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Old 05-26-2009, 03:29 PM
 
31,028 posts, read 37,125,870 times
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Quote:
Originally Posted by GreenGene View Post
Also from 2006:

Stephen Barr - Retirement Fund Tapped to Avoid National Debt Limit - washingtonpost.com

"The Treasury Department has started drawing from the civil service pension fund to avoid hitting the $8.2 trillion national debt limit. The move to tap the pension fund follows last month's decision to suspend investments in a retirement savings plan held by government employees.

"In a letter to Congress this week, Treasury Secretary John W. Snow said he would rely on the Civil Service Retirement and Disability Fund to avoid bumping up against the statutory debt limit. He said the Treasury is suspending investments and will redeem a portion of the money credited to the fund."

And...

"The civil service trust fund will provide the Treasury with several billion dollars for extra borrowing. The fund had an estimated balance of about $655 billion at the start of the year, but only a small portion of that is available to the Treasury because of the statutes restricting the fund's use during "debt issuance suspension" periods."
All state pension funds have a significant balance. The issue is the relationship of that balance to long term expenditures. Thus the concept of underfunded. SS and Medicare each have a big balance but projected out that balance eventually becomes negative. Thus the concept of underfunded.
Government pension funds aren't broke but underfunded based on long term needs measured against long term resources. I am a public pensioner and a big supporter of but the issues are the issues and we all need to be aware of and plan accordingly. I am not making long term planning assumptions about getting a COLA ever as they begin to become fiscally questionable. We are on the same side but this is a political hot potato.


http://newsburglar.com/2009/04/07/so...-fund-balance/

Last edited by TuborgP; 05-26-2009 at 03:44 PM..
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Old 05-26-2009, 03:42 PM
 
Location: Central Maine
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Well, we're a bit off topic, so I'll make this my last post. I appreciate the links you provided, especially the one to the Congressional Research Service Report. The last few sentences of that report's conclusions:

"At present, there is no looming financial crisis facing either CSRS or FERS. According to the actuaries of the Office of Personnel Management, both programs will have sufficient budget authority to meet their obligations for the indefinite future. This will provide the Congress with adequate time to consider fully the benefits and drawbacks that could arise under various reform proposals."
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Old 05-26-2009, 03:45 PM
 
Location: DC Area, for now
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Like I said, if they default on the Fed pensions, nobody's money will be worth anything. Probably not even foreign holdings since as we have seen our troubles ricochet around the world. That would be a collapse that would dwarf the Great Depression.

When they borrowed from the govt employees, they borrowed against the TSP G fund only and replaced the money shortly thereafter with interest. They have done that a few times. This is not the same money as our pension funds. The FERS pension fund is the same as the CSRS - FERS just gets half of the pension since they get SS payouts which is yet another pot.
Congress has never retroactively taken earned benefits away. The laws at the time of the benefit was earned still govern that portion. They may change the future benefits from date x forward, but they honor the existing earned benefits. They will print money or borrow yet more to cover the payouts. They really can't do anything else. That's why so many fat cats fled to T bills last fall. Govt pensions are a drop in the Fed budget bucket. Even the extreme far right Bush adminstration just kept borrowing to cover the losses.

What you are saying is that because so many companies stole the earned benefits of the private sector workforce that the Fed govt should steal the Fed's benefits too. That is a childish and vindictive idea that will solve nothing. Besides, Congress' own pensions are tied up in the Fed pension system. They won't retroactively plunge retirees into poverty with no safety net (unlike the rest of the population has with SS).

The way forward is to address the private sector retirement failures and figure out what we are going to do in the future since the existing system collapsed.
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Old 05-26-2009, 04:53 PM
 
Location: Central Maine
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OK, maybe one more post.
Quote:
Originally Posted by Tesaje View Post
Like I said, if they default on the Fed pensions, nobody's money will be worth anything. Probably not even foreign holdings since as we have seen our troubles ricochet around the world. That would be a collapse that would dwarf the Great Depression.
I agree.

Quote:
Originally Posted by Tesaje View Post
When they borrowed from the govt employees, they borrowed against the TSP G fund only and replaced the money shortly thereafter with interest. They have done that a few times. This is not the same money as our pension funds.
Yes, they've borrowed from the G Fund, but the article I linked to made a point of saying that, at that time, it was the civil service trust fund:

"In a letter to Congress this week, Treasury Secretary John W. Snow said he would rely on the Civil Service Retirement and Disability Fund to avoid bumping up against the statutory debt limit. He said the Treasury is suspending investments and will redeem a portion of the money credited to the fund.

"Once Congress raises the debt limit, the Treasury will "restore all due interest and principal" to the pension fund as soon as possible, Snow said. He made a similar promise when the Treasury announced that reinvestment of some assets in the Thrift Savings Plan's government securities fund, or G Fund, had been suspended."

Quote:
Originally Posted by Tesaje View Post
The FERS pension fund is the same as the CSRS - FERS just gets half of the pension since they get SS payouts which is yet another pot.
Contributions to FERS and CSRS both go into the same pot. However, the FERS basic annuity is 1% of the high-three average for each year of service. The CSRS basic annuity for someone like my wife, who retired at the earliest age possible for a "full" annuity (age 55) with the minimum number of years of federal service (30) is 56% of the high-three average. So, in terms of the basic annuity, FERS retirees get considerably less than CSRS retirees.

Quote:
Originally Posted by Tesaje View Post
Congress has never retroactively taken earned benefits away. The laws at the time of the benefit was earned still govern that portion. They may change the future benefits from date x forward, but they honor the existing earned benefits.
Yep, every Congress has proposals to scale back federal retirement benefits, from changing the high-three to a high-five, raising the employee contributions to the retirement fund, and so on. These proposals never go anywhere, but if they ever did, I would think they would apply to new employees, or current employees, and not former federal workers who are already retired.
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Old 05-26-2009, 05:12 PM
 
31,028 posts, read 37,125,870 times
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It is not a default it is change of benefits which happens in the private sector without a company collapsing. If it ain't funded it ain't funded and other areas are. The impact is on the pensioners and not the economy. In fact if it helps stabalize the budget it will be seen as a good thing. Remember something is going to have to go as current spending is not sustainable. It is just like the change they made to health care accounting by governments which has resulted in state and locals having to reduce health care benefits. One of the links identified things that were part of a bill previously introduced and defeated. One would hope that changes would not impact current retiree's as one hopes SS reform wouldn't. Two years ago saying no way would have been fully agreed on. However with the economy having been on the brink and the recession still in place a lot will depend on how soon a recovery begins how strong it is and how sustainable it is. Oh yeah and elections as always will be the biggest determinant
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Old 05-26-2009, 05:46 PM
 
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If boomers retire early, why would that affect SS ?

Since you only get to draw 75% ( comparing age 62 vs age 66) wouldn't the SS actually come out better cuz sometime around age 75 the early retiree loses.

In the long run, I would think SS would be better off if everyone drew at age 62 since the life expectency should save SS money.
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Old 05-26-2009, 06:27 PM
 
31,028 posts, read 37,125,870 times
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Quote:
Originally Posted by marmac View Post
If boomers retire early, why would that affect SS ?

Since you only get to draw 75% ( comparing age 62 vs age 66) wouldn't the SS actually come out better cuz sometime around age 75 the early retiree loses.

In the long run, I would think SS would be better off if everyone drew at age 62 since the life expectency should save SS money.
I think the immediate concern is that they are drawing at age 62 now which has them hitting the system sooner than later. Long term somewhere around 77 age for many of us it starts to work for them. However in terms of the immediate outlay it is causing them concerns. Also here is the most recent Trustee Report for 2009
Trustees Report Summary

Clock ticks louder on Medicare and Social Security | Money & Company | Los Angeles Times
As the trustees’ report notes:

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16% increase in the payroll tax (from a rate of 12.4% to 14.4%) or an immediate reduction in benefits of 13%, or some combination of the two.

Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

-- Tom Petruno

The above is from the link

Remember this is only year 2 of Boomers hitting 62 lots more to come.
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Old 05-27-2009, 12:56 AM
 
8,998 posts, read 13,022,943 times
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Quote:
Originally Posted by TuborgP View Post
One of the links identified things that were part of a bill previously introduced and defeated.
It wasn't part of a bill, it was an off-the-wall amendment to a budget resolution by an out-of-touch Republican Congressman which had no chance of passing for a variety of reasons. The amendmend proposed to completely freeze non-defense Government spending (what a wonderful idea in the midst of a recession!), make permanent President Bush's 2001 and 2003 tax cuts that are due to expire next year, reduce the corporate tax rate by a third, and completely eliminate the capital gains tax for the next two years. Oh, and to pay for this he wanted to reduce retiree benefits. Yeah, like that really had a chance in Hell of passing!

As someone who reads the Congressional Record every day, I can tell you that off-the-wall amendments are submitted to many, many bills all the time, when even the originator of the amendment knows that it has no chance of being agreed to. In most cases, it is done purely for political reasons, just so that they can later say that so-and-so voted or didn't vote for such-and-such.

I can state categorically that there are no current efforts in Congress to reduce Government benefits at this time. In fact, bills to enhance benefits are the norm write now. The most immediate change is legislation that will allow FERS employees to receive retirement credit for their unused sick leave. Enhancements to the TSP program, including the creation of a ROTH TSP for current employees, are also in the works. Other legislation that is in the works, but faces more of an uphill battle, are bills to cutback or eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) provisions of Social Security that affect CSRS retirees.
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Old 05-27-2009, 12:08 PM
 
31,028 posts, read 37,125,870 times
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Quote:
Originally Posted by MadManofBethesda View Post
It wasn't part of a bill, it was an off-the-wall amendment to a budget resolution by an out-of-touch Republican Congressman which had no chance of passing for a variety of reasons. The amendmend proposed to completely freeze non-defense Government spending (what a wonderful idea in the midst of a recession!), make permanent President Bush's 2001 and 2003 tax cuts that are due to expire next year, reduce the corporate tax rate by a third, and completely eliminate the capital gains tax for the next two years. Oh, and to pay for this he wanted to reduce retiree benefits. Yeah, like that really had a chance in Hell of passing!

As someone who reads the Congressional Record every day, I can tell you that off-the-wall amendments are submitted to many, many bills all the time, when even the originator of the amendment knows that it has no chance of being agreed to. In most cases, it is done purely for political reasons, just so that they can later say that so-and-so voted or didn't vote for such-and-such.

I can state categorically that there are no current efforts in Congress to reduce Government benefits at this time. In fact, bills to enhance benefits are the norm write now. The most immediate change is legislation that will allow FERS employees to receive retirement credit for their unused sick leave. Enhancements to the TSP program, including the creation of a ROTH TSP for current employees, are also in the works. Other legislation that is in the works, but faces more of an uphill battle, are bills to cutback or eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) provisions of Social Security that affect CSRS retirees.
Yes you are very correct. My point and remember we don't want to change the focus of this thread is that the congressman in question is a presidential contender in 2012/beyond and is one of the leading economic thinkers of his party and their think tanks. It is reasonable that those of us who have just retired or will be retiring will see and EXPERIENCE several shifts in thinking within Congress and the Executive Branch as our economy plays out in future years.
http://www.heritage.org/Research/Soc...ity/wm1958.cfm

http://www.jsonline.com/news/statepo.../43705712.html
"It's fairly unusual," says Weber of Ryan's rise. "Most members of Congress do not choose to become influential by knowing more than anybody else, which is what he's done."

House Republican Whip Eric Cantor calls Ryan "very central" to defining the party's economic vision.

"We had been so timid on entitlement reform, on tax reform as a party. We shied away from these issues because we were fearful of the Democrats demagoging us  . . .  and I was getting tired of that," Ryan says about his alternative budget, rejected by Democrats and by about one-fifth of Ryan's fellow House Republicans.

"I wanted to do my part to move us in that direction. I mean I just put out a budget (in which) I touched all the entitlements!" he says. "You know what? We've got to do that!"

Ryan's fondest ambition in the House appears to be the chairmanship of Ways and Means, which writes the tax laws.

"I have a really good shot," he says, if and when his party returns to power.

The above is from the link

Last edited by TuborgP; 05-27-2009 at 12:19 PM..
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