The bogus pension fund crisis. (Cincinnati: insuring, buying, university)

[Zen_master]

Originally Posted by t45209

Not true at all; you are making an apples to oranges comparison. In the private sector, it's called the free market. Customers vote by choosing where to spend their money. If a product becomes too expensive, lower quality, or otherwise uncompetitive, the enterprise either has to change or fail. This rarely exists in the public sector. As I said before, there is no incentive for government to be efficient.

No sense using logic or reason with rrtechno. The poster is much more concerned with scoring political points than actually analyzing this issue. Best to ignore the troll.

[unusualfire]

City % unfunded
Charleston, W. Va. $270 million
Omaha, Neb. $1.43 billion
Portland, Ore. $5.46 billion
Chicago, Ill. $24.97 billion
Little Rock, Ark. $498 million
Wilmington, Del. $364 million
Boston, Mass. $2.54 billion
Atlanta, Ga. $3.17 billion
Manchester, N.H. $436 million
New Orleans, La. $1.99 billion

Big and small cities have big time problems.

[mdovell]

Consider this for a moment.

Defined benefit plans cannot work for everyone as frankly pensions like 401k's and IRA's are invested in the same stocks. It's not like they invest in bonds here..interest rates are so low bonds might as well just be money in savings accounts.

The ability for cities to raise money is shrinking due to a number of factories with technology.

First one could argue sales taxes as with the internet people just didn't pay.

But now there's so much opening up with smart phones that people are sharing goods and services without being actual businesses. The business sector is scared from this as well.

Ever hear of airbnb? People rent out rooms like bed and breakfasts

Zilok? - Have anything physical to rent out like tools? Well that's what people do
Sidecar/Ubur/Lyft - don't have a car? Get a ride instead. Taxi services are pretty ticked off
Cookisto, HomeDine - want to eat out from a chef without a resturant? same thing

Like it or not but with the economy the way it is and how cheap it is to community with one another this is going to grow like wildfire. Heck money isn't a factor since bitcoin grew from five cents 18 months ago to $1200 recently!

Factor in all of the free videos on youtube for lesson plans for everything, library books using the overdrive system, free educational lessons from khan academy and the list goes on and on.

Low crime rates relative to the past, low fire rates and eventually it provides evidence to lower costs. Firefighting is more about preventing fires and smoke detectors have saved probably millions of lives. Yes some urban areas have higher crime rates but the penalties for crime are so high that frankly it shuns people out of jobs. Drug tests, criminal background checks, credit checks etc. There was a time if someone dropped out of high school they could probably find work in something low end. Where is that now? A bachelors today is what a high school diploma was a generation ago.

Union contracts also tend to lock in terms for a number of years that frankly might make it harder to budget in following years. More contracts mean less flexibility.

To comment about retirement in all due respects it is 2013 (soon to be 2014). It is not that hard to understand investments. Is it that hard to read a book about investing? Is it that hard to watch a video about a p/e ratio? All employers have to balance their budgets and work with finance. I just don't see how someone can be exempt from that process.

[kjbrill]

Originally Posted by unusualfire

City % unfunded
Charleston, W. Va. $270 million
Omaha, Neb. $1.43 billion
Portland, Ore. $5.46 billion
Chicago, Ill. $24.97 billion
Little Rock, Ark. $498 million
Wilmington, Del. $364 million
Boston, Mass. $2.54 billion
Atlanta, Ga. $3.17 billion
Manchester, N.H. $436 million
New Orleans, La. $1.99 billion

Big and small cities have big time problems.

Good post. Does point out just how widespread the public sector pension problem is.

In my opinion the private sector is just as bad off. The replacement of traditional pension plans with 401K plans has put the burden on the individual and from what I read many people are simply not investing in 401K plans even when available. This is going to result in a large segment of the population having little or nothing to retire on as Social Security by itself just doesn't cut it.

[kjbrill]

^^ Retirement is a house of cards. I am very grateful for Social Security and sure would not want to do without it. At the same time, without my defined benefit pension plan our standard of living would be much less. And since I also invested in the 401K plan our company offered in addition to the pension, we are doing OK. Since I am of age to be required to withdraw a minimum amount from the 401K (actually an IRA I converted to), this is the way I treat it. I am underwithheld from the pension plan. Since I have the pension, I owe income taxes on 85% of the Social Security. So I have 40% of the IRA withdrawl applied to Federal Income Withholding and 10% to State Withholding. So what I was told money I would have at a time in life when taxes would take a lesser bite, 50% is going straight out the window to taxes. Perhaps I should be greateful to have an IRA at all in addition to Social Security and the pension. But you know what, I just don't feel that grateful.

Those without a firm plan on how they will balance the entire retirement income will be holding a bare stick.

[kjbrill]

^^ For many years, defined benefit plans provided a retirement income for a large segment of the US population. As they disappear, let's see how well the population adjusts to provide for its old age. My opinion is not very well, particularly in the lower 50% percenticle of average income. So we are looking at an increasing public subsidy of the elderly, housing, health, just about everything. So we are designing a socialist state, pure and simple.

[Zen_master]

The following does a fairly balanced job at examining the issues with underfunded pensions. Cliff's Notes version: there are two primary issues that spring up 1) not making the actuarial required contributions, and/or 2) unions successfully lobbying to change the benefit formulas mid-cycle.

When it comes to pensions, California is no Detroit - latimes.com

[Zen_master]

Add Boeing to the long list if companies shedding legacy costs and switching from defined benefit pension plans to 401k-style defined contribution plans

Boeing Union Accepts Concessions to Keep 777X in Seattle - Bloomberg

[kjbrill]

Originally Posted by Zen_master

Add Boeing to the long list if companies shedding legacy costs and switching from defined benefit pension plans to 401k-style defined contribution plans

Boeing Union Accepts Concessions to Keep 777X in Seattle - Bloomberg

And I have to agree with the 70-year old retired Machinist Union member who stated when they are my age they will regret not having a defined benefit pension.

I abhor the term legacy costs. The only time that is a real problem is when you over commit and/or do not fund pension funds sufficiently on an on-going basis using realistic actuarial calculations.

Ask the real experts on this, the Federal Government who is burying the future of all the U.S. children under a mountain of National Debt. In a relative few years, discussions relative to defined benefit or defined contribution (401K) retirement plans will be mute. The interest on the national debt will be so stiffling on the economy it will be impossible for either to succeed.

[maxmodder]

Originally Posted by kjbrill

The average worker is not capable of managing their monthly expenses, let alone plan for retirement.

This is sad, but very true! Hence the reason why places like "check n go" are able to exist.