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Interesting read on Detroit's underfunded pensions and the problems that the Union had in causing it: The Looting of Detroit
Highlights:
-Detroit workers don't make any contributions into the pension.
-Detroit gave out generous 13th month checks around the holidays, which lost surpluses in good years that were needed to offset the bad years.
-Detroit's pension promises are not likely to come true based on what $ set aside and how much $ they promise to give back.
-Detroit pays a generous pension, the weighted down average of $20K includes many people who only work for a few years then leave employment.
-Detroit offers a supplementary defined retirement program like a 401K - where the employees contribute, but the city guarantees a 7.9% rate of return to the employee.
-Detroit would give out bonuses on top of the guaranteed 7.9% rate of return in bad years, so the workers were getting above a 7.9% rate of return even when the accounts lost money.
-Detroit borrowed money through bonds to make the pension appear more adequately funded.
-Union members run the board of trustees and would refuse to balance the pension books and stop giving out bonus payments.
The worker's unions supported this poor policy and the union refused to allow it to be fixed. How much blame belongs to the workers for not telling their union to be responsible?
Detroit/Michigan isn't alone with huge unfunded liabilities for public employees. Last I checked only one state, Wisconsin, had fully funded public pension plans. Both parties gave the store away for votes. They are leaving taxpayers holding the bag to pay for their "generosity" when they would all be safely six feet under.
Detroit/Michigan isn't alone with huge unfunded liabilities for public employees. Last I checked only one state, Wisconsin, had fully funded public pension plans. Both parties gave the store away for votes leaving taxpayers holding the bag to pay for the elected officials' "generosity" when they would all be safely six feet under.
Alaska's retirement system's doing very well... thanks to Palin.
Detroit/Michigan isn't alone with huge unfunded liabilities for public employees. Last I checked only one state, Wisconsin, had fully funded public pension plans. Both parties gave the store away for votes. They are leaving taxpayers holding the bag to pay for their "generosity" when they would all be safely six feet under.
Federal law doesnt equire fully funded pensions, in neither public, nor private enterprises.
Michigan won't be the only place with these problems when it's all said and done.
Nope, long ago the private economy went to the 401K. Kinda sucked for me I would have reached my 85 points needed to get my pension with 60 percent of my former pay from Union Carbide last year. Of course Union Carbide is history and company pensions are headed in that direction. Public employees are just now beginning to undergo what us private company employees have been undergoing for 30 years.
Anyone want to explain how the Social Security trust fund is any different?
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