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.

Click here for the e*Paper or buy a Register at a newsstand near you to read about Monday's police manhunt for an ex-con turned fugitive and his 48-hour crime spree. 

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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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Click here for the e*Paper or buy a Register at a newsstand near you for the rest of this Cincinnati Enquirer editorial and to read about Monday's police manhunt for an ex-con turned fugitive and his 48-hour crime spree. 

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

wetsu

Well said, coasterfan. Regardless of public or private we are being conditioned to accept a reduction in benefits for future generations in order to sustain defense spending and low tax rates for the wealthy. As a conservative person I denied what was unfolding before me for years. For all those so content to band together against the public sector I'm referring to social security. Beware of any politician who claims s/he wants to "strengthen" social security or touts "shared sacrifice", which means less for you and more for an increasingly smaller percentage of the population. Eliminating the income cap on contributions would be a start, but, that equates to corrupt politicians simply having more access to your money. These are the same people who tell you what our share of the federal debt is, that's rich (pun not intended). They took your money off the top, along with the employers contribution, and lived high on the hog. How many times should one be expected to pay for that money we never saw and will likely never see?

Keep your lynch mob going. The politicians need as many lemmings as they can get. After all, they spent your social security so they need to find an entity besides themselves to make the object of scorn. Divide and conquer. Drink up.

whocares

Why can't they be like everyone else and save for their own retirement. After I get done paying my taxes, I still have to save for mine.

Contango

OH needs to move like many states have to a defined contribution (DC) 401(k) type pension plan model for their public employees.

wiredmama222

@who cares....Amen to that. Amen

nobodyfromnowhere

Public employees do save for their own retirements. Between 10 and 15% of their salary.

Kimo

I'm not sure what the Sandusky Registers motive is for continuous bashing of public employees other than to stir the pot and generate hits. Or.... is it something else that I'm missing?
.

Contango

@ Kimo:

Informing is "bashing?" So much for the 1st Amend.

"...is it something else that I'm missing?"

Pew Research is a lefty organization - you tell me.

Kimo

The majority of people that have a 401k plan today are borrowing that money to survive in this trickle down economy.

When you have any retirement plan that is not mandatory, and one that can be tapped, it is doomed to fail.

401k plans were never meant to be a one-and-only retirement plan.

How many minimum wage and or part time "associates" draw enough money to save for retirement? Most do not.

That said; what do you do with them when they get old?
.

Contango

@ Kimo:

"Trickle down?"

Thank the Fed Reserve for partially balancing this economy on the backs of savers and investors with ZIRP.

What kind of ROI are you getting on your cds?

meowmix

What's wrong with you people? I pay MORE into my PERS than you do your Social Security! On top of that, the years I worked under Social Security and paid into it I won't be able to draw on. I don't get where you figure it's some type of perk--it's my equal to your Social Security.
Oh, and grandmasgirl, the regulations have changed regarding retirement age under pers. A person can't retire at age 55 with 25 years anymore (with the exception of a few who can get grandfathered in. Why do you think there was the big rush of public employee's retiring recently--due to rule changes! Now the service time is 32 years of age. A public worker can also save by contributing to a deferred compensation plan.
Also, great post coasterfan!

Contango

@ meowmix:

Comparing PERS and SS is absurd. Apples and dog feces.

One is backed by sound actuarial principles and funding methods, while the other is technically bankrupt to the tune of several tens of trillions of dollars due to looting and unrealistic promises.

You have combo DB/DC plans – most private sector employees do not.

When the govt. changes the rules for retirement - sure sign of a Ponzi scheme.

Keep believing that you deserve taxpayer guaranteed health and welfare benefits.

Care to take a stab at my question:

How do you make the IL public pension fiasco solvent?

The Big Dog's back

Bullspit.

nobodyfromnowhere

Illinois isn't our problem. They got themselves into their mess they have to figure out a way out. In Ohio our plans are funded almost to their required 30 year levels. Contrary to what the Cincinnati paper would like you to believe. I also find it funny how the Register likes to throw out a short blurb but can't be bothered to print even a complete article. Also a pension earned for 25 to 35 years of service is hardly government welfare.

Pete

So let me get this straight:

If the government would just extort 90 cents of every dollar someone earns, then public employees could retire at 55 with an outstanding pension.

Sounds fair to me! :rolleyes:

Contango

Tax Freedom Day 2013 in OH is Apr. 12.

Keep working serfs, the kleptocrats need more of your income.

Progressives: Be thankful that we don't take it all.

BEHAPPY

Well lets just take YOUR retirement!

Maggdi

Just thought I'd stop by to see how you Happy Class Warriors are doing today. Keeping those bourgeois commenters in line with your dazzlingly well researched facts and figures? Remember if you repeat something enough times, no matter how wrong it is, it will be perceived as truth by others that aren't as well informed as you are.
I see your mascot is doing his job by urinating on anything he's surely completely positive is wrong or just doesn't like. Good Boy!
Carry on Comrades! Onward Soviet!

Fromthe419

If you repeat something over and over again and expect different results is the definition of insanity :) The real problem as I see it is the divisiveness of our nation. BHO capaign 1...it's Bush's fault and the fat cats on Wall Street. BHO campaign 2...It's the 1%'ers fault, they are not paying their fair share. This whole class warfare has to stop. When we look at local issues it's now the entitled public unions wanting more and the tax payers/homeowners that have less and less. When it's not wage issues its additional fees, increased utilities etc. What are the answers? At this point I really don't know. With the increasing debt from the Federal gov't all the way down to it's citizens in may mean the combination of some school districts to share the costs and larger classrooms. I don't see any of the levies being put on the ballot passing (Edison, Norwalk, Perkins). About the only thing I can think of is bringing better paying private sector jobs to the area so those that graduate can stay in the area and become this area's taxpayers and not the bigger city taxpayers because that is where the jobs are. If the private sector is healthy and growing these issues won't be as divisive as they are now. Any thoughts?

Maggdi

The problem is that there aren't enough conscientious people out there who are conscientious enough to be trusted not to exploit the proletariat. Therefore we have no choice but to let them exploit, so we can confiscate there ill gotten gains.... sorry. And unfortunately there aren't enough people who are up for that kind of scrutiny.

Fromthe419

Maggdi, I wasn't trying to direct my thoughts at you directly, I agree with what you are saying. My point was to say that our politicians have intentionally made this all about class warfare. It us (pick a side) and them (the opposition). Rich vs poor, private sector vs public sector. They win when they can divide and conquer, it's all about the status quo. We mindlessly fight amongst our selves while they sit back and do nothing.

Maggdi

I know that was your intention and I apologizes for hijacking your thread. I admire the specifics you used to start one the conversations that needs to be addressed. You have tried to start a serious effort to figure out how to effectively educate our children. And there are few higher issues than that for our/their future.

Finn Finn

Just wanted to compliment you and 419 for your composed, well-thought-out comments; the very few on this site not intended to gloat, snip, intentionally insult someone or "tell someone off". Thank you for the civility.

Maggdi

Thanks Fin. But I don't think I've been good about the "... snip,(or) intentionally insult someone..." part. As to the rest I'll plead the 5th (if that still means anything?).
I will join you in complimenting 419. It nice to know that there are still class acts out there.

KURTje

Those complaning here need to give up their parents SSI & their own . You know..that government $$.

Maggdi

If there's any left for those 10-20yrs out, you're welcome to confiscate mine. I mean that's what this whole exercise is about, isn't it? The truly empathetic deciding who deserves to keep what at this point is legally theirs.
And although my totally awesome parents have departed this life they did collect SS. When I tell you they took care of their retirement through hard work, saving and investment ( while raising 6 children) but used alot their SS for gambling and travel, will you tell me they should have returned it?

Maggdi

oops

whocares

If less people are paying taxes how is the government going to fund their pensions. Some days funemployment sounds really good.

Pterocarya frax...

Please do quit your job and go on "Welfare". You will get to find out just how much fun those people are having.

Kimo

When you have any retirement plan that is not mandatory, and one that can be tapped, it is doomed to fail.

401k plans were never meant to be a one-and-only retirement plan.

How many minimum wage and or part time "associates" draw enough money to save for retirement? Most do not.

That said; what do you do with them when they get old?

Instead of a snarky comment answer the question.

What are you going to do with the "old" people that have no retirement money??

Is that why the big push for guns? You going to shoot them????
.

Maggdi

"401k plans were never meant to be a one-and-only retirement plan"..?..what were they meant to be? A supplement? Like IRA's? That the government swore was a sacred cow when it was offered... to be honest I have no answers on how to make sure everyone gets what they were promised. Mostly because the people who made those promises had no business making them to begin with.
When you have fewer people/workers paying for those obligations than there were when those obligations were made....you run into a math problem...

Contango

Kimo writes:

"What are you going to do with the "old" people that have no retirement money??"

Call the Fed Reserve and have 'em print another couple trillion dollars worth of "funny money?"

For one: Since 70% of nursing home care is funded by Medicaid and there are approx. 78 million baby boomers, I guess this society will eventually find out.

General strike by the unions in Greece.

If U.S. citizens care to pay attention, they get to see what austerity looks likes when inflated political promises run out of money.

http://www.nytimes.com/2013/02/2...

The New World Czar

Wait...the Register is just picking up on this?

Maggdi

Heh!
Their just making it a possible reality... to then be scorned... and then be blamed on the evil "rich". Those selfish hoarder types. You know?

meowmix

I find it ironic that those posters on this thread who somehow feel cheated by people who pay and retire under PERS are the very same ones who worry about the extremely wealthy having to pay their fair share. Yep, I feel resentful of the county worker who works for 30 years earning $14.00 per hour at retirement time that will maybe get $1,700. per month in retirement benefits (this prior to his/her medical costs being deducted). I don't get the logic that all PERS contributors are earning the big bucks. Heck, I know of a kid who just got a job at a local factory--starting pay, $17.00 per hour. Not too bad.

Finn Finn

I guess it's all relative. I don't understand how you can be derisive of $14.00 per hour (non-factory) and $1,700 / mo. retirement!!! I've worked 30 years as a legal assistant and make $12.50 / hr. My husband, who is a 36 year steelworker, will get $1,200 / mo. in retirement. He also can not collect that retirement until he turns 62 - no 25 or 30 years and out! While I'm not going to begrudge, or resent, a 30 year wage earner his or her retirement benefits, I can't understand why you sniff at $1,700 / mo in retirement benefits?

meowmix

I hardly think that a steelworker who has 36 years under his belt is only going to get $1,200 per month in Social Security--unless he only worked 15 hours a week at minimum wage! With your work history you will even receive more than $1,200 per month I'm willing to bet. Once again, say you don't begrudge or resent and then imply public workers just have it made. Sniff**

Finn Finn

FYI - my latest SS statement states I will receive a whopping $1,120.00 SS benefit, and that's only if I work until my FULL retirement age of 67 years. So I can expect to work another 15 years added to the 35 I've already put in, to receive (according to your post) $500.00 less than the 30 year PERS employee. So you see, it really isn't "my equal to your Social Security". The gist of this article is that "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", a "taxpayers nightmare" indeed. Yet all you PERS whiners ("Yep, I feel resentful of the county worker who works for 30 years earning $14.00 per hour at retirement time that will maybe get $1,700. per month") still think you're getting the short end of the stick for some reason?

called out

Why don't we stop handing out so much money to welfare, wic, food stamps and every other type of gov't hand outs for people who don't freakin work. Least these people work

Contango

called out wrote:

"Why don't we stop handing out so much money to welfare, wic, food stamps and every other type of gov't hand outs for people who don't freakin work."

Protection money. You want 'em rioting and looting?

Just call up Bernanke and have him print some more Greenbacks and hand 'em out to every American (and illegal) - easy.

Pete

Heck why don't we just let the unions & Democrats run things as they see fit? Then the whole country could be a Libtopia like Detroit:

http://www.detroitnews.com/artic...|topnews|text|FRONTPAGE

Look how well decades of Democratic leadership and unions controlling city hall have shaped this upstanding and paradise of a city into the shiny gem it is!

The Big Dog's back

It could be Conservatopia like Haiti.

Pete

Detroit & Haiti have a lot in common. Both are Third World backwards entities.
The difference is Detroit used to be a bustling city. Then the Democrats & Union Thugs took over & turned it into a Haiti look-alike on American soil.
With Haiti it has always been Third World.

KURTje

That GOPer Rob Portman - wasn't he 1 of the lawyers for Hati? Or was it the Dominican Republic.

Pete

Could you be thinking of Democratic Senator Bob Menendez and underage Dominican Prostitutes?

EZOB

It isn't just Detroit with years of Democratic Mayors, it's many large cities that have declined included on the list is Cleveland. A while back I read a list of what many of the cities who were failing financially had incommon and they all had many years of Democratic leadership. It has taken years but this hard-headed Democrat has seen the light. Sooner or later Common Sense should prevail.

Pete

"Sooner or later Common Sense should prevail."

The problem is it never will. It is not like the Left is going to wake up one morning, look in the mirror, and go "The problems in my life are not the result of someone else, but my own faulty logic".

If you haven't been reading what is going on in Detroit, then you should. They are completely convinced that they can fix this themselves. It is shocking to read the denial the Democrats that run that city have. Dysfunction barely covers it. Mayor Bing tries, I will give him that. But the members of council are delusional!

And as far as the unions involvement, every time the mayor tries to fix what he can, they sue. Detroit is burning through cash at an alarming rate. They imposed furlough days to try and stem the tide. Instant lawsuit.

Contango

Yea, the IL public pension fiasco won't affect us. LMAO!!!

Word is: They will ask for a Fed bailout. Will Pres. BHO deny his Democrat buddies?

Creating moral hazard will have all the states lining up at the public trough.

Bailouts for everyone!!!!

The Big Dog's back

Capitalism destroyed Detroit. Use it up and throw it away.

Pete

Socialism is the only way FORWARD isn't it Brutus?

The Big Dog's back

Capitalism- Where you can enslave fellow humans, rape the planet, and be praised for your good business sense.

Pete

Wrong again Brutus. It was the greed of the unions that put Detroit in the dumpster. You are just too blind to see it.

doglegright

nobodyfromnowhere,
I doubt 10-15% is contributed to pension by employees, but I do know that the unions have negotiated a 10% rate of return GUARANTEED on their pensions. So think back to 2008 when there was over a 10% loss to investments. Municipalities and states had to contribute (or promise to contribute) 20% to make up the difference to get to a guaranteed 10% gain.