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It looks like some of may be in for a fight. There's no money to continue the sweet deal of yearly raises into pensions guaranteed to some state retirees. Colorado is trying to plan for the future, but some retirees have filed legal action against the law they passed.
Battle Looms Over Huge Costs of Public Pensions - Yahoo! Finance (http://finance.yahoo.com/news/Battle-Looms-Over-Huge-Costs-nytimes-252868470.html?x=0&mod=pf-retirement - broken link)
What should these states do? Continue to honor what they said they would pay and possibly bankrupt the state where no one has anything or default on the promise of raises to retirees' pensions?
Tough call, but why should I pay for a retiree's pension if we're out of money? Go back to work or rely on SS.
whoever cooked up and/or agreed to such lavish benefits should be taken to task. no, that won't pay the bills, but it needs to be done anyway.
at some point they're going to have to renegotiate these pensions, there's no other way-although, as you note, some pensioners would sooner see the states spend themselves into bankruptcy first.
Tough situation. My city is also facing a similar issue with our police and fire dept pensions that are ready to bankrupt the city. If they don't renegotiate they won't have any pension at all when the city is bankrupted.
Public employees need to be moved off pensions and on to 401k or similar plans. Pensions obligate future generations of taxpayers to pay for services provided to their parents and grandparents. This isn't right. Either move to a 401k funded as these services are provided by government employees, or contract the work to private companies, where the company is on the hook for agreed-upon pensions.
If a city/county declares "bankruptcy", what happens to pension obligations?
It's not my state, but this type of thing will happen elsewhere. If it were my pension I'd most certainly be mad and disappointed, but I'd rather fore-go the raise than have than bankrupt the state. It's a tough call. A promise is made, but no delivery.
LOL, in my day and age there is no such thing as a pension, but that isn't the fault of the previous generation. I feel for them, but they did get a sweet deal and it sucks there's no money to deliver. It's 401(k) or nada. Even funnier.......our retirement is basically a crap shot, hehe. A gamble. The market...yee-ha. You have to laugh because what else can we do?
Pensions can NEVER be legitimate... you CANNOT promise the future because you CANNOT see into the future... those who participated in this sham are no less accountable, reduce their pensions now! Ignorance about the shady deals promising you the future should not be enforceable in these circumstances... I feel NO pity for people who try to take advantage of the taxpayers and it backfired on them...
Pick up a copy of "While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis" by Roger Lowenstein.
Among other things, you'll learn why public employee pensions can never be reduced - even if the union agrees (decided in the courts many years ago). Even if a city goes bankrupt (a state cannot go bankrupt).
In the final years of GM's pre-bankruptcy, guess what its largest supplier was. A steel company? Nope. Auto parts supplier? Nope. It was Blue Cross - for gold plated medical for the UAW retirees.
Unlike the private sector, the pensions for public sector employees do not have to conform to ERISA (Employee Retirement Income Security Act of 1974 as amended) requirements for actuarially sound financials - so cities and states routinely underfund the pension, because funding it properly might require an increase in taxes or a decrease in services, both of which are unpopular. So they just kick the can down the road to the next administration or election cycle. A $10 million problem in San Diego in the early 1990s has thus mushroomed into a multi-hundred-million-dollar problem today.
This is going to get ugly, real ugly.
Once one first one goes down..the rest will soon follow.
Private companies got out of the pension business.
At my company they went through transitions based on age/time in service until now they have no pension for new hires and just throw a bit more into the 401K.
From defined benefit plans to cash balance plans and now no plan.
The question is..why didn't governments follow the corporations in weaning off the pensions ?
Oh, yeah, it will get ugly. Because there is a large population of people that wanted to make sure that the insurance companies retained the right to screw everyone and NOW that you have that, the very same people are out to destroy everything else. And guess who benefits from a 401K? Not the vast majority of people that have them. Because underneath this entire argument that is getting ready to be staged.....will be he who profits most from it.
And as long as we are scrapping down here then you aren't paying attention to what is really going down. We will be divided. And if we are divided, we won't stand a chance in hell.
Pay these people.
The whole reason that even in the middle of complete and total insanity, with each election, through good and bad they stayed on is so that when they retired they would survive. That was the responsible thing to do.
They acted responsibly. They did their duty. Often, in unpaid overtime. Often at the expense of the family. Responsibility. And often, keeping their mouth shut even though the media and the people were off on some trip. Now, it is in the hands of the people to act in a responsible manner.
In my state, mine is already in a 401K. I just watched people lose everything that they had invested over 25 years. Why? Because they don't work in the stock market. Cool, eh?
If I wanted to gamble, I would go to a casino. The people that you want to nail in the higher echelons will not only remain unscathed but will profit.
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