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.
Well, if you are a citizen of Dallas or Dallas County, the concerns become quite real.
Guess who will pay for the extravagances of the administrators, retirees, and strong police unions. Who will pay the 1.5 billion.
Many pensions rely on bonds to fund pay-outs. Those bonds are bought by investors. It is those investors who will absorb any losses. But that is part of the game - bonds are issued with a credit rating and poor credit bonds pay higher interest so investors know what they are getting into.
In some cases the state may bail out the pension fund in which case tax payers will pay for it. In any case the pension will likely cut benefits.
It is an ugly situation and everybody will lose one way or another. But that being said, there is nothing I can do about it (except not invest in Muni bonds that fund pensions) so I am not going to worry about it.
The pay was low 3 decades ago, It sure isn't low now.
You are making a blanket statement that is not applicable to many areas of the country. You can go apply for a job with the State of Georgia right now as a Financial Examiner with a college degree or a Social Services Program Coordinator with a master's degree. Each position is offering the extravagant salary of $35,000 a year.
Be specific where are you paying for someone's pension?
Tell me what the funding formula is and out of every dollar of taxes you pay to that specific entity how much tax dollars goes to the pension.
In some places the employer made zero contributions for close to 20 years which means no tax dollars and people still believe they funded the pension with their tax dollars
What extravagances? I'm a retired Dallas Cop. I put 8.5% into the pension for 30 years. $3206.00 is my base pension. We don't get a 4% COLA like your mayor says. The mayor wants to build a park on the Trinity River,and does not want to help cops and Firemen. Will you ever go to the Trinity River park? You'll call a cop or fireman before you go there. Hope they answer, cause they are leaving in droves.
That's not much consider that if you invested 8.5% of your paycheck into the stockmarket conservatively by buying ETFs for 30 years you'll have a nice nest and mortgage paid off.
The pay was low 3 decades ago, It sure isn't low now.
This is a point people often forget about public sector work.
When the economy is doing well, if you're in a hot field, or if you're in an economically healthy area, the private sector is likely to be a better choice due to better pay, and possibly better benefits on rare occasions.
When the economy is in the tank, if you're in a field that is not in demand, in an economically depressed area, or some combination of the above, government employment is generally better. Many government employees have a mandatory minimum salary, whereas private sector workers end up with however low the market will go. In my city, a new teacher is paid a minimum of $41,000. While not a large salary, it is better than most anything you can get in the private sector after college.
That's not even counting the defined benefit pension (all major local employers have eliminated theirs), health insurance (the largest local employer has contracted out many services, and those contractors rarely have any benefits), extra PTO (many government offices are closed for the minor holidays. I get only the six major holidays and have to take PTO to be paid for them), etc.
There isn't a one size fits all answer about which is better, but for most positions in the recent past (ten years or so) in my area, government employment has clearly been the better choice. I have two former IT colleagues from when I was working as a contractor for a local Fortune 500 who essentially took a demotion in duties to become city employees.
Let's not be so quick to let the bankers and Wall Street off the hook.
It was the bankruptcy of key large corporations in the 1960s (e.g., Studebaker, which in turn meant Studebaker retirees received pennies on the dollar for their pensions) that ultimately led to an important law called ERISA -- The Employee Retirement and Income Security Act of 1974. Amended several times since, ERISA requires companies to adequately fund their pension plans.
Draft ERISA legislation extended the requirement for adequate funding of pensions to Public Sector Pensions. Makes sense, right - public sector pensions deserve protection in the form of actuarially sound accounting, right?
Public Sector Unions went to Capitol Hill to lobby *against* it.
That's right -- public sector unions did NOT want public sector pensions to be appropriately funded according to actuarial tables.
Why?
The answer is pretty straightforward. Union Bosses knew that the pensions were already relatively underfunded. They also knew that at the next bargaining session, if public sector governments, agencies & authorities were required to put more money into pensions because of ERISA, then that means less money would be available for cash raises in current paychecks to rank-and-file public sector union members.
The Union Bosses did not want money diverted from raises to fund pensions when they knew full well any future pension shortfall would occur decades in the future after they themselves had already retired.
Sooooo.... it was the Public Sector Unions who killed the application of ERISA to Public Sector pension plans.
It is not about Wall Street.
Quote:
Originally Posted by quixotic59
When you have the serious and criminal market manipulations practiced by banks and Wall Street over the past decade
That hasn't happened.
Quote:
Originally Posted by quixotic59
The deficits experienced by many pension funds today are a direct result of the sub prime mortgage debacle of 2008.
It doesn't have anything to do with the sub-prime mortgages in which people fraudulently borrowed money with no intention of paying it back.
The deficits are the direct result of negotiations between public sector unions and governmental entities & authorities over the past several decades. The negotiations went like this:
Elected officials: "We don't have money for big raises."
Union Bosses: "OK, then give us big increases in our pensions. The bill won't come due for decades until far-off 2017 when you are already retired. It will be someone else's problem."
Elected officials: "That's not fiscally responsible."
Union Bosses: "Give us big raises to our pensions and we will contribute to your re-election campaign & support you for re-election. Fail to give us what we want and we will launch a massive get-out-the-vote effort to support your opponent, donate to your opponent, and make sure you are never elected to anything ever again. So give us what we want. Besides, what do you care? The bill won't come due for decades in far-off 2017."
Elected officials: "OK."
Quote:
Originally Posted by quixotic59
It seems obvious to any honest person that the banks and Wall Street should be responsible for these deficits since tax dollars bailed their crooked butts out and they engaged in criminal activity.
First, it seems obvious to any honest person that the negotiations above were not honest nor arms-length. Thus, they should be held by the courts to be invalid.
Second, it has been documented everywhere that the Treasury made a profit by preventing the wholesale collapse of our economic system. Taxpayer money was not "given" to Wall Street. Taxpayer money was injected into major banks balance sheets (no gift - it was in return for purchasing stock). Taxpayers ultimately made a profit when the stock was sold.
Quote:
Originally Posted by quixotic59
Instead of holding the crooks responsible the decision is to punish the workers who never did anything wrong and made their required contributions.
The crooks to which you should focus your ire are Public Sector Union Bosses & elected officials whom they bribed.
You know the reason these problems get so large is because idiots keep kicking the can down the road.
There I must disagree. The responsible people are not idiots. They know exactly what they are doing and they are acting in their own personal best interest by kicking the can down the road.
If they were idiots, the worst that could be said is they are incompetent.
But they were not idiots. They were not incompetent. They understood the implications decades ago and they kicked the can down the road anyway. They betrayed public trust. Union bosses offered bribes (campaign contributions and endorsements) and elected officials accepted those bribes to kick the can down the road.
My personal guess is a state constitutional crisis.
State courts will order the payments even though there is no cash to cover the check. Will state courts intervene and confiscate general fund money to pay then-current pensions? Will state courts order an increase in taxes to fund pensions? Would such orders violate state constitutions? Would the SCOTUS intervene somehow?
This is exactly why when I retired and was offered a lump sum or pension,I took the lump sum. Plus,it made more sense financially for my circumstances. Even though my company's pension fund is doing very well, it is not doing as well as it once was.
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.
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.
