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Public pension programs becoming a big problem for states

Discussion in 'The Okie Corral' started by Mr981, Jan 3, 2010.

  1. Mr981

    Mr981

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    Attached is an article from today's Plain Dealer--a local paper--about the funding problem which is becoming common for Ohio public employee pension programs and what the state is trying to do about it.

    With the loss of many high paying jobs in the state, the tax revenues expected to be there aren't, as well as investment losses over the past few years. One of the solutions is to raise taxes to cover the shortfall and make changes in the payout for future retirees.

    Being on the private side and have witnessed how private pension plans are largely now a thing of the past, I may be sympathetic to those working on the public side that their guaranteed pension/medical benefits are now in question, but it merely reflects what most of us in private side have been going through the past decade.

    The article talks about how one solution is to raise taxes; I gotta tell you, the notion of raising taxes on the poor struggling working class in this state to make the public employees whole doesn't even pass the sniff test and I suspect any politician trying to do it will be looking for a new job.

    On a personal note, I had a discussion with a relative on this subject,who is a retired state worker and he thought that a bump in property taxes didn't seem like much to fix this problem. I guess if you no longer live in the state that's paying your pension and won't be affected by any taxes required to fund your benefits, that makes perfect sense--from a completely selfish standpoint-- but his complete lack of any notion of common sacrifice the fix the problem, made me wonder just how many of these public employees see their pensions as something truly guaranteed.

    As I see it, the economic model that created these public pension programs no longer exists--given the declining job and tax bases for most states. If there is to be a fix, everyone has to be involved--not just the tax payer; if the benefits have to be cut to save the system --so be it.

    http://www.cleveland.com/open/index.ssf/2010/01/public-pension_tab_in_ohio_41.html
     
    Last edited: Jan 4, 2010
  2. schild

    schild

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    If you are an employee of the Illinois Dept. of Transportation(IDOT), I believe with 30 years service you can retire at 80% pay with full medical ins. So you can be a truck driver, pot hole patcher or snow plow driver and retire at 48 years old if you started at 18.:crying:
    Not bad for sitting parked on the side of the road all day drinking coffee.
     

  3. stk10767

    stk10767

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    I am in a public pension system. I pay 8 1/2 percent of my pay every week to fund my pension. One of the reasons I chose my career was becsuse of the pension. I CHOSE this career, just as others CHOSE not to work for the government. I CHOSE this career knowing that I would never be rich, but never be poor either. The opportunity to become wealthy is almost unlimited in the private sector. It's funny how when the economy was strong, those who were making money hand over fist in the private sector laughed as simple 'civil servants' for taking such low paying jobs. Now when the economy sucks, they are crying about public pensions because they lacked the dicipline to save for thier retirement.
     
  4. john58

    john58 BHO is a LIAR!

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    That's the problem with pensions. Eventually they become such a large obligation to the state (organization) it becomes threatening to the existence of the entity that started it.
     
  5. FullClip

    FullClip NRA Benefactor CLM

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    You forgot one word...so I fixed it for you...(never did that 'fixed it for you deal before...sorry:embarassed:)

    Public pension programs becoming a big problem for states TAXPAYERS.

    Won't be any problem for the state, but for whoever is left working in the dreaded private sector and paying taxes to pay for the pensions of the state workers, it's time to tighten up your belt!!

    And not sure about where you live, but in Maine, the biggest employer in the state, IS the State!!:steamed:
     
  6. trifecta

    trifecta

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    Pensions should be funded as the liability is incurred. If they are, the payout may decrease a bit based on market conditions, but the system should never be underfunded. As someone else said, the public sector imployee may have been working for less because of the job/retirement security.
     
  7. JohnLew

    JohnLew

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    Partially true.

    A couple points:

    The opportunity to become wealthy WAS almost unlimited in the private sector. The more government meddles in the private sector, those opportunities lessen.

    I think the frustration comes from the fact that the gov't continues to put restrictions on the private sector and harm the opportunity for true economic advances (what I consider the "American Dream"), while they continue to "fatten" the public sector in terms of pay increases, pensions, etc.
     
  8. Gallium

    Gallium CLM

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    The article has put light on a problem not discussed often enough. MOST STATES are running out of money to fund these pensions, because the money never existed in the 1st place. It is based on a legitimate, legal elegant ponzi like scheme which depends on tax contributions of future generations to supplement those funds that would flow back to you in post-retirement.

    8.5% of your current salary...so let's assume you retire after 30 years of work, and live for another 30 (not an unreasonable assumption). How much return do you think the 8.5% would have earned to allow you any lifestyle post retirement?

    What of medical coverage? Do you get any post retirement? How about now?

    The FACT is, many of the models being used by municipalities for fire, LE, public works, teachers, etc is not self-sustaining in the long run. There are only two possible outcomes.

    1. Raise taxes
    2. Cut benefits

    ...or some combination of the above.

    'Drew
     
  9. JohnLew

    JohnLew

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    And which do you think our government will choose? My money is on #1.
     
  10. kestrou

    kestrou Pin Member #4

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    We've had class warfare festering for a long time - I see this as coming up to "Generational Warfare" - not only from state pensions, but from Social Security too.

    (Ringside Announcer voice)

    And in this corner, the Baby Boomers - who've invested for 40 years, had the guv'ment squander that investment while it was made, who now expect to get what they paid for.

    And in THIS corner, Generation Y - who are just getting started in the workforce, and are seeing that they're going to be taken for a ride.

    Standing in the middle of the ring, and not knowing which side to take, is Generation X - who already have significant investment, but know they're just as screwed as the Gen Y'ers...

    kestrou - who's a Gen X - both invested *and* screwed! :steamed:
     
  11. Gallium

    Gallium CLM

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    Yes. :sad:

    But in 15 years many municipalities will do away with

    - 20 and out (for retirement)
    - 100% coverage of health care (we may see 50%)
    - generous pension plans will get shaved, including post retirement health coverage
    - scaled back "subsidized" college tuition for spouses, offspring/etc at state run schools

    etc.

    'Drew
     
  12. G33

    G33 Frisky! CLM Millennium Member

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    Cut the pensions and the taxpayers will still pick up the tab.
    Retired folks vote.
    More so than the young.

    This was all predicted in the baby boomer cycle.

    USA is bankrupt in more than one way.
    :supergrin:
     
  13. RonS

    RonS Millennium Member

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    They used us and now they are going to sell us down the river. The people who paid taxes and social security and produced and produced and produced are about to get hosed. Obamacare will wipe out most employer sponsored health insurance and states and companies are going to default on pensions left and right and those of us in 50s are going to get pennies on the dollar, if that. Think Germany in 1930. The only place to turn is going to be to the government for welfare and we will have a great leveling. That's what it is all about and why they are doing it. Redistributin of wealth. We worked all of our lives and now they are going to take what we earned and give it all to "the underprivelidged" who didn't "win the lottery of life".
     
  14. Gallium

    Gallium CLM

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    Sir, I understand you've slaved at the feet of the giant .gov, but the reality is, you worked all of your life and you got a PAYCHECK + a promise. Now, they are going to change the terms and conditions of that promise.

    'Drew
     
  15. G33

    G33 Frisky! CLM Millennium Member

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    OK to cut military pensions?
    Beware the trap....
    :supergrin:
     
  16. stk10767

    stk10767

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    I should add that I do NOT get medical coverage when I retire, I have to pay for it like everyone else. And that 8 1/2 percent that comes out of my salary, that goes directly to the State to invest as they see fit. Just as taxpayers (including myself) are frustrated by ever rising taxes, it is even more frustrating for some *****hat who can't take any type of personal responsibility to invest in thier retirement to villify me because I work for the govt'. Like I said in my earlier post, these are decisions that people make, I chose to work for a modest salary with a stable job and good benefits. Others have chose to go after the big bucks, some make it and some don't. But don't yell at me because I am in a pension system, you ad the same opportunity.
     
  17. tc556guy

    tc556guy

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    NY just undid a Pataki era change and went back to making employees contribute throughout their career, rather than stopping at 10 years. This only makes sense. NYs pensions should be fine.
    Just because private employers gutted pensions doesn't mean its a smart move. 401Ks were never meant to be a retirees sole income source.
    edit: we dont get paid retiree health coverage. In fact, the cost of continuing health coverage just about eats up the pension payment.
     
  18. Gallium

    Gallium CLM

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    Hey! :)

    You'll see that I asked a question (or two) rather than leaping to conclusions (I do have an advanced degree in that...:supergrin:). I don't villify anyone, but I do have concerns about some of these employment packages doled out to folks on the .gov payroll. Congress and politicians in general seem to have some of the sweetest deals.

    I've been self employed for just about a decade and a half...so there is no "envy", nor is there any lack of personal responsibility in socking away a few shillings. NO ONE is going to underwrite my retirement, so I do as best I can.

    Either which way, we're mostly screwed.

    'Drew
     
  19. wjv

    wjv Zip It Stan Lee.. . .

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    Wow. . . . Paying people 120% of their salary plus medical benefits once they retire is unsustainable!! Who would have thought!!
     
  20. Atlas

    Atlas transmogrifier

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    As one of those baby-boomers who has paid into social-security, I'll say that we all stood by and watched as the government squandered the money paid in SS "contributions"...

    My attitude is that we can't complain when they come up dry.
    The time for that was thirty years ago.