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Old 04-14-2019, 06:38 AM
 
Location: Washington State
17,569 posts, read 9,077,481 times
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Quote:
Originally Posted by heart84 View Post
A lot of pensions are ponzi schemes. Soon to start really going belly-up. Wait and see.
Yep, going to be very ugly. Next recession will put them in a bind and some might start failing which could trigger a bigger problem.
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Old 04-14-2019, 06:48 AM
 
4,519 posts, read 2,467,855 times
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Quote:
Originally Posted by Hoonose View Post
Not cities, counties or states, but the federal gov't can go by different rules since they are monetarily sovereign.
Not this next time they can’t... if they try to issue significant debt or print money to fund their bad habits the dollar will disintegrate in value. We will have huge stagflation and there will be a bloodbath in political circles.
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Old 04-14-2019, 07:17 AM
 
Location: western East Roman Empire
6,425 posts, read 10,497,260 times
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Quote:
Originally Posted by SWFL_Native View Post
Not this next time they can’t... if they try to issue significant debt or print money to fund their bad habits the dollar will disintegrate in value. We will have huge stagflation and there will be a bloodbath in political circles.
The inflation aspect won't be a hyper problem because there is no crisis of production; if anything, there is a crisis of overproduction.

But the stagnation part, yes, we have already been in that phase for more than 10 years, and quite possibly many more decades to come.
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Old 04-14-2019, 08:49 AM
 
8,704 posts, read 3,799,563 times
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Quote:
Originally Posted by SWFL_Native View Post
Not this next time they can’t... if they try to issue significant debt or print money to fund their bad habits the dollar will disintegrate in value. We will have huge stagflation and there will be a bloodbath in political circles.
In your opinion.

https://mythfighter.com/2009/11/24/f...ing-time-bomb/
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Old 04-14-2019, 09:20 AM
 
7,682 posts, read 7,086,902 times
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There is a lot of pension fraud to allow governments and corporates to put off making contributions to make them whole. They apply optimistic pension return assumptions to cover actual shortfalls and avoid painful choices. It's also one of the ways in which publicly listed companies inflate earnings.
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Old 04-14-2019, 09:48 AM
 
5,019 posts, read 1,862,287 times
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QE and low interest rates get some of the blame for the pension shortfalls. Back when you could get 5% interest from Treasuries, it wasn't hard to add some stocks to the portfolio to meet an 8% return target on investments. When ZIRP happened and bonds paid close to zero, it forced pensions to take on a lot more market risk in order to try to meet their targets.
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Old 04-14-2019, 12:27 PM
 
29,474 posts, read 46,599,898 times
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Quote:
Originally Posted by mysticaltyger View Post
Government pensions not bailed out by higher returns.

The short answer is too much was promised at the worst possible times when they knew a large wave of Baby Boomers was going to start collecting them.

In the 1980s and 1990s, double-digit stock and bond returns convinced governments they could afford widespread benefit increases.

Problem is, they couldn't afford those increases.

But the value of their holdings—their assets—began to fall in the aftermath of the dot-com bust in the 2000s, and the 2008 financial crisis followed soon after. State and local retirement systems lost 28% in 2008 and 2009, according to the Boston College data.

“The first thing you have to do is make up what you lost,” said Sandy Matheson, executive director of the Maine Public Employees Retirement System. “And it takes years. And then you have to make up what you didn’t earn on what you didn’t have. It’s a pretty steep climb.”


We're going to be in serious trouble if the stock market has a major bear market.

https://www.msn.com/en-us/money/mark...ons/ar-BBVN7Ia
Many pensions are obligated to invest certain percentage in certain investments
Oftentimes more bonds than equities
Bond rates have been in the toilet since before the housing market and stock market nose dives

My teachers’ pension has one of the better records but it is hampered because the state has failed to add the same level of contributions to it as the state has to its own state pension plan=-they aren’t the same
Our pension plan has done some unusual things too—like investing small percentage in gold as a diversification
Other funds I don’t think have that flexibility
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Old 04-14-2019, 01:07 PM
 
18,443 posts, read 13,181,841 times
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Quote:
Originally Posted by Elliott_CA View Post
QE and low interest rates get some of the blame for the pension shortfalls. Back when you could get 5% interest from Treasuries, it wasn't hard to add some stocks to the portfolio to meet an 8% return target on investments. When ZIRP happened and bonds paid close to zero, it forced pensions to take on a lot more market risk in order to try to meet their targets.
Well I’d say general under funding of plans forever is probably the biggest issue and second that monetary policy decisions don’t need to and should not be made with pension funds in mind
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Old 04-15-2019, 08:44 AM
 
1,379 posts, read 446,657 times
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I had an interesting conversation with a former School Superintendent- there's a bill in our state that would allow teachers to opt out of the pension and into a 401(k) type plan. Note that it's an OPTION. The employee would contribute less than under the DB pension plan (currently the DB plan is 15% of salary and the school system kicks in 15%) but there would be a 100% match on the first 5%, with immediate vesting.

I wondered why there should be such opposition to this- both the former school superintendent and a retired teacher in the system were very much against it, from my conversations with them. It would be an option, after all- why did they object?

Then I realized why. Right now, short-termers in the school system- those whose spouses have mobile careers or those who leave after a few years to raise children FT- leave without being vested (at least in the school system's 15%- not sure about what the teacher contributed). The money the short-termers lose goes in to the funds for everyone else. If they actually make the savings fully portable, that means less $$ to support the teachers who are vested in the plan. Aha. (And I did confirm this with the former school superintendent.) So, of course teachers who know they're unlikely to stay long enough to get vested will choose the less-lucrative but more portable option.

This makes me sad- some pension plans have been able to stop accepting entries from new hires so at least the hemorrhage of money can be restricted to a fixed group. Here was an attempt to do that and it's encountering resistance and also discouraging new teachers who don't think they'll be teaching long enough to vest. More money for those already entrenched.
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Old 04-15-2019, 08:57 AM
 
5,613 posts, read 3,148,296 times
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Quote:
Originally Posted by mshultz View Post
When I started under Ohio PERS in 1982, the formula was 2.1% per year, with a maximum of 90%. This was changed to 2.2% for the first 30 years, followed by 2.5% per year with a maximum of 100%. Both of these were based on the 3 highest salary years.

Now that the baby boomers are retiring, they are having to cut back on benefits. In addition, paid healthcare for spouses has been eliminated, and Ohio PERS continues to point out that they are not required to provided any healthcare coverage.

Those of us who were employed prior to April 1986, and did not change employers, did not pay into Medicare, and did not earn Medicare credits. I got a part-time job after retirement so that I could earn my remaining Medicare credits, just in case Ohio PERS ends its Medicare Part A payments to those grandfathered employees.

It took the Ohio legislature a long time to implement the changes recommended by Ohio PERS. They said they were studying the issue. I suspect they were delaying the changes in order to benefit themselves.
3 highest salary years - with many unions it’s commonplace to do “pension padding” if overtime is included. The worker about to retire magically needs a lot of overtime in their last few years of work which greatly inflates the payout.
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