Chicago Sees Pension Crisis Drawing Near

RenegadeCJ wrote:

archer wrote: Do YOU plan to retire on Social Security alone? Many employees, both private and public, union and non union get pensions, it's part of the benefit package that attracts good employees to a particular company or government job. It's a contract, just like any other.....and should not be breached. You don't see CEO's, or Congress critters agreeing to give up their pensions when times are tough for their company, or the government...they have a contract and expect to get what has been promised. But when it's an employee....especially a union employee.....THEY don't get that same consideration.

The most generous pensions that I have come across came from major corporations, not government. I have worked for both, and the private company is normally far more generous with pensions.

Public pensions are criminal. Unlike private companies who decide their own pensions, public employees aren't bargaining with anyone. They are bargaining with themselves. There is no incentive for the "employer" to keep costs under control, since they can't go out of business. They can just tax the future. Our youth today will be crushed by these pensions which should have never been given. In order to save the future, we must make adjustments now.

Take away pensions for public sector employees and you make it very difficult for the government to attract and keep good employees, especially police and fire fighters.....these pensions are hardly "criminal" though the hyperbole does work well for the conservatives when trying to demonize public employees.

archer wrote:

RenegadeCJ wrote:

archer wrote: Do YOU plan to retire on Social Security alone? Many employees, both private and public, union and non union get pensions, it's part of the benefit package that attracts good employees to a particular company or government job. It's a contract, just like any other.....and should not be breached. You don't see CEO's, or Congress critters agreeing to give up their pensions when times are tough for their company, or the government...they have a contract and expect to get what has been promised. But when it's an employee....especially a union employee.....THEY don't get that same consideration.

The most generous pensions that I have come across came from major corporations, not government. I have worked for both, and the private company is normally far more generous with pensions.

Public pensions are criminal. Unlike private companies who decide their own pensions, public employees aren't bargaining with anyone. They are bargaining with themselves. There is no incentive for the "employer" to keep costs under control, since they can't go out of business. They can just tax the future. Our youth today will be crushed by these pensions which should have never been given. In order to save the future, we must make adjustments now.

Take away pensions for public sector employees and you make it very difficult for the government to attract and keep good employees, especially police and fire fighters.....these pensions are hardly "criminal" though the hyperbole does work well for the conservatives when trying to demonize public employees.

I haven't heard of any conservatives saying public pensions should be "taken away" (besides anecdotal opinions). And I also doubt that only conservatives are concerned about overly generous pensions that were unfunded and have little to no chance of ever being paid in full.

What is your solution for the pension problem in places like Chicago and Detroit , if you don't mind me asking?

archer wrote:

RenegadeCJ wrote:

archer wrote: Do YOU plan to retire on Social Security alone? Many employees, both private and public, union and non union get pensions, it's part of the benefit package that attracts good employees to a particular company or government job. It's a contract, just like any other.....and should not be breached. You don't see CEO's, or Congress critters agreeing to give up their pensions when times are tough for their company, or the government...they have a contract and expect to get what has been promised. But when it's an employee....especially a union employee.....THEY don't get that same consideration.

The most generous pensions that I have come across came from major corporations, not government. I have worked for both, and the private company is normally far more generous with pensions.

Public pensions are criminal. Unlike private companies who decide their own pensions, public employees aren't bargaining with anyone. They are bargaining with themselves. There is no incentive for the "employer" to keep costs under control, since they can't go out of business. They can just tax the future. Our youth today will be crushed by these pensions which should have never been given. In order to save the future, we must make adjustments now.

Take away pensions for public sector employees and you make it very difficult for the government to attract and keep good employees, especially police and fire fighters.....these pensions are hardly "criminal" though the hyperbole does work well for the conservatives when trying to demonize public employees.

It's not a level playing field in that 78% of public workers get pensions while only 18% of private sector employees get a pension. And that 18% is down from over 30% in the early 1990s.

http://www.bls.gov/opub/mlr/2012/12/art1full.pdf

On top of that, many federal and state workers are exempt from paying Social Security tax. Very few private employees have that luxury. Workers (usually fire, police, and teachers) in about 27 states (and of course the District of Columbia) have that luxury, and that is what I was referring to when I asked why don't they think Social Security is good enough for them.

http://taxes.about.com/od/statetaxes/a/States-That-Exempt-Social-Security.htm

I won't go so far as to call it criminal, but there is a conflict of interest with public sector pensions and collective bargaining (which even FDR opposed).

In the private sector the workers negotiate with a corporation which answers to its board of directors and stock holders. That corporation needs to keep its workers happy while also assure that the company not only stays in business, but is also profitable. Not that they always succeed.

In the public sector, public employees are negotiating with other public employees (usually elected officials and/or their underlings). These elected officials want to get re-elected and public unions represent a large portion of the electorate and exert a strong influence, hence the conflict of interest. They can just keep kicking the can of debt until the city eventually goes bankrupt.

So far as my situation goes, I plan (hope) to retire on Social Security and my 401k/IRAs. Not that I'm counting on much from Social Security (I'd be happy if it just covers insurance for what Medicare doesn't cover). Both Social Security and Medicare are now paying out more than they take in. Few if any companies in my line of work (high tech) have pensions, and I've never worked for one. Plus I've only worked for one company that even contributed to my 401k. Instead many of these companies tend to pay good wages and offer all employees profit sharing and stock options. So hopefully the employees take some personal responsibility and save this money for their retirement. If not, they'll be stuck with just Social Security which in the past was at least enough to keep you out of poverty.

My understanding is that those who are exempt from paying for Social Security also cannot get Social Security. Even if they have a second job that they pay into SS, their benefits are reduced if they are covered under a pension plan for public employees. Why is this a problem? Fewer people paying to SS also translates to fewer people taking out at a later date.

archer wrote:

RenegadeCJ wrote:

archer wrote: Do YOU plan to retire on Social Security alone? Many employees, both private and public, union and non union get pensions, it's part of the benefit package that attracts good employees to a particular company or government job. It's a contract, just like any other.....and should not be breached. You don't see CEO's, or Congress critters agreeing to give up their pensions when times are tough for their company, or the government...they have a contract and expect to get what has been promised. But when it's an employee....especially a union employee.....THEY don't get that same consideration.

The most generous pensions that I have come across came from major corporations, not government. I have worked for both, and the private company is normally far more generous with pensions.

Public pensions are criminal. Unlike private companies who decide their own pensions, public employees aren't bargaining with anyone. They are bargaining with themselves. There is no incentive for the "employer" to keep costs under control, since they can't go out of business. They can just tax the future. Our youth today will be crushed by these pensions which should have never been given. In order to save the future, we must make adjustments now.

Take away pensions for public sector employees and you make it very difficult for the government to attract and keep good employees, especially police and fire fighters.....these pensions are hardly "criminal" though the hyperbole does work well for the conservatives when trying to demonize public employees.

Like this notorious conservative.

Rahm Emanuel.

Some things need to transcend left and right or we are all doomed.

archer wrote:

RenegadeCJ wrote:

archer wrote: Do YOU plan to retire on Social Security alone? Many employees, both private and public, union and non union get pensions, it's part of the benefit package that attracts good employees to a particular company or government job. It's a contract, just like any other.....and should not be breached. You don't see CEO's, or Congress critters agreeing to give up their pensions when times are tough for their company, or the government...they have a contract and expect to get what has been promised. But when it's an employee....especially a union employee.....THEY don't get that same consideration.

The most generous pensions that I have come across came from major corporations, not government. I have worked for both, and the private company is normally far more generous with pensions.

Public pensions are criminal. Unlike private companies who decide their own pensions, public employees aren't bargaining with anyone. They are bargaining with themselves. There is no incentive for the "employer" to keep costs under control, since they can't go out of business. They can just tax the future. Our youth today will be crushed by these pensions which should have never been given. In order to save the future, we must make adjustments now.

Take away pensions for public sector employees and you make it very difficult for the government to attract and keep good employees, especially police and fire fighters.....these pensions are hardly "criminal" though the hyperbole does work well for the conservatives when trying to demonize public employees.

Pensions in general are a bad idea, but if a private company wants to do one, they should be required to keep it fully funded. Govt. employees negotiate with people they put in office, so they are basically like bribes. "Hey, put me in office and I'll make sure your pension promises get better and better!!" Since govt (for example, PERA) makes unrealistic return estimates on their funds, they never have to face the fact that they can never pay those promises out, at least without destroying the younger generation with overly burdensome taxes. Govt. pensions are just another way of kicking the can down to the next generation. I'm shocked that anyone under 30 today votes anyone in who supports govt. pensions.

Govt employees should have exactly what most private employees have. Defined contribution accounts. That way promises are made on a year to year basis, and paid for by taxes paid by that generation. It is the only right way to do it.

archer wrote: My understanding is that those who are exempt from paying for Social Security also cannot get Social Security. Even if they have a second job that they pay into SS, their benefits are reduced if they are covered under a pension plan for public employees. Why is this a problem? Fewer people paying to SS also translates to fewer people taking out at a later date.

Yes, if you don't pay into SS you won't get a benefit unless you have and/or had another job where you did pay SS tax, in which case your SS benefit will reflect what you paid in.

The problem is why do government workers get this exemption while private workers do not? And if Social Security is so good, why do so many public employees opt out of it?

Pensions are disappearing in the private sector for good reasons. Companies need to be able to compete in order to stay in business. Government doesn't seem to comprehend this.

If the public sector needs to compete to attract better people, they can offer better pay instead of pensions that they can't afford nor predict. Let the public sector have the Social Security benefit like the rest of us do instead.

RenegadeCJ wrote: Govt employees should have exactly what most private employees have. Defined contribution accounts. That way promises are made on a year to year basis, and paid for by taxes paid by that generation. It is the only right way to do it.

Couldn't agree more with this statement. This is also how Social Security should be set up as well. Workers providing for their own security in their later years from funds taken from them during their working years rather than asking those still working to fund the subsidy of those that are currently retired.

The imploding cities have one option that we investors love.....float bonds at HIGH interest rates......hummm I would go for some 40% CHITOWN bonds.......

deltamrey wrote: The imploding cities have one option that we investors love.....float bonds at HIGH interest rates......hummm I would go for some 40% CHITOWN bonds.......

I would not. yield reflects risk.