The first of many pension dominoes falling State confiscates funds

a reply to: AndyFromMichigan We all need to remember who has been running the state for the last 13yrs.. And most of the unfunded pensions come out of Cook County. (Chi Town) if you take away CC the state comes out of the Red and we have money to fund things.

originally posted by: Bluntone22
a reply to: JustJohnny


Oddly enough the businesses you say only focus on profits are not the ones that will be defaulting on these pension plans.

The pensions about to default are city and state pensions.
I think they should ask their union reps what's going to cover the shortfall.

But it NOT up to the union to cover the shortfall, caused by the city and/or state underfunding the agreed terms of the pension contract the city and/or state negotiated with the union.

The onus for the shortfall rests with the city/state.

originally posted by: Bhadhidar

originally posted by: JAGStorm
a reply to: Bhadhidar

If you enter into a contract with another party, BOTH parties are expected to adhere to, and honor the term of the negotiated contract.

That is the most ironic part, A lot of the people paying now had nothing to do with those agreements.

Just as those currently threatened with a reduction in their promised pension amounts due to mismanagement and underfunding by city leaders over the past years, had nothing to do with the decisions made by those leaders which resulted in their pensions being underfunded now.

However, you cannot absolve union leadership of their responsibility as well. The pension mess is one reason why government employees should not be allowed to unionize. The unions were negotiating unsustainable benefits by holding votes over the politicians heads with the threat of a strike. When politicians also have to consider their reelections, it is pretty easy to see why they would agree to unsustainable benefit packages in the short term (let the guy elected after me deal with it mentality).

Yes, it sucks for the retirees, but at why should I as a tax payer be robbed to pay for their retirement?

IL has the 2nd highest property tax bills in the country because of our pension mess. I am literally paying about $15k/yr in property taxes on a bungalow that is barely worth what I bought it for almost 15 years ago. Yet, my tax bill has more than doubled in that time. Something like 60% or so of that tax bill goes to pay for other people's retirement.

I am working my butt off to take care of my own family and my own retirement.

Many of these pensioners high tail it out of IL as soon as they retire to avoid the tax bills.

So while it isn't fair to the everyday pensioner, it also isn't fair to the everyday tax payer either.

The money simply is not there. Both sides mismanaged and now the piper has to be paid.

originally posted by: Stealu1two
a reply to: JAGStorm

I think it will be B. screw the state, unless.. there are other states that feel they need the same bailout. If that happens and the state is allowed to do this it will be a very very bad thing. As all the other states will do the same.

I think a is going to happen (not that I think that is right)
I think it is going to happen right around election time....

a reply to: Edumakated

Many of these pensioners high tail it out of IL as soon as they retire to avoid the tax bills.

Isn't that the ironic part. They are taking those retirement dollars and heading straight to Florida, Texas or Arizona!

A lot of places were not funding pensions properly throughout the years. The cities here had to do things to bolster the pension fund. Let the good times roll, waste lots of money and forget about your obligations. That is the new norm, if a private company did that the government would be all over them, yet they did not even check on the state, counties, cities, and school districts to make sure that pensions were properly taken care of.

originally posted by: Bhadhidar

originally posted by: Bluntone22
a reply to: JustJohnny


Oddly enough the businesses you say only focus on profits are not the ones that will be defaulting on these pension plans.

The pensions about to default are city and state pensions.
I think they should ask their union reps what's going to cover the shortfall.

But it NOT up to the union to cover the shortfall, caused by the city and/or state underfunding the agreed terms of the pension contract the city and/or state negotiated with the union.

The onus for the shortfall rests with the city/state.

What good is the union if they don't pressure the city and state to fulfill their agreements?
GM is on strike right now.
The union is pressuring a business.

Why have these other unions not done their jobs for years and years?

That and they have claimed to much of the collective pie for it not to fail eventually..

originally posted by: Bhadhidar

originally posted by: Bluntone22
a reply to: JustJohnny


Oddly enough the businesses you say only focus on profits are not the ones that will be defaulting on these pension plans.

The pensions about to default are city and state pensions.
I think they should ask their union reps what's going to cover the shortfall.

But it NOT up to the union to cover the shortfall, caused by the city and/or state underfunding the agreed terms of the pension contract the city and/or state negotiated with the union.

The onus for the shortfall rests with the city/state.

The problem with public unions is that the tax payer really isn't at the negotiating table. Sure, in theory, the the politicians represent the people, but that really isn't what happens considering that these politicians are often dependent upon the union vote so there is a conflict of interest.

The retirement benefits are simply unsustainable. Some of these pensions are literally like have a multi-million dollar retirement. If a teacher is getting say $75k/yr in retirement that is the equivalent of having put away about $1.5 million in a 401k if we assume a 4% draw down. How many teachers you know make enough or have the ability to save $1.5 million on their own?

originally posted by: Bhadhidar
If you enter into a contract with another party, BOTH parties are expected to adhere to, and honor the term of the negotiated contract.

All State Unions and Pensions should be abolished.

Period.

Allowing government employees to unionize was one of the stupidest things ever allowed to happen. Without them there would be no State Pensions.

Why should a State employee - think your local DMV or Welfare office worker - get a golden parachute? That is pure insanity.

originally posted by: Bluntone22

originally posted by: Bhadhidar

originally posted by: Bluntone22
a reply to: JustJohnny


Oddly enough the businesses you say only focus on profits are not the ones that will be defaulting on these pension plans.

The pensions about to default are city and state pensions.
I think they should ask their union reps what's going to cover the shortfall.

But it NOT up to the union to cover the shortfall, caused by the city and/or state underfunding the agreed terms of the pension contract the city and/or state negotiated with the union.

The onus for the shortfall rests with the city/state.

What good is the union if they don't pressure the city and state to fulfill their agreements?
GM is on strike right now.
The union is pressuring a business.

Why have these other unions not done their jobs for years and years?

That and they have claimed to much of the collective pie for it not to fail eventually..

I don't think you want to use the autoworkers' union as an example here. They were among the worst in terms of forcing unsustainable pay and benefits. And it almost destroyed the domestic automakers. It took bankruptcy at General Motors and Chrysler, and the granting of similar concessions to Ford, to keep those companies in business.

Also, the current negotiations are going on as the feds are in the middle of rounding up a bunch of union officials as part of a bribery investigation. The president of the union is likely to be indicted any day now.

The other issue (much like with social security and medical care), is the pension benefits have not kept up with reality in regards to retirement and mortality.

It used to be you could retire at 55 after doing 30 years. If you were lucky, you'd live to say 65 before a heart attack took you out one day on the couch. Pension math worked because the money isn't passed on to your heirs and enough people died early enough that the pension fund could still sustain the payouts for the guys that lived into the 70s and 80s.

The problem now is that medical advances and better living are allowing people to live much longer. So now you have a guy who could retire at 55, but instead of dying at 65, he now might live to 80-85. He is collecting 20 more years of benefits. Spread this out across the entire population and it is clear why the pension plans are broke.

a reply to: AndyFromMichigan

Yeah, I'm not claiming they are a good union but you gotta admit they make some noise when needed.
They forced the automakers out of the country to keep their benefits.
Japanese automakers, with no unions, built factories here when the big three were moving out..

originally posted by: Bluntone22
a reply to: AndyFromMichigan

Yeah, I'm not claiming they are a good union but you gotta admit they make some noise when needed.
They forced the automakers out of the country to keep their benefits.
Japanese automakers, with no unions, built factories here when the big three were moving out..

Crazy isn't it? German and Japanese manufacturers have plants all over the south (right to work states). If you want "American Made" you actually have to buy a Benz, BMW or Honda.

They show you can have well paid, non-unionized employees AND still build quality vehicles.

IIRC, something like $6,000 is built into every GM car just for the pensions.

a reply to: Bhadhidar

If as a potential employer a company promises you the world, it behooves you to check and decide if you think they are capable of following through.

So no I don't think there should be a double standard, if a private company can't follow through, their employees or rather former employees get screwed and they go out of business. It should be no different here, it should be renegotiated and those politicians should be fired.

Jaden

a reply to: JAGStorm

www.trulia.com...

I did a quick search, I wanted to see what property taxes were and what house prices were there... Holy cow.
Look at these prices, houses for 5K, 10K . So many already in foreclosure. Not sure where they are thinking the money is coming from but they are dreaming!

originally posted by: AndyFromMichigan
I agree with you here. However, those guys are all gone now. We have to be fair and recognize that anyone in office today inherited this mess from someone else. In any case, assigning blame isn't going to solve the problem. Like the OP said, you can't squeeze blood from a stone. The money simply isn't there, not at the local level, and for Illinois at least not at the state level either.

I live in a small town that is going to have a pension problem in the near future. We had a Mayor that was trying to resolve the issue. While doing that he pissed off the Police and Firefighters unions. They bankrolled a challenger and he lost re-election. This is the problem. Until it is corrected you can't solve the problem.

We have a bunch of properties that are over valued in my area. People are fighting for them to be reassessed but, the local Teacher's Union are fighting against it. They view that tax money as theirs.

a reply to: Edumakated

Yep, I believe Nissan and Toyota have factories here in Indiana.
GM has a truck plant too, currently on strike.

a reply to: Edumakated

Boeing moved to SC for that reason and Union tries to unionize them every year and workers refuse.

What happens on the national level when Social Security finally fails ? I have heard of its failure for as long as I have been alive. I think we are finally at the tipping point when its paying out more than it takes in within the next few years. Illinois pensions have long been unsustainable and those who negotiated and recieve them have known. The politician's at the state level have probably taken funds from those pensions to cover shortfalls elsewhere. Congress has continued to "borrow" money from SS contributing to its demise. I can see a future bailout for the state from Congress who seem to be oblivious of simple math

originally posted by: DJMSN
What happens on the national level when Social Security finally fails ? I have heard of its failure for as long as I have been alive. I think we are finally at the tipping point when its paying out more than it takes in within the next few years. Illinois pensions have long been unsustainable and those who negotiated and recieve them have known. The politician's at the state level have probably taken funds from those pensions to cover shortfalls elsewhere. Congress has continued to "borrow" money from SS contributing to its demise. I can see a future bailout for the state from Congress who seem to be oblivious of simple math

I suspect they are going to start means testing social security. Basically, regardless if you paid into the system, if they determine you are "rich" which means you have a 401k or other investments, they will say you can't get social security. In addition, they will probably remove the payroll tax cap so that it applies regardless of income. This will really screw high earners, especially if they cap your benefits OR say you can't receive any benefits.

I know SS isn't a huge part of my financial planning for retirement as I've always assumed it won't be there for me.