Either California Supreme Court, Or Bankruptcy, Will Solve $1 Trillion Pension Time Bomb

[CaliRestoration]

Originally Posted by Elliott_CA

Which is not a good idea, as it would cause city, county and state governments too cough up excessive amounts of cash up front.

You mean... like it already does?

Do you put out fires by spraying gasoline on them?

[Elliott_CA]

Originally Posted by CaliRestoration

Do you put out fires by spraying gasoline on them?

I don't follow your logic. If you want municipal bankruptcies -- perhaps that is your goal, to bring about chaos in pension system to kill it? -- then drop the CalPERS assumed investment return from 7% to 4%. That will trigger a wave of bankruptcies. With a super low investment target the medicine is worse than the disease.

[CaliRestoration]

Originally Posted by Elliott_CA

I don't follow your logic. If you want municipal bankruptcies -- perhaps that is your goal, to bring about chaos in pension system to kill it? -- then drop the CalPERS assumed investment return from 7% to 4%. That will trigger a wave of bankruptcies. With a super low investment target the medicine is worse than the disease.

Yup, or pensioners should take pennies on the dollar. It's tough to swallow medicine, but sometimes that's the only way to get well.

Your logic is like giving a drug addict more crack so they can realize how bad crack is.

[Elliott_CA]

Originally Posted by CaliRestoration

Yup, or pensioners should take pennies on the dollar. It's tough to swallow medicine, but sometimes that's the only way to get well.

The chart you posted only showed what happened in the past. In 2003, a pension reform law was passed. It cut back on pension benefits for new employees and requires sharply higher paycheck deductions from existing employees. It will take time but once the new employees start replacing the grandfathered ones, CalPERS will get healthier and the burden on government will decline:

[payutenyodagimas]

all govt employees should only have SS and 401k equivalents. that way, govt employees don't have the incentive to stay with govt. work in any industry and when you get burned, move to the private sector w/o thinking about the pension entitlement if you have worked for 5 years in govt

[agilpro]

Originally Posted by Elliott_CA

The chart you posted only showed what happened in the past. In 2003, a pension reform law was passed. It cut back on pension benefits for new employees and requires sharply higher paycheck deductions from existing employees. It will take time but once the new employees start replacing the grandfathered ones, CalPERS will get healthier and the burden on government will decline:

My bet is on bankruptcy by that time or a complete pension collapse. Those 2003 reforms basically put a band aid on the mess and the system will fail before the "new pensioners" come on line. Or so say all the actuaries.

[expatCA]

Originally Posted by agilpro

My bet is on bankruptcy by that time or a complete pension collapse. Those 2003 reforms basically put a band aid on the mess and the system will fail before the "new pensioners" come on line. Or so say all the actuaries.

I am curious. The new regulations that went into effect in 2003, did they use low interest gains or the same high returns they based the old system on and that were unreasonable from the beginning?

IF they did not change the projected rate of return to a realistic rate, they still will run out of money even if all the retires before the 2003 decision, finally die.

[V8 Vega]

Obviously 100 year old and senile Brown figures if he just ignores it he will be out of office soon.

[expatCA]

Originally Posted by payutenyodagimas

all govt employees should only have SS and 401k equivalents. that way, govt employees don't have the incentive to stay with govt. work in any industry and when you get burned, move to the private sector w/o thinking about the pension entitlement if you have worked for 5 years in govt

Too late.