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The Suddenly Poor Life: Millions Will Lose Their Pensions

Discussion in 'Coffee Shack (Daily News/Economy)' started by Goldhedge, Mar 4, 2016.



  1. OhWell

    OhWell Silver Member Silver Miner

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    Read The Forgotten Man: A New History of the Great Depression.

    http://www.amazon.com/Forgotten-Man-History-Great-Depression/dp/0060936428

    In it she talks about the negotiations between public employee unions and government representatives over salaries and benefits. Neither will actually pay for what is agreed on. It's the forgotten man (taxpayer) who has no voice or seat in the negotiations. The forgotten man is the one that's stuck with the bill.

    I am an evil government worker (ATC). I can tell you that we are WAY over payed. I will be retiring this year after 40 years at the job and I will take the retirement check I was promised (76% of my present salary). I am also a realist and know there is no way it can go on forever. Because of this I took steps to survive the loss of my pension a long time ago.

    When it happens I hope those responsible suffer, starting with the union scum.

    I'd love to see someone start a list of people that need to pay when the system comes down. Instead of us peons fighting one another we should join together, in spite of our differences, and take the fight to those responsible. They want us killing each other as we swirl down the toilet. What they wouldn't like to see is their name on a list that identifies them as being responsible for the pain we will be living in. At least we would know who to take the fight to.

     
  2. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    Unca Walt you deserve it, 100%. Congratulations. But what do you do if it's broke? (think GM)
    Your the last generation with a pension except for ceo's who get paid stupid amounts & govt workers.

    Your not the only one that saved companies money, increased profits, made superiors look good. But ........ you were in a large corp.
    Lots of small companies simply get rid of you because you make too much & they bring in the next ball of energy so they can steal their ideas.
    No pensions just 401K's. No security, just never ending pushing for being better, faster, whatever. Took one company to record profits.
    When I figured out we needed to shift our market to a higher profit area doing very similar work we moved into that direction.
    Then they hired a guy from that industry, interviewed them in front of me & fired me. I walked into a disaster & grew a team & organization & increased profits.
    He walked into a great running business and brought along his customer list.

    Another job I had I took care of our largest most profitable customer. They screwed the salesman out of his commission.
    I visited them weekly, changed design to aid manufacturing, set up an inventory system that was making massive profits.
    I was not even allowed to see the overall monthly statements. I was told if I saw them I would want more money.
     
  3. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    Before 401K where did companies get the money for a person's pension? Did the company buy an annuity when they retired?
    ie..... Joe retired at 65 & they wrote a check to an annuity company for $X to cover him for life? That's where the survivor benefits came into play?
     
  4. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Unca, you worked for a defined pension, and they should have to pay up.
    On the other hand, if the pension is a fraud and goes bankrupt, why should J6P pay for a bailout [hypothetically]?
     
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  5. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    You shouldn't feel guilty in the least for receiving something you worked for.
     
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  6. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Midas Member Site Supporter

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    I think you should have gotten a bit more than you did. (read a LOT more)
    I was in a similar position with a company & I offered to relinquish my salary for 10% of what I was saving them.
    I was told, basically "NO" & to go back to work.
    You earned that pension, spend it as you see fit & ENJOY !!!!
     
  7. Unca Walt

    Unca Walt Midas Member Midas Member

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    Well, thanks for the support, guys. :beer:

    IBM has figured out a way to be able to fund every single retiree. TINS.

    They have changed their business method; it is now absolutely impossible for any single person to ever retire from IBM again.

    So those who got past the gate before the guillotine came down are funded by an escrow account. Every DAY there are fewer left on the rolls of IBM retired. They worked out an actuarial chart for those who were already on their retiree list, and plunked the dough in it in a lump sum.

    Fifteen fargin years ago. Nobody's been added since then, to my knowledge.

    You are absolutely spot on, there, bro.

    The paradigm has changed. Seminally.

    Regarding the retiree funding: If it wuz broke, I would be sorely upset. But unlike GM and other union-disabled companies, IBM had the means to set it all up with the escrow... providing they stuck it up the hineys of ALL current employees. They get NOTHING.

    But... didja see the date on that K-rand? Wifey and Himself set aside small amount of FRN's each month for conversion to K-rands or whatever since at least that date. That's the only thing I really count on.
     
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  8. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Sounds like IBM did the right thing with the pensions as to putting enough into escrow. What followed for current workers, not so much, however, I am assuming the current workers understand they will get nothing.
     
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  9. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    I doubt very many companies understood what was going to hit them with pensions. After WWII all the baby boomers etc. Then they all retired at once. Say you were 25 in 1945 and retired at 65. That was 1985..... / S&L scandal / no more pensions in the late 70's early 80's time frame, 401K because they saw it was unsustainable. Where the big three and many others screwed themselves is they gave up 65 as the retirement age & went to 30 years. People starting at 20 retired at 50 & lived a very long time. People working until 65 died shortly after.

    I can't find it but it was Allied Signal chart. Retire at 65 & the AVERAGE pensioner received 18 checks before he died at 66 1/2 years old. Retire at 55 & the AVERAGE lived until 80 or 300 pension checks.
    It was almost a straight linear line on the chart. Granted it was AVERAGE but the amount was enormous. My point is every year a man works past 55 he is loosing more than he is gaining. Also thought it strange it applied to men only and not woman.
     
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  10. Joe King

    Joe King Gold Member Gold Chaser

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    The problem most pensions had was in being underfunded by the companies who made the promises of big pensions in exchange for more work at the time.
    They got the work done, but failed to hold up their end of the bargain because they always counted on rosey predictions of big future returns to make up the short fall.

    In order to get those 10% returns over time, the $ has to be in there from the beginning.
     
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  11. Unca Walt

    Unca Walt Midas Member Midas Member

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    Oh, boy... Don't they, though.

    IBM TOTALLY changed its business practices. Useta be, there were T-shirts that said, "IBM Bigot" on them. Loyalty was fierce. Way back when I first got there, nepotism was actually encouraged.

    Some guy would get a job, and if he was performing poorly, his FATHER would talk to him. TINS, Pilgrims.

    And the company was loyal to its employees. Fiercely loyal. I was just a new hire, and we discovered than my son had a heart defect. And a rare blood type. (We have a mixed marriage: I'm Klingon.) He had to have an operation that was only conducted at one hospital in the US... so they took my son there.

    Anyway, the company flew in 9 volunteers from all over the fargin world with the A-neg blood type to stand by during the operation (the blood could not be stored, had to be "right from the source").

    My cost? 45 cents. One 20c and one 25c phone calls were not covered by the company.

    Years later as a manager, I would explain to my department that the company never laid anyone off. Well... that went out the fargin window.

    Then they installed the absolutely infamous "4-Check" program. That's where the manager of a department had to have at least one employee on the soon-to-be-fired shitlist for every one that he rated as "exceeds requirements"

    Think about that. You were measured AGAINST you co-workers. You were also (split-personality psychotic schizophrenia!!!!!) specifically measured on how well you helped your co-workers. So if you and another guy were in a heat for the axe, would you HELP him to beat you out? Not fuggin likely. Really made for frightened, desperate, chaotic, low-morale employees.

    OH. And for the professionals -- scheduled 60+ hour weeks. The new norm. On top of the other schizophrenic shit.

    And retirement? It is no longer even offered -- just in case somebody flying that Wellington bomber over Germany every night for years manages to survive. You work until the day you leave... and that's it.

    Like America, the wonderful company that was IBM... is no more.
     
    Last edited: May 27, 2016
  12. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  13. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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  14. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    The COLA number is bogus anyhow. They are so much more broke then they let on. That's why CEO's get paid up front........
     
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  15. Ensoniq

    Ensoniq Midas Member Midas Member Site Supporter ++

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    How a CEO is paid is actually my number 1 metric system on whether to invest in a small cap. I love small salary and large options. They should get rich only if they make the shareholders money.

    Unfortunately, like everything else, the Feds have F'd up the process with regulations

    - I think you can no longer issue stock options with a strike price different than the share price on date of issue (used to be able to make the strike price higher so there was some stretch in the goal)

    - I think you can no longer issue options without treating them as an expense, which limits a start up or cash limited company from incentivizing management. Small companies need their cash to fuel their growth.
     
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  16. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  17. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Thanks for the taxpayer horror story searcher. Hopefully somebody goes to jail.
     
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  18. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  19. honu5050

    honu5050 Mother Lode Found Mother Lode

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    I guess they can just be old gorillas every little bit counts. Fight on
     
  20. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  21. latemetal

    latemetal Gold Chaser Platinum Bling

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    Silver dimes are more trustworthy than my pensions...
     
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  22. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  23. Olmstein

    Olmstein Seeker

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    What's the old saying?

    "It ain't rocket science, but it is actuarial science."
     
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  24. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  25. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    At what point do the few people that still have jobs get fed up and say FU? Can't blame the govt employees for wanting their pensions and can't blame people that are starving, in debt, worked to death and living from hand to mouth from being tired of paying for others obscene pensions. That's not a society it's serfdom at best.
     
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  26. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Establishment Tries To Suppress "Dissident Actuaries" Explosive Report On Public Pensions

    [​IMG]
    by Tyler Durden
    Aug 6, 2016 8:05 PM

    Submitted by Walter Russell Mead via The American Interest,

    America’s slow-motion public pension train-wreck (by some estimates, the shortfall currently exceeds $3 trillion) has been kept in motion for years by deeply dishonest accounting practices employed by state and local governments, which presume unrealistically that pension funds can consistently earn white-hot annual returns approaching eight percent. So it’s disappointing, but not particularly surprising, that the actuarial establishment moved to suppress a report pointing this out.

    Pensions and Investments reports:

    The American Academy of Actuaries and the Society of Actuaries Monday abruptly disbanded its longtime joint Pension Finance Task Force, objecting to a task force paper challenging the standard actuarial practice of valuing public pension plan liabilities.

    “This paper (is) being censored by the AAA” and SOA, said Edward Bartholomew, who was a member of the former task force, in an interview. “They didn’t want it to get out.”

    Others who were members of the task force also said in interviews the two actuarial groups are trying to suppress publication of the paper.

    There are powerful interests that don’t want public pensions to be governed by the same kinds of accounting principles used in the private sector because… well, because if they were, public pensions would go from seriously underfunded to catastrophically underfunded.

    Union officials and state legislators (in both parties) seem to believe that it makes more sense to allow public pension funds to play “let’s pretend” with public money. To be sure, the sudden imposition of a tougher standards would cripple business as usual in many state and local governments, so there can and should be some reasonable accommodations made to allow the adjustment to take place in a less disruptive fashion. Governing by catastrophe is almost never a good idea, and a series of small and incremental changes is usually (though not always) a better way to manage public affairs.

    In the long run, shifting to a more portable system of public pensions—defined contribution, rather than defined-benefit—wouldn’t just help save states and municipalities from fiscal ruin. It would also do much to improve the performance of the civil service. The current system creates a jobs-for-life mentality in public employment because workers need to stay at their positions for decades to collect the full value of their pensions. Somebody who was a good teacher at 30 but wants to leave and should leave at 40 is currently trapped. Also, one of the reasons the unions fight quality evaluations so fiercely is that the loss of job and pension is so much more draconian than simply losing a job.

    The report from dissident actuaries might have helped push state and local pension systems down a more sustainable path. And the conduct of American actuarial leaders—disbanding a reputable task force that had prepared a report that the bureaucracies didn’t like, and then hinting at legal action if the report is published—is irresponsible at best and corrupt at worst. Is it any wonder that Americans are fed up with experts and the institutions they manage?

    http://www.zerohedge.com/news/2016-...nt-actuaries-explosive-report-public-pensions
     
  27. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    First they bankrupted the old, infirm retirees with ZIRP, then the insurance companies and pensions start failing left and right.
    They have painted themselves into a corner, they can't let rates go up because the debt service will consume the entire budget in just a few years.
    Nobody is this stupid, it has to be a planned destruction.
     
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  28. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    But but but............ they're professionals. Don't try this at home kids.
    Remember it's always about money & control. They still have "pensions" and they have not even bailed in your 401K or crashed the market...................yet.
     
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  29. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Uglytruth, that is the uglytruth.

    They will be stealing down the road. We have some breathing time to make the IRAs bank accounts etc go to zero. Even if it's spent on hookers and blow, it's better you get the hookers and blow and not some politician.
     
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  30. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  31. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  32. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Kentucky teachers aren't on SS. Our pension system is hosed. Token fixes just kick the can down the road a bit. They can't IMHO tax us too much more or there will be a rebellion. As for me, I just read my county is looking to jack up property taxes this year.

    Latest BS is up in Jefferson County, AKA Louisville.
    The property assessment are skyrocketing. The problem is that causes the money the school system can take from property taxes over a threshold that causes there to be a vote by the public. They are crapping bricks it seems as they know what will happen if it comes up for a vote. So they are asking for percentage of increases to be lowered so there cannot be a vote by J6P. At least, that is how I understand the issue - I don't live up there but I found it interesting.
     
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  33. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    Already did that, I work 5 taxable hours a day = just enough to get by. I'll work 16 hours a day for cash though.
     
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  34. Dude

    Dude Midas Member Midas Member

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    The teacher pension system in KY lost money investing last year. They botched it bad with overseas investment.
     
  35. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    If you look at all these pension scams....... as a KILLinton would say that's old news. They knew it would blow up and 30 years later it is. Just another govt program that enriched a few insiders at the expense of the masses and like any good ponzi a few got out at the right time and it was OK.......... until it wasn't. But they got their fees, they knew every day when institutions would be forced to buy so they bought ahead of them and skimmed the waves every day for years from day one.

    I used to watch the market at open. Back in the 90's early 2000's a safe trade was S&P at about 9:40 AM and sell by 10:15 AM or earlier and you could have made a dream days wages playing with 50K. In, out and off to the lake or whatever.
     
  36. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    That well may be, however, the problems started long before that.
     
  37. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Illinois Warns Of "Crippling Tax Hikes", "Devastating Impact" If Largest Pension Fund Admits Reality

    [​IMG]
    by Tyler Durden
    Aug 23, 2016 10:38 PM

    Defined Benefit Pension Plans are, almost by definition, a ponzi scheme. Current assets are used to pay current claims in full in spite of insufficient funding to pay future liabilities: classic Ponzi. But unlike wall street and corporate ponzi schemes no one goes to jail here because the establishment is complicit. Everyone from government officials to union bosses are incentivized to maintain the status quo - public employees get to sleep better at night thinking they have a "retirement plan," public legislators get to be re-elected by union membership while pretending their states are solvent and union bosses get to keep their jobs while hiding the truth from employees.

    We even published a note several weeks ago titled "Establishment Tries To Suppress "Dissident Actuaries" Explosive Report On Public Pensions," which pointed out that the American Academy of Actuaries and the Society of Actuaries killed a report that would have warned about the implications of lowering long-term expected returns on pension assets. Apparently the truth was just too scary.

    Similarly, Janus' Bill Gross has been warning of the unintended consequences of low interest rates for years, and reiterated his concerns to Bloomberg recently:

    Fund managers that have been counting on returns of 7 percent to 8 percent may need to adjust that to around 4 percent, Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund, said during an Aug. 5 interview on Bloomberg TV. Public pensions, including the California Public Employees’ Retirement System, the largest in the U.S., are reporting gains of less than 1 percent for the fiscal year ended June 30.

    Two weeks ago, we decided to take a look at what would happen if all federal, state and local pension plans decided to heed the advice of Mr. Gross. As one might suspect, the results were abysmal. We conservatively assume that public pensions are currently $2.0 trillion underfunded ($4.5 trillion of assets for $6.5 trillion of liabilities) even though we've seen estimates that suggest $3.5 trillion or more might be more appropriate. We then adjusted the return on asset assumption down from the 7.5% used by most pensions to the 4.0% suggested by Mr. Gross and found that true public pension underfunding could be closer to $5.5 trillion, or over 2.5x more than current estimates. Others have suggested that returns should be closer to risk-free rates which would imply an even more draconian $8.4 trillion underfunding.

    [​IMG]

    The result which we dubbed an "Unsolvable Math Problem", is the reason why so few pension funds have dared to address this issue face on.

    However, to our surprise perhaps because they realize just how near to the end really is or for other unknown reason, certain pension funds are finally taking notice, and action. In early August, Richard Ingram of Illinois's largest pension fund announced that he would be taking another look at long-term return expectations noting that "anybody that doesn’t consider revisiting what their assumed rate of return is would be ignoring reality." Ingram's Illinois Teachers' Retirement System is only 41.5% funded and currently assumes annual returns of 7.5%, down from 8% in 2014.

    And right here we get an example of precisely why US pensions are a legal ponzi, because the moment one person is willing to do the right thing, and evaluate the situation soberly, someone else promptly steps in, realizing that if just one card is removed from the house of cards, the whole thing collapses.

    Enter Illinois governor Bruce Rauner, who warned that should his state's largest public pension fund do what it should have done long ago, it would put a big dent in the state's already fragile finances and lead to "crippling" pension payment hikes, Reuters reported today.

    [​IMG]
    Bruce Rauner and his wife Diana

    According to a Monday memo from a top Rauner aide, the Teachers' Retirement System (TRS) board could (or rather, should) decide at its meeting this week to lower the assumed investment return rate, warning that this move "would automatically boost Illinois' annual pension payment."

    "If the (TRS) board were to approve a lower assumed rate of return taxpayers will be automatically and immediately on the hook for potentially hundreds of millions of dollars in higher taxes or reduced services," Michael Mahoney, Rauner's senior advisor for revenue and pensions, wrote to the governor’s chief of staff, Richard Goldberg.

    As a reminder, the TRS already lowered its assumed rate of return once, back in 2014, and as a result of the even bigger underfunding hole created by the lower assumed rate of return, the state's pension payment increased by more than $200 million, according to the memo.

    It is about to do it again, only this time it would have to cut the discount rate far lower, if it wishes to be even remotely realistic: recall Gross' suggestion is to lower the expected return to 4% (or even lower). However, as we reported two weeks ago, the TRS hole is already gargantuan and about to get even bigger. Illinois' fiscal 2017 pension payment to its five retirement systems was estimated at $7.9 billion, up from $7.617 billion in fiscal 2016 and $6.9 billion in fiscal 2015, according to a March report by a bipartisan legislative commission. The country's fifth-largest state's unfunded pension liability stood at $111 billion at the end of fiscal 2015, with TRS accounting for more than 55 percent of that gap. The funded ratio remains just under 42%, implying that any rate reductions will push the already frigthfully low funding ratio even lower.

    And this is where the politicians come in.

    An impasse between the Republican governor and Democrats who control the legislature left Illinois as the only state without a complete 2016 budget, however a six-month fiscal 2017 spending plan was passed in June.

    Still, Mahoney has cautioned that "unforeseen and unknown automatic cost increases would have a devastating impact" on Illinois' ability to fund social services and education.

    What Rauner's senior advisor is essentially saying, is that if the TRS does what the Fed and other central banks are forcing it to do, our political careers may be over, and that could be just the beginning.

    And here is the punchline: one of Rauner's top Republican legislative allies, Senate Minority Leader Christine Radogno, urged the TRS board to delay a vote Friday to give the public time to weigh in on its possible actions. "This issue is important enough at the very least to put the TRS board on notice we don’t want them taking any action that could cost taxpayers $200 to $300 million without appropriate scrutiny,” she said. The action in question, Radogano is demanding the TRS not take, is to lower its return expectations from the ludicrous 7.5% to something realistic; instead she is suggesting the fund pretend all is well, and avoid the day of reckoning for at least a few more years, ideally until she has quit as Senate Minority Leader, at which point the TRS can by all means go ahead and admit just how terrible its underfunding truly is.

    Translation: please keep your heads stuck in the sand, and dare not admit the reality of near-zero returns in the new normal, but instead keep the projected return rate at 7.5%, or else you will not only admit just how much bigger the underfunding hole truly is, but the resultant surge in public anger following the broad rise in taxes coupled with cut to pensioner benefits could lead to millions of furious voters sweeping all of Illinois' current career politicians right into the unemployment office.

    Incidentally, this is precisely the fight that countless ponzi schemes, pardon pension funds, across the US will be forced to go through in the coming months, unless somehow the Fed funds a way to guarantee 8% returns every year, or else sending inflation soaring, and wiping out the fund's liabilities.

    Since neither is likely to happen for a while, the biggest losers will once again be taxpayers and pensions recipients, who this time will be forced to pay - literally - because their public fiduciaries lied to them, and because other fiduciaries are hoping the lies will continue for at least a few more years.

    http://www.zerohedge.com/news/2016-...stating-impact-if-largest-pension-fund-admits
     
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  38. mtnman

    mtnman Gold Member Gold Chaser Site Supporter

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    My dad was a Teacher in the Louisville School Systems. Taught for 27 years at Ahrens Trade School. He says the same thing about the school pensions. I've been out of Louisville for a LONG time, but I remember the Suburban Fish Fry Mmmm Mmmm Goood!
     
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  39. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    My DIL is a school teacher in Jefferson County, but questioning her results in one of two things:
    1. She doesn't know [Didn't know if she paid in to Social Security or not - I had to look it up]
    2. Some Leftist retort or position.

    A couple of years ago I brought up teacher pensions; she was of an opinion that all was good and would remain good forever. She seemed to have no idea or awareness of the pension fund shortfalls, one of the top three worst in the nation at that time. I didn't see an upside in educating her. She already knows everything about everything if you know what I mean. Need to keep things friendly.
     
  40. latemetal

    latemetal Gold Chaser Platinum Bling

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    Is your son brighter, make sure he understands it too...
     
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