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Old 04-22-2019, 10:53 AM
 
5,102 posts, read 2,118,856 times
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Quote:
Originally Posted by craigiri View Post
Does that math include productivity increasing 600% or more?
Or per capita GDP growth of 1000%

Why or why not?

If I produce and/or am worth 6 to 10X as much, it would seem easy to cover a couple more years. Moreover, most of the lower lifespans were due to infant and child mortality and the mortality of the younger set (in general)

Since those people never built up much pension money, they would not drag on the system.

Math is more complicated than one number, right?

The biggest numbers which have changed is the distribution of wealth as well as difference in wages between the top tiers and the lower tiers. This would all seem to figure in much more than increased life spans.

Productivity is not only a straw man argument, but it actually works against you. After all, the cumulative inflation rate since 1935 has been 1,772%.



Meanwhile, child death rates in the 1930s ranged from around 500 per 100,000 for infants to around 140 for 14-16 year olds during the same period. While high by today's standard, that is nowhere close enough to affect matters. When Social Security began in the 1930s, there were roughly 49 workers to every retiree eligible for benefits. Even in the 1960s, there were four workers for every beneficiary. By 2030 that number is down to 2.3.
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Old 04-22-2019, 01:32 PM
 
18,538 posts, read 13,282,580 times
Reputation: 13911
Quote:
Originally Posted by RationalExpectations View Post
Not quite the same. See Roger Lowenstein's excellent book:

While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis

Lowenstein extensively documents the history of pensions in both the private and public sector, together with their financial difficulties.

In the private sector, beginning in the late 1950s and early 1960s, escalating labor costs resulting in union contracts where both union management and corporate management "bet the company." The typical form was a union agreeing to less in the way of near-term cash raises in paychecks (which the company couldn't pay) in exchange for larger far-away-pension-benefit-increases (which the company *might be able* to pay). Both union management and corporate management knew that the company's long term financial viability was at stake, although rank & file employees typically did not. It was a "bet the company" strategy. Either the company would thrive with its new products & business strategy, in which case it would be around to pay those far-off pension obligations... or its new products & business strategy would not pan out, in which case everyone lost.

Several of those didn't work, resulting in large corporate bankruptcies in the 1960s and early 1970s, prompting Congress to act. The result was the ERISA Act of 1974 - the Employee Retirement Income Security Act. Its purpose was to require actuarially sound pension accounting and funding, to set standards for financial viability, to set requirements of fiduciaries, and of course to create the Pension Benefit Guaranty Corporation (PBGC).

Originally, ERISA was intended to apply to Public Sector pensions. However, Public Sector Unions launched a massive lobbying campaign against this, arguing to exempt public sector pensions from actuarially sound accounting.

So, ERISA of 1974's requirement for actuarially sound accounting does not apply to public sector pensions.

The motivation of Public Sector Unions was obvious, of course.


Are you saying underfunding isn’t a problem in both public and private pensions?
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Old 04-25-2019, 10:35 AM
 
597 posts, read 138,929 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
Because they continue to skim the proceeds and lie about their theft.
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Old 04-25-2019, 03:09 PM
Status: "Re-edit status" (set 14 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
3,767 posts, read 1,734,115 times
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Not against government pensions. I am just against pensions that are actuarially unsupportable; In Oregon, early Tier 1'ers.
JMO, the state or municipality needs to go bkrpt to reset. I see no other way.
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Old 04-27-2019, 07:54 PM
 
25,710 posts, read 28,088,293 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.
A similar thing happened at my public sector job in California.
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Old 04-28-2019, 08:29 AM
 
13,567 posts, read 3,618,917 times
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Quote:
Originally Posted by leastprime View Post
Not against government pensions. I am just against pensions that are actuarially unsupportable; In Oregon, early Tier 1'ers.
JMO, the state or municipality needs to go bkrpt to reset. I see no other way.
I'm not saying the math works out, but I have heard such predictions for at least 40 years. Yet it hasn't happened....what HAS happened is certain rejiggering of the situations to make them somewhat whole (or half).....

One can giveth and one can taketh away. My bro worked for Lucent for 20 year in the boom times. I won't tell the whole story but all the amazing stuff he built up.....just isn't and wasn't there.

We are discussing some of the future here without mentioning the past. Millions have already been screwed out of some of their pensions and savings and investments. Two of the smartest people I know lost much of their net worth in the dot-com boom....whoever had money left after that or built some up often lost it in the Great Recession.

This is the way our system works. Retail investors are led into thinking they "make money"....even pension funds! Meanwhile, Super-computers programmed by the best minds on earth skim the cream by the micro-second until one day it all collapses.

My friend with a actual stock market seat is ALWAYS completely out of the market at the end of each day. Think about it. Why?

People in this thread accuse gubment and pension funds of "not knowing how it works" without understanding that the entire world doesn't know either. Mr. Greenspan.....didn't know. How are we expected to?
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Old 04-28-2019, 09:27 AM
 
1,415 posts, read 317,515 times
Reputation: 2399
Quote:
Originally Posted by mshultz View Post
Now that the baby boomers are retiring, they are having to cut back on benefits.
Question: are they cutting benefits of existing retirees? Near-retirees? Newly-hired? Or a combination?
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Old 04-28-2019, 11:56 AM
 
1,500 posts, read 498,786 times
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Quote:
Originally Posted by RationalExpectations View Post
Question: are they cutting benefits of existing retirees? Near-retirees? Newly-hired? Or a combination?
It varies. Here are the steps companies can/have taken. Sometimes they can't do anything because of union contracts.

1. Terminate the plan for new entrants.
2. Cut benefits for existing retirees- usually a last resort but has the most dramatic effect. Railroad pensions have been cut recently.
3. Stop providing retiree health insurance, or don't provide it for spouses. A previous employer froze its contributions going forward- so at least they gave you what they were paying in 2016 for health insurance every year going forward. Better than stopping it completely, which happened to my brother after retirement.
4. Offer vested employees a "cash balance" payout, typically less than the actuarial value of the liabilities.
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Old 04-28-2019, 01:19 PM
 
Location: Wooster, Ohio
1,011 posts, read 759,079 times
Reputation: 1438
Quote:
Originally Posted by RationalExpectations View Post
Question: are they cutting benefits of existing retirees? Near-retirees? Newly-hired? Or a combination?
It does vary. We have groups A, B, & C for Ohio PERS. I am in group A. Groups B & C have to work more than 30 years for an unreduced pension. While I earned 2.5% for each year past 30 years, group C has to work more than 30 years before earning 2.5%. The formulas get to be complicated.

Healthcare for spouses is gone. It did not matter what group you were in, or whether you were working, retired, or resting in peace.

I went back to work in order to earn the additional Medicare credits I needed. If Ohio PERS continues to pay Medicare A for grandfathered employees, this will save them $240 a month, as I had 35 credits prior to my part-time job. Also, I am paying an additional $74 a month in medical fees because the part-time job is an Ohio PERS job.

I am tempted to go to an Ohio PERS meeting, point out the money I am saving them now and in the future, and ask if I get a Thank You.
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Old Today, 12:54 PM
 
597 posts, read 138,929 times
Reputation: 857
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
The stock market should be a small portion of the portfolio, but people are easily convinced that the only way to make money is to risk it all.
There is a much safer place for most of the money.
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