BGF:

I appreciate your thoughtful and informative response.

Thank you

Mr. Purrington

 

Only 18% of non-government workers have a guaranteed pension while 80% of local, state and federal government workers (includes military and teachers) have a taxpayer guaranteed pension.  Taxpayers cannot be expected to continue to subsidize this unfair situation whether such pension funds are underfunded or not.

Either a special "bailout" package should be appropriated to guarantee a basic value level of all 401ks, IRAs, etc  or taxpayer subsidized pensions should be abandoned or converted to the same risk and uncertainty as private retirement savings plans.

If this situation is not corrected, then America risks evolving into a new sort of Soviet style system.  You may recall that Communist Party members held all the government positions, and that they did not suffer during times of food and housing shortages as did the vast majority of their population.  But Americans are not like the Russian peasants; they will revolt much faster.

Government workers, for their own self interest, should be pressuring their elected officials to help the majority of us American workers to also have a reliable pension to look forward to.  Remember what happened to Marie Antoinette when she sort of told the starving French people to, "Let Them Eat 401ks". 

 

 

Simon,

I can appreciate your views. In fact to a large degree I am of the same opinion. However, we have two problems. 1) Local governments can not function with out them. Meaning that teachers, firefighters and police officers are typically not the most highly paid individuals. They are willing to trade current dollars for future dollars which is why the government is okay with pensions. If we were to reverse course wages would have to increase to offset what might be deemed loss of "automatic savings". 2) pension benefits would not be such a burden if they had just funded them in the first place. Most pension plans really still need to be suplimented with personal savings, but there are some states that loved the idea of lower wages today that they were willing to promise away all of tomorrow.

BGF

Nonsense to the idea that government workers have a lesser pay in lieu of their pension guarantees. they are very well paid with overtime all over the places. a firefighter friend who works parttime in my office had to leave for a 15 monute appearance for a cause. he received 4 hrs pay. many other examp[les like this. accumulating sick and vacation time over the yrs and cashing out at retirement. Having a gvt pension and being rehired to another govt position. It goes on and on .Rich

NY state pension funds face Lehman losses

By MICHAEL VIRTANEN |Associated Press Writer September 16, 2008

ALBANY, N.Y. - New York's pension funds for state workers and teachers face several hundred million dollars in losses from Lehman Brothers' collapse, and both have a large stake in troubled Merrill Lynch & Co., which agreed to a buyout by Bank of America.

Monday's shocks to financial markets affected retirement investments of more than a million state and municipal workers, retirees and beneficiaries, as well as some 400,000 in the teachers' pension system. Both pension funds also have holdings in troubled American International Group Inc.

Mr. Purrington

 

It's time to take the rose colored glasses off.  Pension funds all over are underfunded and many are already cutting back on benefits.  We are in all likelihood entering a period of low growth with low returns.  Most pensions have their payouts based on much higher returns than are likely to be realized in the next several decades(yes decades).  There are really two choices for the managers of these funds:  1) reduce payouts 2) take much higher risks.  They can't do the second, so that leaves them with fewer benefits.

Our county is not going to be able to leverage itself the way it did over the past several decades.  The banks are not going to be able to lend as much.  Companies in turn are not going to be able to borrow as much to fund growth.  Without growth, stock prices al likely NOT to increase as they have in the past.  This in turn leaves us with less to distribute.

We already should realize that taxes will be going up.  Our National, State and Local debts are already unsustainably high.  Additional borrowing is going to be limited.  At some point you have to ask yourself how many additional tqxes can be placed on our economic system before it screeches to a halt.(look at what's happening today)   You can tax the rich, but I doubt that they have near enough to fund everything that has been promised.

So, if we increase taxes to fix Social Security and associated benefits, pay down accumulated debt at every level, deleverage a lot of the borrowing that has been taking place, fund current educational needs, and fund the host of additional necessary benefits, it stands to reason that pensioners are likely to get the short stick.  It is already happening in the private sector and therefore will likely happen as well in the public sector.  (Once retired you have little say over promised benefits)  My suggestion to protect yourself is take the cash if it is ever offered.  There are too many promises to too many people and NO way to fullfill most of them.  IMHO

Judyken - you've pretty much summed up what a lot of us are pondering - system wide leveraging into the future. Even under average growth scenarios, projections were way too high/optimistic. Especially in the area of property taxes, where, as prices escalated, local property tax systems raised assesments and spending in lockstep. Now, as the underlying property asset value is in freefall, local governments are fighting tooth and nail to keep the "cash flow" at the old levels - adding new "fees" and a la carte bills for fire protection, park usage, etc. In fairness, I think many of the local town managers may cautiously think this is temporary, and that the good times will return - so they don't want to give up and find themselves behind if there's a turnaround. But I think we all knew that the property value increases were unsustainable. In the end, the towns will have to adapt - the golden goose is dead.

But what's missing from your commentary is the "base" for continued support of the "pensioners" over future years; and that is, the youth of today. Without their continued participation in the economy, at fair compensation and provisions for their retirement too, nobody will be collecting much of anything. I, frankly, am worried about the mess we are leaving them.

 

 

Teachers, police, state, city, local government workers need not worry, if the pension funds come down people will be taxed more to replenish, that is what happened after year 2000. During around 2000 - 2004, property school taxes went up enormously, they said because teachers pension fund took risk and lost, so we the property owners had to pay for the loses. The strange thing is no one replenished when our 401K became 201K, now it is getting worse, no one to bail out the home owners who have to pay an arm and a leg for school taxes even when you have no kids. What kind of a system we have? There are no pensions in private industry for white collar workers. Teachers union publicity states that teachers do not get paid well, in year 2000 teachers were approaching $100k/year for six months of work, some even reached $125K/year in NY city suburbs. I have not seen current salary list from my school district since year 2000, I imagine they must be making well over $100K. Teachers were also retiring with million dollar portfolios, by age 50. The same is true with police. I have not seen fire fighter salaries, they probably are not too far away from the above. They are completely out of touch with the real world and always complaining about under pay, for a change they should join the corporate world and see how good they had.

Teachers, police, state, city, local government workers need not worry, if the pension funds come down people will be taxed more to replenish, that is what happened after year 2000. During around 2000 - 2004, property school taxes went up enormously, they said because teachers pension fund took risk and lost, so we the property owners had to pay for the loses. The strange thing is no one replenished when our 401K became 201K, now it is getting worse, no one to bail out the home owners who have to pay an arm and a leg for school taxes even when you have no kids. What kind of a system we have? There are no pensions in private industry for white collar workers. Teachers union publicity states that teachers do not get paid well, in year 2000 teachers were approaching $100k/year for six months of work, some even reached $125K/year in NY city suburbs. I have not seen current salary list from my school district since year 2000, I imagine they must be making well over $100K. Teachers were also retiring with million dollar portfolios, by age 50. The same is true with police. I have not seen fire fighter salaries, they probably are not too far away from the above. They are completely out of touch with the real world and always complaining about under pay, for a change they should join the corporate world and see how good they had.

rebe945,

You are taking one example and trying to apply it to everyone. While I don't disagree that some cities and states pay their employees well, the majority do not.

The police officers get overtime and all the guys I know work hard for that extra money. I would say police officers are paid fairly on one standard and then a little low when you consider the risk of the job. Please take one day and go for a "ride along" with your local police officer. You go on the right night and you'll be on the ride of your life. Their pay does not seem so bad until they don't go home one night and mom and kids must make due.

Teachers are salary so they get no overtime. They often work the typical work day and I would say the avg. teacher puts in 3 extra hours a day with no pay to get the job done. The really exceptional ones will even be in on the weekends puting in an extra 5 - 10 hours just getting organized for that weeks projects. They get paid for the time they teach, not for the time to grade, prepare lesson plans, organized and clean the rooms, gather crafts and tools for teaching the lessons, etc.

Firefighters, not to knock them really get a more cushy situation. One of my cousins is a firefighter and they do work a lot of on off shifts. So far his situation is pretty cushy because in most situations (unlike a police officer) they can adjust their level of response to the risk to personal loss of life.

Point is, some states and cities have overnegotiated pensions which is why their retirement is so cushy. Some states also pay their public servants really well, but I would guess about 30 or so states in the union underpay their teachers, police officers and firefighters. If you look at what the avg. police officer, teacher and even firefighter makes in most cases it puts them into the lower middle class. Many of these people would likely leave the profession without the pension benefit without an increase in pay. My wife happens to be a teacher. I can say if she lost her pension benefit with no increase in pay she would leave. She is not in it for the money... but she works twice as much as I do and I make twice what she does. When you consider her pension benefit it even things out a bit.

BGF

Ok, that may be. Here in NY state teachers and police officers are way over paid by 50%. I do not know how well fire fighter get paid, there are not busy with putting out fires in the suburbs as in NYC, in NYC fire fighters lose their lives, it can be dangerous but not outside of the city

.I do not know a single teacher who want to leave the public school system here in the suburbs, even NYC city teachers get paid well, they