Illinois set us up the pension bomb

[bernorange 8362]

Yeah, so Illinois kicked the can a little bit, but the problem not only hasn't gone away, it's growing much, much worse.  It's like a parallel for the global debt issue that some peeps like to think was resolved after 2008.

Quote

Three years ago Tuesday, the Illinois Supreme Court struck down the state's attempt to cut its employees' pension benefits to chip away at a retirement-system debt that's swelled to almost $11,000 for every man, woman and child.

Since then, Illinois's credit rating was downgraded to the verge of junk, its bonds have tumbled and its largest city, Chicago, was stripped of its investment-grade status by Moody's Investors Service. And Gov. Bruce Rauner, R, and the Democrat-led legislature have made no real progress toward a new plan that doesn't violate the state constitution's ban on reducing benefits.

"Illinois failure to address its pension crisis has resulted in further deterioration of the state and cities' financial condition, exorbitantly high borrowing costs, and an inability to address other critical needs at the state and local level," said Laurence Msall, president of the Civic Federation, a Chicago nonprofit that tracks state and municipal finances. "Time is not your friend when your liabilities are compounding and your revenues are not."

The funding shortfall across Illinois's five retirement systems climbed to $137 billion by last June, a jump of about $17.8 billion since 2015, after the government for years failed to made adequate contributions. That pension deficit -- more than four times larger that its debt to general-obligation bondholders -- is adding hundreds of millions of dollars in costs to Illinois's budget each year as the government plows more money in to catch up.
...
Even as the state is set to pay $8.5 billion to the five retirement systems in 2019, it's still not enough. Unfunded liabilities keep growing. And the 2019 contribution is more than three times the state's payment a decade earlier: Illinois paid $2.8 billion to pensions in 2009. By 2045, the projected contribution will be $19.6 billion, according to a March report, based on actuarial valuations.

Illinois has actually made the problem worse since its highest court's ruling in 2015. In the past, if a pension fund's assumed rate of investment return got lowered, the state would step up its contribution. But last year lawmakers approved so-called smoothing, allowing the state to phase in hundreds of millions of dollars of those increased contributions. It helped the state ease its budget shortfall temporarily but will be costly over the longer term.

The longer the state doesn't address the pension crisis, the closer Illinois gets to taxes that are overly burdensome, to credit downgrades, to not paying pensions or even bond defaults, said Richard Ciccarone, president of Merritt Research Services.

... The state cannot grow its way out of this problem, Martwick said.
...

More:  http://www.chicagotribune.com/business/ct-biz-illinois-pensions-20180509-story,amp.html

(bold emphasis is mine - I like that quote)

The Chicago Fed floated a proposal.  It appears to have gone over like a lead balloon...

Quote

An audible gasp went out in the breakout room I was in at last month’s pension event cosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.

Evidently, that wasn’t reality-shock enough. This week the Chicago Fed published that proposal formally. It’s linked here.

It surely ranks among the most blatantly inhumane and foolish ideas we’ve seen yet.
...

More:  http://www.wirepoints.com/chicago-feds-answer-for-illinois-pension-crisis-is-a-statewide-property-tax-wirepoints-original/

Since the math is inescapable, I predict that Illinois will at some point amend their constitution to allow a reduction in benefits and the unions will howl as they gut the system.

[TwiceHorn 31506]

So a 1% property tax increase to cover existing debt is inhumane and foolish?  What does that make Robin Hood, then?

[ChickenSandwich 9843]

Make it a sales tax increase instead and then it’s even. 

[Anastasis 23477]

24 minutes ago, bernorange said:

Since the math is inescapable, I predict that Illinois will at some point amend their constitution to allow a reduction in benefits and the unions will howl as they gut the system.

Put my money on a federal bail out. 

[Dolemite 143]

Property tax is already 5% of appraised value in some areas of Illinois.  5% property tax, 3-5% mortgage interest. Insurance etc. Why own a home in Illinois? 

[Elvis Presto 21]

11 minutes ago, Dolemite said:

Property tax is already 5% of appraised value in some areas of Illinois.  5% property tax, 3-5% mortgage interest. Insurance etc. Why own a home in Illinois? 

Why live in Illinois at all?  Chicago is a fun town to visit but it aint worth that money and the rest of the state is a farm field.  If you live in Moline why not move to Iowa?

[Armybrat 40851]

[bernorange 8362]

That chart is 2 years old.  Would be interesting to see an update with current numbers.

[Incredulity 11675]

1 hour ago, Dolemite said:

Property tax is already 5% of appraised value in some areas of Illinois.  5% property tax, 3-5% mortgage interest. Insurance etc. Why own a home in Illinois? 

Especially with the State and Local tax deduction limitation.  There is going to be some big time ass puckering April 15 2019

[DaysOff 7958]

Can't give you what I don't have. Every airline employee has had their pension wiped out post 911, but public sector employees are delicate flowers that need their promises kept. Learn to shove money under the mattress for your old age like everyone else.

[David Dennison 18925]

21 minutes ago, Incredulity said:

Especially with the State and Local tax deduction limitation.  There is going to be some big time ass puckering April 15 2019

Thanks, Donald.

[Johnny Sack 8397]

22 minutes ago, David Dennison said:

Thanks, Donald.

Those rich folks should be glad to pay their fair share.

[PittsburghTiger 6192]

I think this study came out a few years back. It's gotten much, much worse.

https://www.illinoispolicy.org/reports/whats-driving-illinois-111-billion-pension-crisis/

 

Some of the biggest drivers include the following facts:

• 60 percent of state pensioners retired in their 50s, many with full pension benefits.
• Over half of state pensioners will receive $1 million or more in pension benefits over the course of their retirements. Nearly 1 in 5 will receive over $2 million in benefits.
• Almost 60 percent of all current state pensioners can expect to spend 25 or more years collecting benefits, based on approximate actuarial life expectancies. Due to automatic, 3 percent compounded COLA benefits, those pensioners can expect to see their annual pension benefits double in size.
• The average career pensioner – retired after Jan. 1, 2013, with 30 years of service or more – receives $66,800 in annual pension benefits and will collect over $2 million in total benefits over the course of retirement.
• The average career pensioner will get back his or her employee contributions after just two years in retirement. In all, pensioners’ direct employee contributions will only equal 6 percent of what they will receive in benefits over the course of their retirements.

Edited May 14, 2018 by PittsburghTiger

[Sbbruin 21861]

1 hour ago, Armybrat said:

We're Number 1!!

The public pension liability is crushing state and local budgets out here.  Skyrocketing property values are masking an inevitable collapse.

[Incredulity 11675]

That graphic really should be per capita, right? or percentage of state revenue?

Edited May 14, 2018 by Incredulity

[Armybrat 40851]

1 hour ago, bernorange said:

That chart is 2 years old.  Would be interesting to see an update with current numbers.

Texas is getting worse.

[Nice Guy Eddie 13515]

27 minutes ago, Incredulity said:

That graphic really should be per capita, right? or percentage of state revenue?

It would help point out the problem better if displayed in that manner.  Big surprise that CA ha the "biggest" unfunded pensions.    Props to NY for keeping their's low but I don't know if this chart is state-only or includes municipal #s as the chart's data source isn't labeled.  Which could also mean the numbers are false.

Any pension issue almost always has to be kicked down the road somewhat but hopefully there is a plan to get it back on track with combinations of lowering future benefits and how to increase funding.   I know Houston's recent changes claim to have addressed it in this manner.  

Edited May 14, 2018 by Nice Guy Eddie

[Aqua Buddha 14598]

24 minutes ago, Armybrat said:

Texas is getting worse.

Every state is getting worse.  Unfunded pensions and health care costs are eating up all the state budgets.  There's been almost no growth on any other line items.

[Macanudo 12990]

Whenever this comes up, I think about CALPERS and how those idiots think they can secede and everything will be peachy keen.

[David Dennison 18925]

2 hours ago, Sbbruin said:

We're Number 1!!

The public pension liability is crushing state and local budgets out here.  Skyrocketing property values are masking an inevitable collapse.

Oh, Prop 218.

[workswithseed 2112]

4 hours ago, Armybrat said:

Texas is getting worse.

https://www.texasmonthly.com/politics/towering-debts/

Last November, the financial analysts at Moody’s issued what was, for many, a troubling report. It included the fifteen U.S. cities with the largest unfunded pension liabilities—to put it in English, the money missing from city coffers that’s supposed to pay retirement benefits to police, fire, and other city employees, not just today but down the road. Of the fifteen cities, Chicago topped the list, and San Francisco was fifteenth.

For those of us in Texas, with our gloriously high credit ratings and fervent allegiance to low taxes, restrained spending and conservative oversight of a robust Rainy Day Fund, the news that certain big cities around the country were in a heap of trouble might have elicited nothing more than a collective, if somewhat condescending, shrug. Except for one thing: Texas’s four biggest cities were all high on the list. Dallas, which came in second, is on the hook for $7.6 billion, about five times the amount of its total operating revenues. Houston was fourth, with a $10 billion shortfall—equal to four times its operating revenues. Austin, at number nine, has $2.7 billion in liabilities, and San Antonio, ranked number twelve, is $2.3 billion short. That seems like very bad news for just about any Texan. Particularly since the vast majority of Texans now live in urban areas. How can a state known for fiscal responsibility have so many cities with empty pockets?

Let’s start by asserting that this isn’t just a Texas problem. Pension systems are causing fiscal havoc across the country. And only a handful of experts really understand the problem. Words like “pension” and “unfunded liabilities” tend to have a Sominex-like effect on most people—that is, until said people are personally affected. Pensions have been used to attract and retain skilled workers for dangerous or relatively low-paying public-sector jobs. If you are a police officer, a firefighter, or a municipal employee, your city grants you a generous, and in some cases more than generous, retirement compensation for the years you devoted to, or risked your life for, the citizens of your community. Traditionally, that has meant an old-fashioned pension, a guaranteed paycheck for the rest of your days.

If, on the other hand, you are an ordinary citizen, who expects that trash will be picked up, potholes filled, and, yes, that police and firefighters will show up when summoned, you might be unhappy about more and more of your tax dollars going not to city services but to pay the pensions of retired city employees. That has happened because, nowadays, there just isn’t enough money to cover it all. Over time, Texas cities have tried to save themselves by betting on everything from higher oil prices to ever larger population growth to higher rates of return to somewhat confounding Hail Mary investments, but such Texas-size optimism hasn’t worked out. The holes keep getting deeper.

Each time city officials have confronted unpleasant but more realistic solutions—raising taxes, cutting services, or trying to persuade city workers to take less money or accept a different kind of retirement plan, like a 401(k) instead of a traditional pension—they tend to end up chickening out. The result has been growing liabilities and still less money for services, and the very real prospect of bankruptcy. In other words, just beyond the soporific verbiage of a looming fiscal disaster is a simple financial problem so politically thorny that finding a solution has, so far, been nearly impossible.

 

For instance, many people outside of Dallas were shocked to see a story on the front page of the New York Times in November with the unfortunate headline “Dallas Stares Down a Texas-size Threat of Bankruptcy.” After all, Dallas has maintained a superlative reputation for fiscal responsibility and civic good since it started retooling its reputation after the Kennedy assassination. Dallas was supposed to be a city of stability and seriousness, of corporate headquarters and gleaming mega-churches. Its current mayor, Mike Rawlings, is a former CEO of Pizza Hut.

But, as the Times explained, what’s happened in Dallas is an “extreme example” of what’s happening around the U.S. Workers were promised generous pensions years back, and the city’s attempts to cover those payments as they grew became more and more desperate, bordering, finally, on the bizarre, and possibly the criminal (Rawlings has called in the FBI and the Texas Rangers to investigate mishandling of the pension fund). If it weren’t tragic, it would make for dark comedy.

And the bumbling extends well beyond city hall. Cities must pay the pensions, but it’s the Legislature that makes and approves the rules for the city systems. Back in 1993, when Dallas was trying to keep experienced police and firefighters from leaving for better-paying jobs elsewhere, lawmakers allowed for generous pension boosts, promising 8.5 percent interest paid yearly to individual savings accounts once workers reached the ripe old retirement age of fifty. To keep this up, legislators required Dallas to freeze its pension contributions at 36 percent of the police and firefighters payroll. It was an article of faith that Dallas would keep growing and that those new tax dollars would continue to fund the retirement accounts. It was also believed—fervently—that the payroll would grow by 5 percent and that the pension fund would earn 9 percent annually on its investments. The Texas Pension Review Board and the plan’s actuarial firm were uneasy about the idea—when was the last time one of your investments earned a guaranteed 9 percent—but the Legislature okayed it.

The market proved too volatile to earn such high returns consistently. The economy took a downturn with the bursting housing bubble and the like. Suddenly earning 9 percent on the Dallas police and firefighters’ pension accounts was looking pretty tough. And pensioners found themselves at the mercy of fund managers and pension board members who were not exactly financial wizards, or even civic-minded. The Dallas pension fund started investing in various real estate deals in Dallas exurbs like Hawaii, Australia, and Uruguay. These investments required plan officials to make crucial, in-person inspections of their properties over the years, with stopovers in places like Zurich and Abu Dhabi, at a cost of around $1 million in travel expenses alone. That was small potatoes compared with the $32 million in management fees billed in a single year (2011).

Then there was the Museum Tower debacle. It was supposed to be a super-special luxury high-rise, located in the much-vaunted Dallas Arts District in close proximity to the beloved Nasher Sculpture Center, designed by the unimpeachable starchitect Renzo Piano. How could you lose? The pension fund invested $20 million initially, but then, somehow, wound up shelling out $200 million for the whole development. At the same time, the height of the building doubled and the reflected glare from the glass sheath started threatening the priceless art in the Nasher, not to mention immolating its world-class landscaping. What followed was nothing less than class war—pitting the pensioners against the arts community—and the tower, struck with a serious case of PR cooties, had lackluster sales. Meanwhile, the value of all those other far-flung investments began to crash. Still worse, as this news reached the actual pensioners, they started withdrawing money from their funds to the tune of $500 million (they are allowed to do so by law).

If Houston’s problems are less colorful, they are no less severe. They too date back to a sweet deal given police, firefighters, and city employees in 2001 by then-mayor and former police chief Lee Brown and the state legislators who approved the munificent plan. But unlike Dallas, the problem of Houston’s $10 billion pension shortfall, as calculated by Moody’s, can be traced to simple denial. The phrase “kick the can down the road” has been applied to virtually every mayor since Brown made the deal; term limits have essentially allowed each one to apply quick fixes or small reductions until they were safely out of office. Former mayors Bill White and Annise Parker tried to get some help from the Legislature but were spurned.

Now the job has fallen to Sylvester Turner, who took office a year ago riding to victory on the promise that he could pull Houston back from the brink. So far, he has managed to come up with a plan that spreads the pain around and promises to solve the problem within, um, thirty years. The package includes some reductions in benefits (like cost-of-living increases), a more realistic anticipated rate of return on investments (from 8 to 8.5 percent down to 7 percent), and a limit on the number of employees in a program that allows them to continue working while collecting their pensions (the program was instituted to help retain veteran workers, and it’s proved costly). The city will also issue $1 billion in bonds to begin closing the funding gap. But one of Turner’s concerns is whether Houston firefighters will go along with his plan as peaceably as the police and city workers. A lot of folks are bracing for those emotional arguments about the compensation for the people who risk their lives to protect the citizenry. Aren’t they owed a secure retirement?

But, of course, that’s only part of the problem. No matter what plan each mayor comes up with, it still has to be approved in Austin. History has shown that legislators don’t have to worry about paying for any plan, both literally and metaphorically, that they put in motion, and they are highly susceptible to powerful political contributors’—and fellow legislators’—desires (see Houston circa 2001 and Dallas circa 1993). There’s also the question of how interested a Republican Legislature will be in helping out cities that are predominantly Democratic. A lot of people in Houston are hoping that Turner’s decades as a state legislator, and his closeness to John Whitmire, who had long served on the Pension Review Board, which oversees all of Texas’s public pensions, will prove beneficial. He may be luckier than Rawlings, who so far has received little to no support for his entreaties.

 

Of late, the buzzwords are “local control.” Mayors want it, claiming rightfully that the legislators have no business making decisions that have ramifications they will not be responsible for. Legislators, on the other hand, have rightfully pointed to the incompetence of city officials who would rather boost their political currency by using public funds to support projects that are a lot more glamorous than funding pensions.

Meanwhile, the bankruptcy clock is ticking, as if those aging pensioners, not to mention the taxpayers of Texas’s big cities, had all the time in the world.

[PittsburghTiger 6192]

Here is a story about pension funds in general, not just Illinois. The news is not good.

 

https://www.cbsnews.com/news/study-some-public-pensions-funds-could-run-dry-in-downturn/

 

 

[bernorange 8362]

As indicated in that CBS News article, New Jersey and Kentucky were highlighted for being high risk.  California wasn't include in the study.  All three of those states have both options (divert more tax revenue to fund pensions or reduce benefits) on the table.  Illinois appears to be the only state that is severely handicapped (reducing benefits not on the table) in managing the issue..

[atomheartbevo 89735]

On 5/14/2018 at 11:07 AM, PittsburghTiger said:

I think this study came out a few years back. It's gotten much, much worse.

https://www.illinoispolicy.org/reports/whats-driving-illinois-111-billion-pension-crisis/

Some of the biggest drivers include the following facts:

• 60 percent of state pensioners retired in their 50s, many with full pension benefits.
• Over half of state pensioners will receive $1 million or more in pension benefits over the course of their retirements. Nearly 1 in 5 will receive over $2 million in benefits.
• Almost 60 percent of all current state pensioners can expect to spend 25 or more years collecting benefits, based on approximate actuarial life expectancies. Due to automatic, 3 percent compounded COLA benefits, those pensioners can expect to see their annual pension benefits double in size.
• The average career pensioner – retired after Jan. 1, 2013, with 30 years of service or more – receives $66,800 in annual pension benefits and will collect over $2 million in total benefits over the course of retirement.

I love when they try to make these people out to be millionaires by throwing out there how much they are going to get if they live X number of years, as if it's a crime.   The problem is that a lot of these people are not collecting Social Security, and their pension is not much when you look at it year-by-year.  

It also doesn't take many very high-paid employees to skew the average.  Certain professions (such as firefighters) can also skew the average healthcare costs greatly as well, simply because they are under far greater physical demands.

We do have to accept certain costs for public employees, but we need to find a way to prevent hiring people that should never have been hired in the first place - when you haver tens of thousands of employees (or more), there are always hundreds, if not thousands, of jobs that simply should not exist.  Also, way too many high salaries can really skew things.

Edited May 29, 2018 by atomheartbevo

[PittsburghTiger 6192]

https://www.usatoday.com/story/money/personalfinance/retirement/2018/06/12/these-retirement-cuts-threaten-millions-of-workers/35914843/

 

There's a lot of debate about the differences in working conditions that public-sector and private-sector workers face. Some private-sector workers who have seen many of their employee benefits deteriorate or disappear entirely over the years believe their public-sector counterparts get benefit packages that are too expensive for taxpayers to maintain. Public-sector employees can point to base salaries that have historically often been lower than what they could make in the private sector as a justification for additional benefits to make up the difference.

Recently, the White House issued a new threat to federal worker benefits that added to the controversy. A letter [opens PDF] from the director of the administration's U.S. Office of Personnel Management to House Speaker Paul Ryan laid out a series of proposals for legislation that would make reductions to many of the retirement benefits that federal workers who are eligible for the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) receive. The moves would help to narrow budget deficits, but opponents argue that federal workers have already sacrificed through pay freezes and compensation adjustments that have lagged what their private-sector counterparts receive. Here's a closer look at the four proposals that lawmakers might consider in the near future.

[ScottishHorn 172]

On 5/14/2018 at 8:20 AM, TwiceHorn said:

So a 1% property tax increase to cover existing debt is inhumane and foolish?  What does that make Robin Hood, then?

Maybe because the property owners are getting fucked for irresponsible politicians.  You might have a small place in chicago worth $1M.  You might have bought it for $400k 15 years ago.  That's $10,000 extra you might not have to pay.  Should they lose their homes?

[ChickenSandwich 9843]

2 hours ago, ScottishHorn said:

Maybe because the property owners are getting fucked for irresponsible politicians.  You might have a small place in chicago worth $1M.  You might have bought it for $400k 15 years ago.  That's $10,000 extra you might not have to pay.  Should they lose their homes?

1234

Edited June 13, 2018 by ChickenSandwich

[Johnny Sack 8397]

3 hours ago, ScottishHorn said:

Maybe because the property owners are getting fucked for irresponsible politicians.  You might have a small place in chicago worth $1M.  You might have bought it for $400k 15 years ago.  That's $10,000 extra you might not have to pay.  Should they lose their homes?

They need to pay their fair share.

[TwiceHorn 31506]

3 hours ago, ScottishHorn said:

Maybe because the property owners are getting fucked for irresponsible politicians.  You might have a small place in chicago worth $1M.  You might have bought it for $400k 15 years ago.  That's $10,000 extra you might not have to pay.  Should they lose their homes?

So, right, what about Robin Hood?

[Hank Scorpio 17729]

Where are those death panels I was promised with Obamacare. Just shift it from healthcare to pension benefits.That would solve this problem. Sorry Agnes, you've been collecting benefits for 30 years, time to die. 

[zork 629]

On 6/13/2018 at 3:01 PM, Hank Scorpio said:

Where are those death panels I was promised with Obamacare. Just shift it from healthcare to pension benefits.That would solve this problem. Sorry Agnes, you've been collecting benefits for 30 years, time to renew with the rest of 'em Saturday night at the Palace de Renewal. 

FIFY

Search Logan's Run for reference.

[Guest]

Local authorities in Illinois are doing as little as possible to interfere with grassroots eradication of longevity of life.

 

Seems they have enacted non-tax solutions, IMHO.

[Bill Clinton 73]

Ontario is doing the same thing. Economics 101, you have a future burden, you double down on government workers to tax them and pay the retirements. Works every time.

https://www.youtube.com/watch?v=Tax7H6O_Yw4

 

[Bateshorn 9928]

On 6/13/2018 at 11:34 AM, PittsburghTiger said:

https://www.usatoday.com/story/money/personalfinance/retirement/2018/06/12/these-retirement-cuts-threaten-millions-of-workers/35914843/

 

There's a lot of debate about the differences in working conditions that public-sector and private-sector workers face. Some private-sector workers who have seen many of their employee benefits deteriorate or disappear entirely over the years believe their public-sector counterparts get benefit packages that are too expensive for taxpayers to maintain. Public-sector employees can point to base salaries that have historically often been lower than what they could make in the private sector as a justification for additional benefits to make up the difference.

Recently, the White House issued a new threat to federal worker benefits that added to the controversy. A letter [opens PDF] from the director of the administration's U.S. Office of Personnel Management to House Speaker Paul Ryan laid out a series of proposals for legislation that would make reductions to many of the retirement benefits that federal workers who are eligible for the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) receive. The moves would help to narrow budget deficits, but opponents argue that federal workers have already sacrificed through pay freezes and compensation adjustments that have lagged what their private-sector counterparts receive. Here's a closer look at the four proposals that lawmakers might consider in the near future.

Let me state flat for the record:  Neither CSRS or FERS are in any kind of financial distress.  The letter linked actually says "FERS is a fully funded system"  CSRS is a legacy system which was transitioned to FERS in the 80s.  There are probably less than 250000 CSRS employees left, and the number is declining annually. CSRS retirees also do not receive Social Security.  They were exempted from the system.  The elimination of CSRS was part of Social Security reform proposed by Alan Greenspan, passed by a Democratic House, Republic Senate, and signed into law by Ronald Reagan.  You'd be hard pressed to find a more substantial piece of bipartisan financial reform.

This has literally nothing to do with the stability of either program, but is a direct tax on past, current, and future federal employees to reduce deficit spending.  Deficit spending that was greatly excerbated by the tax cut. Nothing more.  Other than the fact that Illinois and the Federal systems involve the word pension, there is no other connection.

In fact, it's the exact opposite of Illinois:  You have a financially solvent retirement system that politicians are proposing to raid to pay for other program. 

Edited June 15, 2018 by Bateshorn

[BabaYaga 15301]

31 minutes ago, Bill Clinton said:

Ontario is doing the same thing. Economics 101, you have a future burden, you double down on government workers to tax them and pay the retirements. Works every time.

https://www.youtube.com/watch?v=Tax7H6O_Yw4

 

Those workers vote...which, at the end of the day, is what this is all about.  Underfunded liabilities are going to take multiple states down eventually.  When they (the state) can no longer borrower, shit's going to get bad.  Real bad.  

[sheeeit 129]

3 hours ago, Bateshorn said:

Let me state flat for the record:  Neither CSRS or FERS are in any kind of financial distress.  The letter linked actually says "FERS is a fully funded system"  CSRS is a legacy system which was transitioned to FERS in the 80s.  There are probably less than 250000 CSRS employees left, and the number is declining annually. CSRS retirees also do not receive Social Security.  They were exempted from the system.  The elimination of CSRS was part of Social Security reform proposed by Alan Greenspan, passed by a Democratic House, Republic Senate, and signed into law by Ronald Reagan.  You'd be hard pressed to find a more substantial piece of bipartisan financial reform.

This has literally nothing to do with the stability of either program, but is a direct tax on past, current, and future federal employees to reduce deficit spending.  Deficit spending that was greatly excerbated by the tax cut. Nothing more.  Other than the fact that Illinois and the Federal systems involve the word pension, there is no other connection.

In fact, it's the exact opposite of Illinois:  You have a financially solvent retirement system that politicians are proposing to raid to pay for other program. 

Bates- You need to do a little research.  The statement "FERS is a fully funded system" does not mean that it is currently fully funded.  It is describing the TYPE of system in place.  All that statement means is that the employer, in this case the federal govt, is legally obligated to pay for it.

Currently the combined un-funded liabilities of the two plans is approximately $1.7 Trillion.  The reserves, for lack of a better term, for the money in the CSRDF is nothing more than promises from the govt to pay them.  The money is, in no way, sitting in the bank.  Our govt (and we the tax payers) are on the hook for $1.7Trillion in payments and there is no reserve to pay it.

[BabaYaga 15301]

2 minutes ago, sheeeit said:

promises from the govt to pay them.

This just described virtually every entitlement and/or pension program.  And despite record revenue receipts YOY, each year higher than the previous, there is never enough to satisfy them.  

[XR4ticlone 122]

It turns out you can't pay people 70-90% of what they used to make working....just to sit around and do nothing for 20-30 years.  No matter how great they were at pointless clerical work, holding up a broom, or creating new & exciting regulations & wasteful programs. 

Who could have known? 

In 04 when I called on the US Gov in DC for work, I quickly learned that most of these 'retirees' don't really retire.  No...they leave on Friday with punch & cake to celebrate reaching their pension level...then come back on Monday working for General Dynamics or whatever at 35% more pay with the Gov being charged for them to do both work (at a premium due to a nice Gov contractor profit) and a nice pension.

 

In a world where the rest of us have zero guarantees...we're being asked to endlessly pony up to protect the lifestyles of Gov employees & other beneficiaries.  

Sorry...but not sorry.  Time to come join the rest of us in the real world. I mean the non 1%'s of course...we'll just keep being awesome.

Edited June 16, 2018 by XR4ticlone

[bernorange 8362]

On 5/14/2018 at 7:56 AM, bernorange said:

...

Since the math is inescapable, I predict that Illinois will at some point amend their constitution to allow a reduction in benefits and the unions will howl as they gut the system.

Yeah, about that...

Quote

Mayor Rahm Emanuel on Wednesday delivered his proposals for improving Chicago’s public pension system, which is only 26 percent funded. Emanuel diverted from Democratic Party orthodoxy by calling for an amendment to the Illinois Constitution that would allow easing a rigid clause stating that public pension benefits “shall not be diminished or impaired.” ...

https://www.chicagotribune.com/news/opinion/editorials/ct-edit-emanuel-pension-constitution-amend-unions-illinois-chicago-20181212-story,amp.html

[bernorange 8362]

Quote

Chicago’s outgoing Democrat mayor, Rahm Emanuel, says the way to defuse the Windy City’s pension bomb is to legalize and tax marijuana and build a city-owned casino. ...

https://www.breitbart.com/economy/2018/12/14/rahm-emanuel-pay-chicagos-28-billion-pension-casinos-pot/

lulz

[Guest Lobo]

Ask yourself who is truly responsible for the proliferation of the defined benefit plan in the United States?  It's not a political party.  It's Unions.  And maths were an afterthought. 

[HenryJames 66132]

Proliferation? They've been declining for 40 years.

 

[DaysOff 7958]

DB plans are nothing more than deferred compensation just like the rest of your benefits. It's how the company/union decided to divide up the pie of total compensation. They've failed because they were legislatively allowed to with unrealistic funding laws. Then companies and states pull lint from their pockets like the monopoly man and wonder what happened.

[bad_teammate 13218]

tax the rich, dummies

[Incredulity 11675]

1 minute ago, bad_teammate said:

tax the rich, dummies

Define, "the rich"

[VRHorn 718]

25 minutes ago, Incredulity said:

Define, "the rich"

Isn't the answer "anyone who makes more than I do?"

[Incredulity 11675]

8 minutes ago, VRHorn said:

Isn't the answer "anyone who makes more than I do?"

I do know he won't answer the question.

[ADHD 28]

Sin solves everything.

[Johnny Sack 8397]

1 hour ago, HenryJames said:

Proliferation? They've been declining for 40 years.

 

Have public sector unions, which is the pension issue state and locals are facing, declining?  I was under the impression private sector unions have been sucking wind and public sector unions have been fine.  

[Incredulity 11675]

Well, state lotteries are practically the only politically acceptable way to tax low income people.  So I guess its the only way you are going to extract more.