Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 12-03-2013, 09:07 PM
 
Location: Sacramento
14,044 posts, read 27,165,238 times
Reputation: 7373

Advertisements

I'm sure this will be appealed, and the decision can be revoked, but for now this is of major concern to anyone with a pension from local government:

In a single ruling, U.S. Bankruptcy Judge Steven Rhodes overturned a 50-year belief that vested public-sector pensions are protected by the state constitution under Chapter 9 and allowed the largest municipal bankruptcy in American history to proceed... With cities, even states, grappling with ballooning unfunded pension liabilities, there are growing concerns that the obligations promised to public-sector retirees associated with municipalities could be discharged in Chapter 9 bankruptcy.


Rhodes' opinion on pensions will have national repercussions | The Detroit News
Reply With Quote Quick reply to this message

 
Old 12-03-2013, 09:26 PM
 
Location: State of Being
35,879 posts, read 77,258,797 times
Reputation: 22751
I have been expecting this at some point . . . too many municipalities are unable to fulfill their pension obligations.
Reply With Quote Quick reply to this message
 
Old 12-03-2013, 09:35 PM
 
Location: Los Angeles area
14,017 posts, read 20,869,471 times
Reputation: 32530
I read the whole article and found it very interesting. There is a lot of logic in the judge's opinion that while Detroit's city pensions constitute contracts under state law, the whole idea behind bankruptcy is that contracts have to be breached because of the impossibility of fulfilling them. It would not be consistent to hold that some contracts are inviolate while other contract holders have to get the shaft. EVERYBODY will have to get in line for some sort of pro-rata type sharing.

Naturally this is bad news for all retirees who are drawing city or county administered pensions. However I do not see the applicability to state administered pensions because it is my understanding that states cannot declare bankruptcy.
Reply With Quote Quick reply to this message
 
Old 12-03-2013, 10:01 PM
 
48,505 posts, read 96,675,147 times
Reputation: 18304
Quote:
Originally Posted by NewToCA View Post
I'm sure this will be appealed, and the decision can be revoked, but for now this is of major concern to anyone with a pension from local government:

In a single ruling, U.S. Bankruptcy Judge Steven Rhodes overturned a 50-year belief that vested public-sector pensions are protected by the state constitution under Chapter 9 and allowed the largest municipal bankruptcy in American history to proceed... With cities, even states, grappling with ballooning unfunded pension liabilities, there are growing concerns that the obligations promised to public-sector retirees associated with municipalities could be discharged in Chapter 9 bankruptcy.


Rhodes' opinion on pensions will have national repercussions | The Detroit News
He just said that federal law overrules state laws which isn't anything new really. He also rules that all bondholders are subject to it;investors and other pension plans that invested in the cities bonds. This isn't something new it has happened to numerous pension plans thru the year under federal bankrupsy laws.Once he ruled they are bankrupt under chapter 9 then all creditors are effected by it;not just local pensions.
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 01:01 AM
 
2,499 posts, read 2,621,062 times
Reputation: 1789
Detroit's Pension Is Actually Well-Funded, So What's All the Fuss?


Playing games with the pension again.
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 07:06 AM
 
31,680 posts, read 40,970,152 times
Reputation: 14424
On the other hand the LA police dept is running short on satisfactory recruits. Just wait until Detroit starts running short of qualified applicants for key services. It is a vicious cycle that will compound the rebirth efforts. No need for anyone to get their panties bunched up if you disagree fine and have a good day.
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 07:17 AM
 
Location: Baltimore, MD
5,306 posts, read 5,984,594 times
Reputation: 10851
Quote:
Originally Posted by tom1944 View Post
I certainly don't consider this "playing games" with the pension. Perhaps if you actually read the article in your link, you'd understand the problem.

"But those bond certificates are why Detroit’s plan is so well-funded today – in effect, the deal shifted the liability risk from the retirees to the taxpayers. And that debt is contributing to the city’s inability to provide services to its residents".

And,

"By 2011, its pension payments accounted for nearly one-quarter of payroll. Meanwhile, since 2001, the number of active employees contributing to the system has fallen by nearly half while the number of retirees (now about 11,500) has stayed roughly the same."
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 07:33 AM
 
Location: Northern Wisconsin
10,379 posts, read 10,877,650 times
Reputation: 18713
This makes sense. What is the other alternative? City govts. cannot make pension promises that they can't keep and then expect others from outside the city to cover their lies/foolishness/deceit/greed. Lots of others in the private sector have lost their pensions. Why should govt. employees be exempt.
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 07:51 AM
 
Location: Sacramento
14,044 posts, read 27,165,238 times
Reputation: 7373
It is a very difficult topic to analyze, and I don't want to delve into it where I end up converting this into a P&OC type of discussion.

There are two sides to this story, and to me both have some legitimacy. On one hand, it is possible that some pensions have benefits that are excessive relative to their core funding structure, but on the other hand the long term severe reduction in bond interest rates causes some need to seek higher returns via alternative investments.

Also, in Detroit's case, some additional factors appeared to have contributed to the problems of today. One of the most significant might be the transfer of funds from the defined benefit plan to the defined contribution plans, providing a high guaranteed rate of return on worker investments:

Detroit Retirees Got Extra Interest After Their Guaranteed 7.9% - Bloomberg
Reply With Quote Quick reply to this message
 
Old 12-04-2013, 08:32 AM
 
Location: Wherever I happen to be at the moment
1,228 posts, read 1,366,081 times
Reputation: 1836
Quote:
Originally Posted by NewToCA View Post
I'm sure this will be appealed, and the decision can be revoked, but for now this is of major concern to anyone with a pension from local government:

In a single ruling, U.S. Bankruptcy Judge Steven Rhodes overturned a 50-year belief that vested public-sector pensions are protected by the state constitution under Chapter 9 and allowed the largest municipal bankruptcy in American history to proceed... With cities, even states, grappling with ballooning unfunded pension liabilities, there are growing concerns that the obligations promised to public-sector retirees associated with municipalities could be discharged in Chapter 9 bankruptcy.


Rhodes' opinion on pensions will have national repercussions | The Detroit News
I hope people take note of the fact that his ruling applies to municipal, public-sector pensions only. It does not apply to state or federal plans as neither can file bankruptcy. Counties may be a whole other can of worms.

Too many in various threads are predicting the demise of public sector pensions altogether and jumping up and down with glee at the prospect. Pension envy is really ugly and getting worse. They're clearly oblivious to or simply ignore the fact that there are limits to what various courts can change.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads

All times are GMT -6. The time now is 12:45 PM.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top