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This is what infuriates me. My BIL was a CA firefighter (who rarely saw action, by his own admission) and retired 20 years ago with one of those huge pensions. Yet all he could do was badmouth CA and beat it for Texas. The hypocrisy. He had a sign in his RV:
"Not born in TX but got here as soon as I could".
Yeah, with your generous CA pension!
You realize that many of those dollars still end up in the same hands despite where the transaction originated.
How about encouraging people to come back by giving them incentives like the companies get. Also, there is a tremendous amount of tax dollar waste by companies contracted with the government that if offset could provide quality service delivery at a reasonable rate.
California did pension reform in 2013. All new employees since then get reduced benefits at an older retirement age. There's a hard cap on pension calculations: only the first $121k of salary can count towards pension benefits. It also outlawed pension "spiking" by prohibiting use of vacation or sick leave cashouts from being called salary.
The problem is the above does not apply to employees who were hired prior to 2013. They continue to hold a contractual promise to receive the more generous benefits. The post-2013 pensions are sustainable and affordable. So now it's a question of can CalPERS and local governments survive the next 20 years or so until all of the older employees are gone and fully replaced with newer workers. Calpers has $378 billion in assets. I think they'll make it. Some cities might go bankrupt if we have a recession, though.
Sure, just make sure we bail out those businesses instead when they screw the people. Why would you want to help your neighbor? Morons abound.
This thread is about California's pension disaster, and related state pension disasters. Please stay on topic. Feel free to start your own thread on whatever you wish to talk about.
This is what infuriates me. My BIL was a CA firefighter (who rarely saw action, by his own admission) and retired 20 years ago with one of those huge pensions. Yet all he could do was badmouth CA and beat it for Texas. The hypocrisy. He had a sign in his RV:
"Not born in TX but got here as soon as I could".
Yeah, with your generous CA pension!
You can't really blame public sector retirees for taking advantage of the "system" in place including moving. I did just that also. I took advantage of the very, very generous pension CA offered (I figure they may have to reduce it at some point, but I can stand a 25% pension haircut) and beat it out of CA also.
Who you CAN blame is the people who offered these unsustainable pensions in the first place....namely those getting the votes from the strong unions who didn't give a rip about the future employees nor the state of CA. They only are about votes.
Also, organizations like Calpers are to blame. Totally incompetent. They have too many hands in the pot before Fund gets to distribute the money to the pensioners. And their actuarially assumed rates of return are way off base and they haven't come close to meeting their assumed rate of return. The broader indices such as the S&P have silgnifiantly out-performed the Fund over time.
One mouse click is all their "investment gurus" need to do, but everyone has their hand in the cookie jar and the jar is running out of cookies. Once the funding levels get much below 60% (which they are at after a move in the S&P from 666 to over 3000 unbelievably) a point of no return is hit. Then it's reduced services, higher contributions from agencies and employees, new pension tiers, and probably reduced pensions for existing retirees.
Yes, I worked in the field so I know what I'm talking about.
California did pension reform in 2013. All new employees since then get reduced benefits at an older retirement age. There's a hard cap on pension calculations: only the first $121k of salary can count towards pension benefits. It also outlawed pension "spiking" by prohibiting use of vacation or sick leave cashouts from being called salary.
The problem is the above does not apply to employees who were hired prior to 2013. They continue to hold a contractual promise to receive the more generous benefits. The post-2013 pensions are sustainable and affordable. So now it's a question of can CalPERS and local governments survive the next 20 years or so until all of the older employees are gone and fully replaced with newer workers. Calpers has $378 billion in assets. I think they'll make it. Some cities might go bankrupt if we have a recession, though.
Although PEPRA helped, it's doubtful that is helped enough. I don't necessarily agree that the post PEPRA pension formula provides for a sustainable pension system(s) in CA.
People on public pensions were promised these plans if they put 20+ years in and do a good job. They earned them and deserve to be paid.
I agree – at least for rank & file. I think there are some exceptions at the very high end – see the bottom of this reply.
Quote:
Originally Posted by Katie the heartbreaker
I blame the cities for promising these people something that they knew would cause this problem later on.
There were at least two parties to blame: elected officials on one side of the negotiating table and the public sector union leaders on the other. Indeed, most people believe there was collusion between the two, as in the hypothetical interchange below:
"Give us big raises," asked the Public Sector Union Bosses.
"We can't. We don't have the money," replied the Elected Representatives.
"Then, in lieu of big raises now, give us raises in the form of increases in pension payouts decades from now in far-off 2019. It costs you little out of your current budget," replied the Public Sector Union Bosses."
"Intriguing," replied the Elected Representatives, “It doesn’t come out of my current budget?”
“That’s right,” said the crafty Union Bosses, “and by the time the bill comes due in far-off 2019, you yourself will have moved on & retired & living the good life in Florida, playing with your grandchildren & great-grandchildren. Future taxpayers to whom you are not accountable will be stuck with the bill.”
“That’s a tempting solution to our impasse,” said the Elected Representatives, “Let me think about it.”
“While you’re thinking about it,” said the Union Bosses, “Think about this: if you give us big pension raises that pay out to 20, 30 years from now, we will have a massive get-out-the-vote effort to get you re-elected. If you fail to give us this, we will contribute mightily to your opponents and have a massive get-out-the-vote effort to defeat you,” said the Union Bosses, “It’s your choice.”
Quote:
Originally Posted by Katie the heartbreaker
There is no way away around it, taxes have to be raised.
There is a middle ground. A fair & reasonable pension is one thing, but gaming the system by pension spiking, as an example, should be illegal.
It is reasonable to set a MAXIMUM public sector pension such that it is fair, reasonable, and affordable.
Moreover, laws should be changed so that pensions are taxed where they are earned. If a CA public sector retiree wishes to retire to, say, Texas or Nevada, fine; but their state-paid pension should be taxed in CA as non-resident income.
Last edited by RationalExpectations; 08-24-2019 at 01:38 PM..
This thread is about California's pension disaster, and related state pension disasters. Please stay on topic. Feel free to start your own thread on whatever you wish to talk about.
This is on topic. If you cannot see the relationship you should not ask intelligent people questions.
Its only a disaster for certain cities. Much of the state (including the teachers) and many cities have no pension crisis.
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