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Are Pensions a Promise?

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posted on Dec, 16 2018 @ 02:03 PM
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It’s the Democratic Party way. Taxes, for them, is the answer to everything, no matter the damage. Now that California, Oregon, Washington State, Illinois, the NE are all beyond saving, they’ll be coming for the rest of the country.

Don’t even know how politicians with (D) after their names can accept a salary.




posted on Dec, 16 2018 @ 02:35 PM
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A pension agreement is worth as much as the paper it is written on. It is a gamble on whether the money will be there at and through retiring. If the funds or the agreed upon amount is not payable, there is an old adage, "You can't get blood from a turnip."



posted on Dec, 16 2018 @ 02:43 PM
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Most public pensions, indeed, dare I say ALL of them, are funded by the employees who receive them. They are funded by taxpayers only insofar as tax payers paid the employees' wages in the first place. During the course of a career the employee and employer both pay into the pension fund at a rate of between 4% and 8%, so at any given time there is 8-16% of the employees' salary that is going into the pension fund monthly. The Pension Board (or department of retirement, or whatever it is called) invests these funds "in a prudent manner," which has a legal definition. When the employee retires, after 25-30 years, he has earned 2% of his final salary for every year worked, so a 30 year employee receives 60% of his final wage as a pension.

The above is a generic description. Most states have more than one pension plan, each one with different rules, and each state also has different rules, so to be entirely accurate, this post would have to be 100 times longer, but the above gives you a general idea. One major point is that these pensions are pre-funded. The taxpayer is NOT shelling out every month to pay these pensions. They are SUPPOSED to be funded from the earnings of the Pension Board which has invested in prudent securities. A second point is that about 1977 all these pension plans changed so that people retiring today, in 2018, are under much more restrictive rules than the older plan which ended in 1977. People under the older plans are dying off and are statistically only a small part of the current pension system.

Illinois has a very generous pension plan, helped in part because of strong unions and a corrupt government to begin with. They are in trouble because they did not manage their securities well and now find themselves with under-funded plans. So they promised over the years 2% per year, and now they find themselves unable to do that. But the thing is, that money belongs to the pensioners. They are the people who put it in there in the first place. People who say it's all taxpayer funded are missing the point. They are right in the sense that the employees were paid out of tax dollars during their entire 30 year career, but that money was spent years ago. Just like social security, the employee had forced payroll deductions all those years. If an employee had the discipline to do it, putting the same amount of money in CDs at the highest available rate over that 30 years would have yielded a nest egg far larger and the employee would have been better off. But they were forced to contribute.

From an accounting perspective the State now has a legal obligation, a liability on the books to fund the pension fund. If they raise taxes to make up the difference, taxpayers will claim they were screwed over by the state. If they do not and default, all those people who worked all those years and put their own money into the fund will say they were screwed over by the state.

It's a lose-lose proposition that is guaranteed to piss off a lot of people.



posted on Dec, 16 2018 @ 02:55 PM
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a reply to: schuyler




They are the people who put it in there in the first place. People who say it's all taxpayer funded are missing the point. They are right in the sense that the employees were paid out of tax dollars during their entire 30 year career, but that money was spent years ago.



www.illinoispolicy.org...




A common refrain sounded by public sector unions is that government workers have consistently “paid their share” into Illinois’ pension systems and the state has not. However, the facts tell a different story. While government worker contributions to Illinois’ five pension systems have increased by 75 percent since 1998, taxpayer contributions have increased by 427 percent over the same period. In 2012 alone, Illinois taxpayers contributed $3.5 billion more to the pension systems than state workers did.



posted on Dec, 16 2018 @ 03:57 PM
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Like I said, Illinois is corrupt. The pensions work exactly as I explained them above. I worked for 30 years in one and I know how it works. Don't look at Illinois and jump to the conclusion that all pension funds work like the newspaper article you cited. In Washington State, for example, the taxpayers are not out ONE DIME because of the pension funds.



posted on Dec, 16 2018 @ 04:33 PM
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If student loans are a bad investment by students then pensions were a bad investment as well



posted on Dec, 16 2018 @ 04:37 PM
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originally posted by: schuyler
Like I said, Illinois is corrupt. The pensions work exactly as I explained them above. I worked for 30 years in one and I know how it works. Don't look at Illinois and jump to the conclusion that all pension funds work like the newspaper article you cited. In Washington State, for example, the taxpayers are not out ONE DIME because of the pension funds.


I wrote this post talking about Illinois not Washington state. I even say,


I'm picking on Illinois again

I post several links all about ILLINOIS. I nowhere said or assumed all pension work this way. You are assuming that.
You wrote:



Illinois has a very generous pension plan, helped in part because of strong unions and a corrupt government to begin with.
They are the people who put it in there in the first place. People who say it's all taxpayer funded are missing the point.



To which I showed why that thinking is in ERROR. Illinois taxpayers are indeed out lots of money.



posted on Dec, 16 2018 @ 05:46 PM
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Ask any retiree from the City of Detroit if it is a promise.
More like an empty promise.
The pension fund suffered due to corruption and the inability of the City to pay health insurance companies for years....resulting in a huge underfunding.

The Detroit retirees...most of whom receive less than $20,000 per year got their pensions trimmed and lost all healthcare.

I would have thought other entities would have seen the writing on the wall and taken steps to avoid this happening to their employees....seems not!!!!!!

Detroit was told they would not be bailed out by the Feds.
Fine, then the Feds should not bail out anyone.
Pensions need to be stabilized....not made whole by taxpayers.

Take a look at the sad state of affairs with the Teamsters.
They have been facing pension problems for years....and last I heard, my friend told me they voted to not take cuts.
What? How does that fix anything????
www.freep.com...



posted on Dec, 16 2018 @ 05:58 PM
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I am 18 years into my career as a fireman. I took a $20,000 paycut to join the fire department knowing it was more secure and I could promote up and be at my previous pay in 5-6 years. I did just that and have been a civil servant for 18 years seeing horrible things, staying up all night, worked fires until I dropped.
They have reduced my pension twice so far and are working at round 3 right now. All I ask is to be fair and honest as I’ve done. But they are lying scum that run large city’s. They misappropriated funds, pay media for hit pieces, pet projects in the millions for their buddies, and froth at the mouth wanting their hands in that pension fund with billions in it. Yes! Billions, because it is 10s of 1000’s of employees putting large sums of our checks in it.
I’ll do my best for the citizens, but “they may go to hell”. (As in that old saying)



posted on Dec, 16 2018 @ 06:00 PM
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Too often, a crisis isn't really a crisis until it hits your neighborhood. Until then, it's just somebody else's problem.


Wow interesting article!

Illinois had the opportunity to change its course. That was in the early 1990's. Of course nobody felt the pain (or worry) yet so they ignored it for years and now the time has come.



posted on Dec, 16 2018 @ 06:07 PM
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Don't accept a pension for lower pay. Take the higher pay and invest it

You will get more out of it anyway



posted on Dec, 16 2018 @ 06:11 PM
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originally posted by: toysforadults
Don't accept a pension for lower pay. Take the higher pay and invest it

You will get more out of it anyway


Sage advice now, but 15-20 years ago that wasn't the case!



posted on Dec, 16 2018 @ 06:37 PM
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A pension is not a promise... promises can be broken. A pension is a contract, just like if someone buys insurance and has a legitimate claim, they hold a contract. I'm surprised some enterprising young legal mind hasn't started a class-action suit already to enforce that contract (and get paid for their trouble by Illinois).

Normal business accounting practices would show any future pension amounts as a liability, just as a business that receives payment for a future delivery would consider that payment as a liability until the product was delivered. Apparently, our governments are not very good with accounting, certainly not as good as the companies they regulate accounting practices in. That explains why the cockamamie ideas that keep coming out of the government at least...

The only way I know of that a contract can be nullified in the real world is for a party of that contract to go out of business and cease to exist. Then everything owed gets pro-rated as a matter of reality. Perhaps that is what should happen... the government of Illinois, if they are unable to pay their pensions, should simply cease to exist and be liquified to pay whatever funds are available. That means the state becomes a territory, the state constitution is abolished, and the citizens will have to start fresh. It also means any corporations under that state would be dissolved and all laws under the state would be null and void. Oh, yes, and all state elected officials would be out of a job as well... including Representatives and Senators... until a new constitution could be drafted and admission to the US be re-applied for.

Before anyone clutches their chest and screams "I'm coming to join ya, Elizabeth!" it will only take one state being dissolved to scare some sense into the rest... and into the Federal government as well, likely.

TheRedneck



posted on Dec, 16 2018 @ 07:06 PM
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I think a government, state or city, or any business can file bankruptcy, and be relieved of paying pensions.

Not sure, but I think so maybe. It's scary for people. I can't imagine trying to live on SS alone these days. I would never get to retire.

But many states invest those funds, and since the stock market has been doing well, so have those funds. I'm thinking Ill. might be more of the exception than the rule. *crosses fingers*



posted on Dec, 16 2018 @ 07:19 PM
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originally posted by: angeldoll
.I'm thinking Ill. might be more of the exception than the rule. *crosses fingers*


Illinois has company:
The 15 States Making America’s Pension Crisis Worse


www.cheatsheet.com...



posted on Dec, 16 2018 @ 07:31 PM
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a reply to: JAGStorm

Whoa, not at all surprised to see some states on that list (Cali, Florida) and surprised to see others like Mass. and Conn.
We live in uncertain times, folks.

Thanks for the list. (My state's not on there.)



posted on Dec, 16 2018 @ 08:57 PM
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a reply to: JAGStorm I am one very lucky retiree. My pension was paid entirely by the company. Needless to say, I am in the last group who will ever see that kind of deal. The company abolished that type of pension about 10 years before I retired, so none of the new hires or people with less than five years seniority were not offered that kind of pension. They only had 401K. I had both an hourly pension and a salaried pension. Our pension fund has been managed well. I will probably not outlive it.



posted on Dec, 16 2018 @ 09:44 PM
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originally posted by: TexasTruth
I am 18 years into my career as a fireman. I took a $20,000 paycut to join the fire department knowing it was more secure and I could promote up and be at my previous pay in 5-6 years. I did just that and have been a civil servant for 18 years seeing horrible things, staying up all night, worked fires until I dropped.
They have reduced my pension twice so far and are working at round 3 right now. All I ask is to be fair and honest as I’ve done. But they are lying scum that run large city’s. They misappropriated funds, pay media for hit pieces, pet projects in the millions for their buddies, and froth at the mouth wanting their hands in that pension fund with billions in it. Yes! Billions, because it is 10s of 1000’s of employees putting large sums of our checks in it.
I’ll do my best for the citizens, but “they may go to hell”. (As in that old saying)


I hate to tell you this, but this is why you do not rely on government for anything.

Conservatives know that if you put them in charge of the desert, they would run out of sand.

Why do you think we eye Social Security askance and laugh when people promise us some kind of "lock box"? It's a lie. The government has mismanaged those funds too, and if I get anything out of what they're raiding from my pay every month now, I'll fall over dead in shock and save them the trouble of having to pay me.

None of that helps you, but there it is. They poison everything they touch.



posted on Dec, 16 2018 @ 10:53 PM
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a reply to: ketsuko

I am conservative and knew social security was a joke which is why I got on the Fire Dept in a Conservative city. They are thieves at the local level D or R. I put in heavy to my 407 but when my wife got a job that matched 401 I stopped mine and had her max out. I will be fine, but others not so much. New hires are going to get screwed which will greatly lower the quality of people you get coming to you or your family and friends aid.



posted on Dec, 17 2018 @ 01:56 PM
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one question that needs to be asked in this discussion. you go on and on about how big a finical liability pensions are, zeroing in on Illinois. well just what exactly are ALL their financial liabilities? and just how much of those other finical liabilities are not things actually owed due to work that has long been done, ie pensions? or things like police and fire services that are needed? if it is not an absolute NEED, then the state should not be paying for it if they can not meet their finical obligations.

for example Illinois is a sanctuary state. so how much is spent on illegal aliens? the answer should be ZERO. if they can't afford their actual financial obligations how can they spend anything on anything to do with illegal aliens. something that they do voluntarily. and i just bet there are a lot more things being paid for that are not absolutely necessary. how many things like sports complexes or stadiums has the state at least in part paid to build, or pay to run and maintain in the last couple years? again that is something that they should cut out of the budget. if something can not pay for it's self, then they need to close it down until they have extra money they can use to pay for it. and they certainly should not be paying to build anything like that. if they are broke enough to not pay their actual obligations, then they can not afford to pay for things that are not actually a critical need. and they most certainly should not be paying over $200 million to build the Obama library. something there is no need for at all. so all work on that should be immediately stopped. if people want it, they should donate their own money to pay for all of it. and the work stoppage should include the millions they are spending on road and transit improvements specifically for that library. and they should be charging fair market value for the land it is to be built on as well. that is money they can certainly use to help pay actual obligations such as pensions.




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