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I don't know if this has already been brought up here, but I didn't see it in a forum title search nor on the most recent couple of forum pages.
Some states are testing the legal right to alter pensions for current retirees. The issue has to do with cost of living raises, however I have some concerns that if they win on this issue based on the "current economics threatens solvency" argument, it could also subsequently be used to reduce current benefits too:
Many state lawmakers and pension administrators have concluded that cutting benefits for new employees alone will not save enough money in the short term to keep pension plans solvent over time. So they are searching for ways to zero in on the benefits of current retirees and employees...lawmakers are hoping that the courts will agree that the current financial turmoil facing states imperils public pension systems as never before and calls for a new approach.
About 10 years ago my company change it pension system, It divided emp into 3 group, Group A >50 yrs old/25yrs of service, No change to Pension system. Group B <50/25 Lock in the then current % ( then lower % rate Caped at 50yrs of service) Group C New hires. lower fixed At last for now % caped at 50 yrs of service)
Thanks for the link. A few months old, but timely still, as court challenges grind on very slowly. That the idea of reducing even current retirees' pensions is surfacing is hardly surprising, given the dire straits some states find themselves in. But here I go again, in broken-record style: Pension systems vary all over the map in this country. Just consider how many systems there are - state, county, city, school teachers, law enforcement, and more. The more outrageous and unsustainable ones make the news, of course, but there are enough of these to be troubling. That some systems are on solid financial ground is not newsworthy. I'll just give one example of the wide variation: In some systems, the employees contribute nothing (and that is rapidly changing). But California public school teachers, kindergarten through junior college, contribute 8% of their salaries and have done so since at least 1971 when I went to work as a high school teacher. I feel like I have paid my fair share and I resent others who make no contribution and who are getting a free ride.
No doubt that the public, and often the media, tends to lump all public pensions into a single pile.
Though I think we are currently in a bit of a "torch and pitchfork" atmosphere concerning public pensions, I hope a cooler headed analysis will show that most are quite solvent, and the courts won't alter current agreements.
If current agreements are altered though, I hope the wording at least limits what can be changed.
For Alaska, the Legislature tried to change benefits for existing members and lost in court during the 80's. As a result, the State now has a multi-tiered retirement system to address concerns over the years. Each successive tier reduced benefits for new hires in some way, with the fourth tier likely being the last change (went to defined contribution).
While it's unlikely that Alaska will try to change benefits for current employees with the precedent set, it doesn't mean it won't happen in other states.
People should look to NJ to see what they are doing. It is not draconian and the major impact on current retiree's is COLA and that should not be a guarantee. Why if the economy is tanking and inflation is high you can do the math.
About 10 years ago my company change it pension system, It divided emp into 3 group, Group A >50 yrs old/25yrs of service, No change to Pension system. Group B <50/25 Lock in the then current % ( then lower % rate Caped at 50yrs of service) Group C New hires. lower fixed At last for now % caped at 50 yrs of service)
t56s called decoupling of present retireees;those smplyed and new hires. its had to win on present retires and empopyeees because terms of employemnt are like contract twerms. They can have some control has to whether to contribute COL because inmnay cases it is optional. They are facing the same thing on terms of empooyeemnt on new healthcare laws as to contributions promised like contracts.
If states cut pension benefits for a retired person the retired person should have the right to get their job back if they want it
Do you associate COLA with legally contracted benefits? One of the things to remember is that like SS the money is there in most states to pay out for years. It is future retiree's and accounting for them that is the problem. Since the Pension trust fund is administered independent of government can government dictate their contracted payout responsibilities?
Do you associate COLA with legally contracted benefits? One of the things to remember is that like SS the money is there in most states to pay out for years. It is future retiree's and accounting for them that is the problem. Since the Pension trust fund is administered independent of government can government dictate their contracted payout responsibilities?
Seems like this will be decided in the courts, and besides COLA's you can include supplemental benefits such as paid (or subsidized) health and other insurances too.
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