Pension funds not keeping up

Could very well be that no one is Joe. The government either can't be sued or has it's maximum liability established through legislation. The pension funds for the public employees is a contract between the union representing the employees and the government. PERA is an association with a board of trustees. It is very likely that both the government's, and therefore the taxpayers', future liability to the association and its members (retired public employees) is either very limited or non-existent beyond making the contributions to the fund required by contract.

If/when the association is unable to meet its obligations, or if the legislature decides to do away with it for any reason, since the association was a creation of the legislature it can also be terminated by the legislature. At that point there are laws about how the existing assets of the association would be disbursed to its members and the association would simply cease to exist. I don't even think a formal filing of bankruptcy would be necessary, the legislature could simply decide to do away with PERA, disburse the funds and be done with it. A lot like Social Security and Medicare - they will only exist for as long as the legislature decides to continue them and should they decide to end the programs, none of those who have been paying into it for the entirety of their working years will have any recourse through the courts because they do not have a personal property right to any of the benefits promised in the legislation.

Except PERA is also the retirement fund for our legislators so I suspect it will continue to be funded.

My point is that the unfunded liabilities of the public pension plans shouldn't be worrisome to Joe as a privately employed citizen who pays his taxes. Should the public employees be worried about it? Absolutely they should - because they could very easily find themselves having far less to live on than their contracts require they be paid if they insist on receiving every dime due them under those contracts. The legislature may simply decide it isn't worth the hassle and get rid of the association, in which case those generous public pensions that resulted from inherent conflict of interest negotiations would simply disappear overnight with no recourse available to those that were affected.

Remember this - whatever the government giveth, the government may taketh away..........

Scary thing about pensions is that most are defined benefit, rather than defined contribution ---- and there's simply not going to be adequate funds to handle the guaranteed benefit amounts.

Managers have pulled off a lot of different stunts to try to keep the funds floating. However, it's mostly stop-gap measures.

I'm not counting on my own annuity fund --- it's going to be icing on the cake for me.

PrintSmith wrote: The legislature may simply decide it isn't worth the hassle and get rid of the association, in which case those generous public pensions that resulted from inherent conflict of interest negotiations would simply disappear overnight with no recourse available to those that were affected.

Remember this - whatever the government giveth, the government may taketh away..........

I'm not sure that is true PS, a contract is a contract, and they do have recourse in the courts. Now whether there is any money in an empty pension fund to pay, that is different. Usually the end result of that kind of scenario is bankruptcy to nullify a contract, which I don't know if states can do, but local governments can. I don't think the legislature can just nullify a contract to provide a lifetime pension.

And what the contracts stipulate is that X percent of the worker's wages will be placed into the pension fund by the employer and X percent of of the wages will be contributed by the employee to that pension fund. It is not a county pension fund for county employees, it is an association created by the State for the all of the public employees that reside in the State. Unless I am mistaken, which I do not believe I am, what the pension benefits are going to be is not a matter of contract, it is either a matter of public law for the members of the association or a matter that is the result of administrative rulings by the board which controls the association. Since it is not a Jefferson County, or a Park County, pension fund that is subject to management by the county, the counties themselves would not be in a position to negotiate what the resulting pension would be for inclusion in the contracts that the county has with the various public employee unions.

bailey bud wrote: Scary thing about pensions is that most are defined benefit, rather than defined contribution ---- and there's simply not going to be adequate funds to handle the guaranteed benefit amounts.

Managers have pulled off a lot of different stunts to try to keep the funds floating. However, it's mostly stop-gap measures.

I'm not counting on my own annuity fund --- it's going to be icing on the cake for me.

If there aren't adequate funds in the state pension fund and since states can't file bankruptcy, then won't the taxpayers of the state end up covering the difference?

Would the state really consider renegotiating the pensions of public workers rather than asking taxpayers to cough up the balance?

akilina wrote: Would the state really consider renegotiating the pensions of public workers rather than asking taxpayers to cough up the balance?

Perhaps not, but the taxpayers in this State can amend their constitution via the amendment process and disband the association themselves or refuse to allow their taxes to be raised if the legislature attempts to compel them to "cough up the balance". What States without these protections in place do is of no concern to me. Those governments are foreign to the one I am a citizen of and I am not encumbered by the choices they have made.

FYI here is an article about Stockton CA. They are going thru this right now, and considering chapter 9 Bankruptcy.

http://www.nytimes.com/2012/03/17/busin ... wanted=all

Another problem local governments have is unfunded health care plans for retires. Those costs are growing fast, and are not even pre-funded like pensions, they are pay as you go.

Stockton is in the midst of a mediation process with its creditors that will determine by the end of June whether it will file for Chapter 9 bankruptcy, which would allow the city to negotiate reductions in its debt in court.

For Calpers, the prospect of a California city in Federal Bankruptcy Court portends a potential test of the constitutional mandate that federal law trumps state laws — in particular, the state laws that protect public workers’ pensions in California. Such a challenge could blow a hole in what experts consider the most airtight pension protections anywhere.

akilina wrote:
If there aren't adequate funds in the state pension fund and since states can't file bankruptcy, then won't the taxpayers of the state end up covering the difference?

Consider Colorado ---- with TABOR in place, as well as entitlements and constitutional mandates ---- Colorado will be in complete paralysis.

TABOR wouldn't allow tax hikes ---- Entitlements are just that --- and there's also an education amendment that mandates specific funding levels for education. The only thing Colorado could do is to renege on the benefits.