagement.

          When properly funded and managed, pensions have a stellar track record.  That's why they've been around as a retirement vehicle for a century and a half.

          I think it's past time a few of you here start learning these simple truths.

          "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

          by Darth Stateworker on Sun Mar 02, 2014 at 08:27:18 PM PST

          [ Parent ]

      •  Le sigh. (2+ / 0-)
        Recommended by:
        Puddytat, Mostel26

        I'd respond to the "most egregious", but given that those posts were written by the usual suspects, like Sparhawk, it's basically like talking to a brick wall.

        "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

        by Darth Stateworker on Sun Mar 02, 2014 at 08:29:12 PM PST

        [ Parent ]

  •  Slightly off-topic, but not everyone knows that (9+ / 0-)

    private pensions are a potential "profit" center for businesses.

    Under our increasingly bizarre accounting rules, businesses are allowed to assume any rate of growth of their pension plans they wish.  And they get to count this assumed growth as "income" which makes their PE ratio look better.

    During the financial crisis a few years ago, some major American corporations had the majority of their income come from this phantom gain on the money they had put aside to fund their pension plans.  This was at a time when all investment classes used by pension plans were actually losing money.

    So when did the companies have to recognize the losses they were actually incurring instead of the profits they were reporting?  Never!  Is this wonderful country, or what!

    (I know accounting rules did require the corps to report the difference between what they actually had in pension gains vs. what they should have had, as a liability.  But this gets into a whole 'nother discussion of off-balance sheet accounting rules.)

  •  I think one of the greatest issues is the (2+ / 0-)
    Recommended by:
    Sparhawk, FindingMyVoice

    abuse of disability pensions which was not factored in or weighted enough in underwriting to reflect accurately what is actually happening.

    Of course there are many completely legitimate disability pensions and police and firemen work in environments where you would expect a proportionately greater amount of disability in their general populations and they are not the only ones retiring early on disability pensions. That being said, I used to live in Rhode Island and one of the template news stories on any given slow news day  were stories about people receiving Rhode Island disability pensions and then moving and working full-time in another state. or the local news channel would have video of the disability pensioned former state worker doing back-flips on their trampoline in their backyard, etc.

    If any of you haven't heard of the pension scandal at the Long Island Railroad, you should look it up. They had a gigantic percentage of their employees all going out on disability pensions.

    My own opinion is that if someone is forced to retire on a disability pension then there should be some curtailment of the income they are allowed to earn as an adjunct to the disability income or they should forfeit incremental amounts of the disability portion of the retirement as it is replaced by other sources. My understanding was always that a disability retirement meant that one had lost the "ability" to earn other income and that was why it was higher and available earlier. If that is not the case, then logic says we should change the rules.

    I am pro-labor, pro-unions, pro 99%, pro disabled population, but for the system to survive someone has to figure out a fix for this portion of it.

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Sun Mar 02, 2014 at 04:59:59 AM PST

    •  That's quite an assertion. (1+ / 0-)
      Recommended by:
      Clues

      I would agree that there are plenty of examples of people abusing the disability provisions of pensions...

      ...but that is still only anecdotal evidence that abuse of those disability provisions represent a wide-spread problem that is resulting in a systemic failure.

      The problem is this:  we can read 1000 stories of this guy or that guy bilking the disability provision of a pension.  However, that is still a fraction of a fraction of one single percent of all pensioners.

      So while I agree that abusing disability provisions are wrong and clearly we want to prevent it as much as possible, to assert that abuse is causing a widespread financial strain with any authority really requires a cold, hard look at statistics, which I don't think you've done - largely because the statistics don't really exist in the first place.

      Even the LIRR itself is only anecdotal evidence of a problem.  To show that the problem is actually true, it has to be done statistically and mathematically.   The problem is, the LIRR belongs to a pension plan that has almost 600k pensioners and even more working members.  So the LIRR abuse, at the end of the day, is still a statistical blip.

      I'm certainly not trying to diminish the seriousness of the fraud committed by the LIRR jerkoffs.  My point is to reflect that your assertion on how such fraud affects the stability of pensions overall, while well intentioned, doesn't really seem to take actual statistics and math into account, and hence, is pretty much baseless.

      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

      by Darth Stateworker on Sun Mar 02, 2014 at 08:50:07 PM PST

      [ Parent ]

  •  What broke the system? (4+ / 0-)

    The systematic destruction of unions is what broke the pension system.

  •  Why not both? (2+ / 0-)

    Strange that in these comments there seems to be the view that it's either one side or another.

    There is mismanagement and corruption in both the private and public sector! Inevitable where ever there is money and power and lack of good oversight.

    I know in Philadelphia that the pension amount you are paid is determined by your salary in the last couple of years worked. So it's common that retiring workers pile up on overtime (sanctioned by superiors) in their last year sometimes doubling their regular salary. Then their pension gets a big increase for as long as they live. We know disability pensions have been abused for years by some. These kinds of "abuses" are not so common in the teachers union. It's usually Police, Fire Department and Sanitation.

    The private sector is constantly looking for ways to rape public pension funds.

    The GOP is always calling for crisis "solutions" that privatize handing over whatever they can to wealthy donors. What they did to the post office was ridiculous.

    The real problem is that it's hard to find oversight or solutions  that are not self interested.

    •  ...lots of truth in this comment... (1+ / 0-)
      Recommended by:
      i saw an old tree today

      ...and teachers do it too. Locally the teachers union decided to forgo increasing all teachers salaries some in order to allow those in their last year or two of teaching to get a bump in pay so as to receive a much better retirement amount...

      Welcome from the DK Partners & Mentors Team. If you have any questions about how to participate here, you can learn more at the Knowledge Base or from the New Diarists Resources Diaries. Diaries labeled "Open Thread" are also great places to ask. We look forward to your contributions.

      Ignorance is bliss only for the ignorant. The rest of us must suffer the consequences. -7.38; -3.44

      by paradise50 on Sun Mar 02, 2014 at 12:32:45 PM PST

      [ Parent ]

    •  The solutions are out there. (1+ / 0-)
      Recommended by:
      HM2Viking

      However, they just don't get discussed much.

      Pension padding can be problematic.  However, one aspect of pension padding not generally discussed is that sometimes, it's still cheaper to pay a shitload of overtime (and the pension contributions that follow them) than it is to hire new employees.

      However, here's how you make it fair:  only overtime shifts that are worked on a mandatory basis should be pensionable.  If you volunteer,  it doesn't count towards your pension.  This would clear up the deliberate pension padding while still ensuring that if local management deems it to be cheaper to pay O/T than hire more employees, that O/T is still pensionable.  It also should be noted that most padding tends to happen with public safety workers, as they have the greatest need to use overtime.  Most blue collar civilian workers don't have much opportunity to pad, and a large number of white collar professional civilians are on straight salary, so they get no O/T to begin with.  IE:  When was the last time you heard of a teacher getting paid hourly instead of a salary?  Maybe a substitute.

      The disability issue can be managed well - as long as those reviewing the requests for disability pensions are honest and reject claims without sufficient basis.   On the flip side - there are dishonest doctors who are happy to provide "evidence" of a disability - and there needs to be a crackdown in that respect.

      I agree with you that this isn't an all or nothing proposition - there are things about pensions that could and should be fixed.  However, those items (and their effects) tend to be significantly overblown by those looking to destroy pensions.

      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

      by Darth Stateworker on Sun Mar 02, 2014 at 09:03:08 PM PST

      [ Parent ]

  •  Just a thought (3+ / 0-)

    When public pensions are reduced to the same level as private pensions, who are the austerity idiots on here going to blame then?
    I imagine the anti-pension commenters on here are either 1) young people who believe they are smarter than everyone else and will never get old and 2) bitter, old people who believed the lies of capitalism and are now wanting everyone else to eat cat food.

    "We make money the old fashioned way, fleecing widows and orphans."
      - Smith, Blarney

    •  Spot on. n/t (0+ / 0-)

      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

      by Darth Stateworker on Sun Mar 02, 2014 at 09:03:43 PM PST

      [ Parent ]

  •  Wisconsin public pensions are in good shape (2+ / 0-)
    Recommended by:
    Clues, HM2Viking

    For two reasons:

     1. IIRC, contributions and benefits are changed to align with the actual 5 year RoI: in bad 5-year stretches, pensions' annual increases are lower and contributions are increased; in good 5-year stretches, the opposite happens.  The cashflow is thus aligned to the RoI and spreads shocks over the course of years.

     2. The State Supreme Court ruled in 1997 that the pension fund was not an obligation of the state, but rather belonged to the employees it covered instead (it being deferred compensation).  Thus smacking down the 1987 fund raid of Governor Tommy Thompson (R) (he had been after some of the cash from a good year).

    The result is a pension fund that is 99.9% funded (search for 'funded status').

    Fake candidates nominated by the GOP for the recalls: 6 out of 7. Fake signatures on the recall petitions: 4 out of 1,860,283.

    by GeoffT on Sun Mar 02, 2014 at 11:14:44 AM PST

  •  Give the fed it's due (0+ / 0-)

    The defined benefit pension system was killed by the federal reserve's zero interest rate policy.  Savers in general and other retirement saving programs have also been sacrificed by that policy.  All long term saving programs depend on the power of compounding to provide sufficient accumulations.   Because interest rates have been held artificially low for over 10 years, compounding has not been able to work its magic and savers were forced to choose between higher risk and no return.   The recent increase in pension plan underfunding is a direct result of two factors:  (1) the reduced returns on invested assets on the calculation of the present value of the future benefit obligations and (2) the negative impact of the Great Recession on the value of financial assets held by retirement saving programs.   Businesses and governments used these conditions, which are likely temporary, to justify ending or curtailing their so called legacy obligations (previously known as deferred compensation).  The fed's actions are designed to stabilize the banking system.   The fed does not care about the impact on savers and saving programs.  

    •  Maybe. In part. (2+ / 0-)
      Recommended by:
      GeoffT, Mostel26

      Pensions don't rely on simply interest bearing instruments to meet their discount rates, nor have they ever.  Anti-pensionists will argue they should, because only a "risk-free" discount rate is "appropriate", but they're full of shit and ignore many decades of history proving otherwise.  Not to mention if the only reliable way to invest was at "risk-free" levels, 99% of Wall Street wouldn't be there - which also reflects the fallacy of the risk-free argument.

      Obviously, each fund is allocated differently, but most tend to allocate only a small portion on such instruments, and tend to rely on the returns from other investments such as stocks and real estate to boost them to the proper discount rate.

      It's really not a bad plan, considering that over the long term, simply investing in a market index like the DJIA would have returned an average of well over 8% annually (if dividends were re-invested) - going all the way back to before the Great Depression.

      So lack of any real return on interest bearing instruments might be causing a small hit in plans being able to hit their discount rates, I don't think that overall it's all that problematic.  It all depends on allocation and how successful their other investments are.

      "There was no such thing as a "wealthy" hunter-gatherer. It is the creation of human society that has allowed the wealthy to become wealthy. As such, they have an obligation to pay a bit more to sustain that society than the not-so-wealthy." - Me

      by Darth Stateworker on Sun Mar 02, 2014 at 09:15:55 PM PST

      [ Parent ]

  •  Sold out by 401K plans (0+ / 0-)

    My employer, like most, replaced employee pension plans with a company 401K plan, with some fractional matching funds.  Basically, this absolved the employer of any pension plan responsibility, and threw us to the wolves of Wall Street.
    Many of us lost major portions of our retirement savings during the last stock market crash, while the wolves of Wall Street scooped up record high profits.  Basically they robbed all of our pension plans as soon as they had us all hooked into it.
    And now they want to kill our social security lifeline.
    It is a rigged system by heartless wolves.

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