Public employee pensions are taxpayers' nightmare

Associated Press
Feb 19, 2013

Excerpt from the Across the State editorial in today's Register: The state of Ohio faces a gap of $77 billion between what it owes to its five public pension plans and what it has funded. That’s more than the gross domestic product of Panama.

The mounting pension liabilities are putting pressure on municipal budgets that are already strained. These pension gaps will continue to be a threat to taxpayers unless legislators summon the will to make more substantial changes.

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Some experts, including the Pew Center on the States, point to Rhode Island’s reforms as a possible model.

Rhode Island suspended cost-of-living raises for retirees until the system is fully funded (that could be decades); raised the retirement age for all workers to be in line with Social Security’s guidelines; and created a hybrid traditional-401(k) style plan for current employees, not just new hires. 

Legislators need to work up the political courage to take the next step, rationalizing benefits for current workers, before the pension gap saddles future generations with unsolvable financial problems.

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Comments

There you go again

Will someone please tell Obama?!?! He doesn't think we have a problem....

Licorice Schtick

Did you notice this article is about
STATE pension funds?

mikel

don't worry schtick federal retirement funds are right behind. the usps is approximately 5 years behind in funding their retirement plans.

Contango

@ LS:

Gotta think outside the obvious.

The "word" is that IL's "impossible" public employee pension mess will eventually be bailed out by the Feds.

Introduce the "moral hazard" and watch as other states start lining up at the trough.

Pres. BHO has Fed Chair Benanke on speed dial. Print as needed.

Contango

What liberals naively believe:

"•The US government has plenty of money.

•Government cares for its citizens.

•The economy cannot crash.

•We are not in a recession (Depression).

•The lives of their children will be better than their own.

•The government can continue to print money to fund promises they cannot afford."

http://www.zerohedge.com/news/20...

KnuckleDragger

This is why even FDR was against unionizing public employees. Even he knew that eventually would would bankrupt the very people they were employed to serve.

"“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.” FDR

Contango

@ KD:

Keep an eye on IL. They're losing $17M A DAY on their grossly underfunded ($96B) public employee pensions.

IL has the lowest credit rating in the country.

The Democrats have controlled the legislature for 30 yrs. They own this fiscal mess lock, stock and barrel.

http://www.nytimes.com/2013/01/0...

They did however pass gay marriage legislation! When the "goin' get tough," the "tough" do what they can. :)

Perkins2060

Another reason to vote no on all levies.

Swamp Fox

SB5

mikel

it's ok. the demmies loveeeeeeee to spend money of this kind of stuff. time to honor ALL old contracts and place all new employees into some kind of retirement plan that does not strangle the taxpayers.

Fromthe419

I think it's time the public sector follows the private sector union's. All new hires get a 401k with no match, sick days use them or lose them. No pension and salary/hourly raises based on merit, not time on the job. We can not put our children and grandchildren further in debt by reckless spending and endless borrowing.

grandmasgirl

Just going to say the same thing. Young people today that have seniority built up in private jobs have to worry about their employer finding a reason to fire them. That way, they can go from someone who has worked 30 years earning 4 or 5 weeks of vacation to someone who only gets one week. Then there are the other benefits that they have earned. And as far as I know, only public employees can retire at age 55 with full benefits and huge pensions.

nobodyfromnowhere

Please explain what qualifies as "full benefits and huge pensions"?

SamAdams

You're right Unfortunately, the culture of "gimme my free stuff!" is overwhelming those of us who remain fiscally sensible and personally responsible. Combine that with the union leadership's tendency to, like politicians, put the accumulation of power above all else, and the system will probably have to collapse to see it come to an end. And liberals call CONSERVATIVES greedy. Hah!

nobodyfromnowhere

Free stuff? You do know that public employees contribute between 10 to 15% of their salaries to their pensions. And that the pension reforms did not increase cost to government entities?

Contango

Since everyone worked for the govt. in ol' Soviet Union, they "officially" had 0% unemployment rate.

They also had "cradle-to-grave" health and welfare benefits for all citizens.

Waste, fraud and abuse ultimately destroyed their socio-economic scheme.

American Progressives believe that they are smarter than those dumb ol’ Russians – they ain’t.

Maybe the U.S. govt. should just hire everyone? 0% unemployment rate, plus all those "free" bennies sounds good huh?

Perkins2060

Why should the government hire them and make them work? They already are being paid to stay home and make babies.

PerkinsVoter

Vote NO. Greedy astards go and retire and come right back to work drawing a pension and a salary. I wish that social security would allow me to retire and make unlimited wages and collect socual security. You read about these public parasites all of the time who retire and come right back to work and they are all employed bu the schools or government and they make the rules.

Darkhorse

The people need to wake up and stop feeding the unions through tax levies or special assessments. The voters are responsible for giving them more money. Keep voting for more tax levies and this is what you get. Wake up people!

doppleganger

These problems are not all caused by public UNION employees. Did you see yesterday's article about Pete Daniels getting promoted and now making $109,000/yr.?
Pretty excessive for a little po dunk county like Erie. And he is just ONE of the overpaid administration staff. Let's be fair now, it is not only the union breaking our backs. And before you ask, no I am not a union worker nor a public employee.

coasterfan

In the 1950's and 60's, when our parents were in the prime of their careers, most every employer offered a pension. Dad knew that when he retired, he would be well taken care of through his retirement years.

What changed? Greedy CEOs decided that they no longer needed to take care of their employees upon retirement. Full pensions gave way to employee-funded 401k retirement plans, and if the employee was very, very lucky, his employer might pay half of the retirement through matching funds. Meanwhile, the CEOs' salaries grew until they averaged 432 times the salary of the average American worker. The salaries of CEOs in other developed countries averages only 20-30 times what they pay their rank and file workers.

About the same time, taxes for the most wealthy Americans dropped from a 90% rate to less than 1/3 of that. The interesting part about it, and the part that Republicans don't like to hear, is the fact that the era in which the rich paid such high tax rates was during the 1950's, a time of American prosperity that we have not been able to match ever since.

Public worker pensions are not the problem. It's the current system of taxation which taxes rich people at the LOWEST rate, and ON TOP OF THAT doesn't tax them for capital/investment gains. The math is pretty simple: we stopped collecting money from the rich, and now have a huge revenue shortage.

Contango

coasterfan writes:

"Greedy CEOs decided that they no longer needed to take care of their employees upon retirement."

Wrong. Govt. made admin. and funding rules too expensive and too complex for corps. to continue defined benefit (DB)plans.

See: ERISA

Also, through deductions, no one paid the 90% marginal tax rate during the 1950s - that is a fiction.

Private DB plans do not contain COLAs - too expensive. Also, most private corps. do not guarantee retirement health benefits.

The public employee gravy train is goin' broke.

How should IL fix their public employee pension mess hum?

The Big Dog's back

Moderators have removed this comment because it contained Personal attacks (including: name calling, presumption of guilt or guilt by association, insensitivity, or picking fights).

wiredmama222

@ costerfun...you are right about this. Look at where the bail out money went, especially to AIG. They took that money and ran with it. The top people got there's and it didn't trickle down. Now the outsted CEO's wanted to sue, but the present CEO's wouldn't have it. (good for them). The truth is, the greedy get greedier and the poor get poorer.

As for the city pensions, they new this was coming and they had to make arrangements. The unions take the lions share and run with that as well. Look at the people out at GM plant and ask them! It wasn't the company but the union that took and ran. They would like you to think it was the government when it fact it was their union.

Who paid taxes that were equal to the big money they got? Not the rich!

The biggest problem is follow this money and see where it goes....right to the rich of the union holders. Read some of the articles about unions and see for yourselves. They hit and run.

Good comments coasterfun.

Contango

@ wiredmama222:

The Washington kleptocrats helped AIG pay off the default swaps to the tune of 100%.

Former CEO Hank Greenberg has written a book:

http://www.usatoday.com/story/mo...

wiredmama222

@contango...and he has filed suit with other past board memebers complaining HIS receipts on his dividends were not high enough after the bailout and wanted the new controllers of AIG to file with them. They refused. The judge has dismissed their case. Talk about greedy.

goofus

Just wondering what color the sky is in Coasterfan land. More class warfare and jealousy. Everyother year in the 50's and 60's didn't the UAW pick a target auto company for a strike if wages weren't increased? Subsequently management always gave UAW workers more money and passed it along to the consumers. Guess what, they have the price of cars so high only the auto workers could buy them and they can't support their industry solely.
I remember when a personnel director didn't need a college degree, now one must have a masters,at least. Government regulations have mandated it with hiring laws and EPA regulations and the rest. What do I care what my CEO makes as long as I have a job that can maintain my existence.
Typical liberal, we DON"T have a revenue problem, we have a spending problem!!!!!

The Big Dog's back

Would you rather they struck all 3 at the same time? Since the unions have been decimated, how much have the price of cars come down?

Pterocarya frax...

Wow!!! You conservatives start slobbering when liberals blame Bush for what he did 6 years ago, but you try to blame unions for something from 60 years ago?

BEHAPPY

Great comment COASTERFAN

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