The upcoming pension crisis

originally posted by: JAGStorm
In Illinois they were talking about it at least 25 years ago! Imagine that. If they started forcing government workers on a 401K style system 25 years ago maybe this could have been solved, if at the very least reduced.

The biggest problem with pensions (government or private sector) is that there's a single point of failure with the entity that manages it. You don't get away from that with a 401k, but there are more entities managing them, so when a single one fails, fewer people are effected.

Honestly, the concept of expecting that everyone will invest wisely enough to be self sufficient in retirement is absurd. Social Security should be funded adequetly such that it can function as the primary source of income for most people at retirement age. Savings and investments are still good, but that should be supplemental. We have the idea backwards right now.

originally posted by: Fools
The thing is this (and this does affect me personally as my wife is a public school teacher) is that politicians brought this into being in most cases and made their political class the overseers of it all. Somewhere in the last 50 years or so they decided that this was no longer a private fund but a public fund. As a public fund its worth can be raided to support other "inniatives" . Of course this was always a lie. Was and will be forever. I would imagine in some world there will be a citizen class that demands accountability, but it doesnt seem like that happening anytime soon.

That's what happens when you ask for tax cuts. Revenues still have to be maintained, which results in taxes being taken from elsewhere. Sometimes it's an increase in sales tax, sometimes it's a fund being used to make up the shortfall.

originally posted by: Aazadan

originally posted by: Fools
The thing is this (and this does affect me personally as my wife is a public school teacher) is that politicians brought this into being in most cases and made their political class the overseers of it all. Somewhere in the last 50 years or so they decided that this was no longer a private fund but a public fund. As a public fund its worth can be raided to support other "inniatives" . Of course this was always a lie. Was and will be forever. I would imagine in some world there will be a citizen class that demands accountability, but it doesnt seem like that happening anytime soon.

That's what happens when you ask for tax cuts. Revenues still have to be maintained, which results in taxes being taken from elsewhere. Sometimes it's an increase in sales tax, sometimes it's a fund being used to make up the shortfall.

OMG this is the dumbest thing I have ever read.. I would imagine that since pensions ALL pensions invest in the stock market and in bonds that if businesses are doing better via tax cuts and thus their stock valuation as well as possible increases in their dividend amount per quarter - then the pensions value actually goes up. Taxes going down are actually a Godsend to any pension fund.

Pensions have been losing money because of early retirement ages combined with longer lives. Basically there comes a point where there is more going out than coming in.

I sort of tricked you by making a mockery of "public" pensions but they are still investing in the market and thus a tool of capitalism no matter what anyone has told you before.

originally posted by: Fools
Taxes going down are actually a Godsend to any pension fund.

Until of course, they get raided to make up budget shortfalls.

originally posted by: Aazadan

originally posted by: Fools
Taxes going down are actually a Godsend to any pension fund.

Until of course, they get raided to make up budget shortfalls.

You may have a point there. I wonder what the record of pension raiding actually is. I mean I know it happened during the depression and after world war 1. I don't know if it has literally happened after that. But I think its worthy of looking into.

Anyway the two that I am talking about were strictly federal pensions. But assuming that I bet that Illinois Teachers Pension has probably been raided in some sort of stealthy way.

a reply to: Fools

Wait are you suggesting that there is no unfunded pension liabilities?

Who's paying all the pensions if its not debt or tax payer money?

a reply to: Fools

Let's say that everything has been on the up and up, and there has been nothing shady going on (although it's Illinois of course there are shady things going on, but nevermind)

If you just look at the math it is unsustainable, it's underfunded. What the pension did not account for is three main things,

#1 people retiring in their 50's (over 60% retiring at this age with full benefits!)
#2 people living much much longer
#3 #1 & #2 x generous cost of living adjustment

Ok, so it's underfunded, but the main problem is that they have done absolutely nothing about it while knowing the problem for years/decades, and they keep kicking the ball the down the street. So now the question will be, who is going to bail out this mess? The Illinois taxpayers, or all taxpayers?

originally posted by: toysforadults
a reply to: Fools

Wait are you suggesting that there is no unfunded pension liabilities?

Who's paying all the pensions if its not debt or tax payer money?

Not suggesting that. Stating the fact that the pensions are funded by the employees. Then the pensions are managed by the pension holding company that in turn invests the money that the pensioners pay into the fund. The hope being that the investments will return enough money to pay for the pension promises to the employees.

The problem comes in when as listed that there is more going out than coming in. One of the reasons why as I get older I am glad I am in my own IRA and 401k. If it fails it is my fault for not properly managing it. Anyway, no tax paid money goes into any pension as far as I know. I think some outifits like rail companies struck deals with the fed where they dont have to pay Social Security and instead pay into a railroad pension but that probably isn't related to your question.

My understanding is that a pension is in fact like a group IRA that is managed by the pension holding company with no input from the payees as to how the fund is managed. It doesn't have much to do with taxes or taxes as funds as far as I know. Of course since I am not an expert I could be wrong.

The illinois Teachers Pension (along with many other states) is underfunded. So maybe the state government is left holding the bag in responsibility but knowing illinois there is probably a quid pro quo.

a reply to: Fools

Hope I didn't misunderstand you, but in the case of Illinois, The teachers pensions are NOT funded by the employees!


www.illinoispolicy.org...

most of these districts don’t require their teachers to contribute anything toward their own retirement Instead, the contributions are paid for or “picked up” by school districts – and by extension, local taxpayers.

originally posted by: JAGStorm
a reply to: Fools

Hope I didn't misunderstand you, but in the case of Illinois, The teachers pensions are NOT funded by the employees!


www.illinoispolicy.org...

most of these districts don’t require their teachers to contribute anything toward their own retirement Instead, the contributions are paid for or “picked up” by school districts – and by extension, local taxpayers.

Wow, what a deal for them. In Missouri the teachers and school district employees pay into it. And quite a bit too. But in the end I think my wife will be able to retire at the age of 53 (30 years of service) with I believe 90% pay and the same medical for some amount of time.

What in the hell is with Illinois and people that work for that state? Why do the state workers have this opinion that they are owed so much? I mean I know the unions there are bizarrely corrupt but how would have anyone thought that a state funded pension ever be successful in the long run?

a reply to: Fools

Right, what a sweet deal, but in the end will it be when there is no money?

Isn't that crazy town!! Yes I lived in Illinois for many years, left about a decade ago and haven't looked back.
I feel so bad for friends and family that decided to stay. Many are stuck now. The property taxes are getting so bad that for many it is more than their mortgage. For working folks it is a struggle, for retirees it is dire situation.

a reply to: Fools

So whos paying the unfunded pensions?

Most state and even trade pensions have unfunded liabilities.

Does someone making 100k a year put enough money into a pension to acquire an 80k a year pension for 25 years?

Also, is it really only the money that you put in or does the government contribute x amount of money to the fund?

And why do you think you have the riggt to force me to pay higher taxes to fund your retirement?

So whos paying the unfunded pensions?

I think it varies on the state. I wonder how many public sector pensions are under funded? Probably many of them.

Does someone making 100k a year put enough money into a pension to acquire an 80k a year pension for 25 years?

I have no idea. You also should consider the money the pension made on the market during the same time. I mean how much unfunded pension portfolio's have gone into the black since the Trump explosion on the market? I have no idea but it would be interesting to know. Wish I had the numbers or knew where to get them. Funny thing that all these union people want to be socialist but expect the gravy retirements courtesy of the stock market as well as it seems (in some areas) the tax payer.

Also, is it really only the money that you put in or does the government contribute x amount of money to the fund?

It is in Missouri. Obviously it is not in Illinois - which is awful. Keep voting Democrat Chicago!

And why do you think you have the riggt to force me to pay higher taxes to fund your retirement?

I don't, my apologies if I gave that impression. For me, in my state it doesn't seem to be the case.

a reply to: Fools

www.businessinsider.com...


This is why we can't afford healthcare offer college tuition benefits cant get the roads paved why our cities cant even collect garbage anymore

originally posted by: toysforadults
a reply to: Fools

www.businessinsider.com...


This is why we can't afford healthcare offer college tuition benefits cant get the roads paved why our cities cant even collect garbage anymore

If I had my way, SS and Medicare would be ended. People paying into those programs under 5 years would be excluded and asked to invest their own money. People over 5 years would be allowed their promised benefits until death. But we know that isn't going to happen - or anything like it.

Too many people believe in welfare systems. They think they work. I sometimes wonder if the Fed was actually created to keep the facade alive and well as long as possible. Anyway, it will be some ugly times when those systems start to fail and people stop getting their "paychecks".

I was hoping that someone or some sort of solution could be had but other than saying its over and cutting the youngest working generation off from failed promises - I have no real idea what to do about it.

I'm blessed to be the member of 2 unions. I trust them to keep the pension funds safe more than any corporate funded plan .

a reply to: olaru12

I wouldn't be so sure about the Unions either:

money.cnn.com...


There is only one retirement fund that is certain, one that you control, that you can liquidate quickly or already have in hand. That's it, everything else is vulnerable.

a reply to: Fools

It is a facade, but that facade is going to explode real soon. People don't realize how fast this is happening.
It is happening. It will first be the states I mentioned. It will soon leak into the other state then the US as a whole, mark my word.

I was hoping that someone or some sort of solution could be had but other than saying its over and cutting the youngest working generation off from failed promises - I have no real idea what to do about it.

Our system is flawed, we can't be half socialist half capitalist. It only works if you are 100% one or the other.
My elderly in law told me she didn't want to pay for schools since all her kids were out now, I told her well all of us don't want to pay for medicare. That sure made for an interesting holiday dinner. That is exactly what is happening with the pensions, we are paying for others mistakes and there will be nothing left, yet will will still have to pay into a broken system. Let's face it, our kids will basically have to work until death at the rate things are going.

originally posted by: JAGStorm
a reply to: Fools

It is a facade, but that facade is going to explode real soon. People don't realize how fast this is happening.
It is happening. It will first be the states I mentioned. It will soon leak into the other state then the US as a whole, mark my word.

I was hoping that someone or some sort of solution could be had but other than saying its over and cutting the youngest working generation off from failed promises - I have no real idea what to do about it.

Our system is flawed, we can't be half socialist half capitalist. It only works if you are 100% one or the other.
My elderly in law told me she didn't want to pay for schools since all her kids were out now, I told her well all of us don't want to pay for medicare. That sure made for an interesting holiday dinner. That is exactly what is happening with the pensions, we are paying for others mistakes and there will be nothing left, yet will will still have to pay into a broken system. Let's face it, our kids will basically have to work until death at the rate things are going.

Here is another issue for you to consider - how has the influx of illegal immigrants affected this purse? Are these non-citizens getting money and treasure otherwise earmarked for existing legal citizens? Are they helping to drain the tub? Are they adding to the future misery? A while back I noted that the states with the largest deficits were also the ones that had the largest illegal immigrant population.

BTW, great comment to your in law.

a reply to: JAGStorm

"Our system is flawed, we can't be half socialist half capitalist. It only works if you are 100% one or the other. "

But so many people tell me that we should be more like Europe where apparently that works flawlessly. In my mind the only country in Europe to learn from is Switzerland. All others have been marching to the tune of Bismarks deceptive programs since the 1890's - in some form or another.