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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. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    and she has the degrees to prove it! Educated beyond their intelligence I call it....
     
  2. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  3. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  5. Ensoniq

    Ensoniq Non-Black Member Midas Member Site Supporter ++

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  6. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    Best I could make out is that the United Mine Workers Union wants the FedGov to bail out the failed pensions for former Union mine workers, caused by the destruction of the coal industry by Democrat policies. The bail out would not help non-Union workers in areas that are currently producing the majority of coal [Wyoming].

     
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  7. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The article was in a paper that "hides" articles that are over 24 hours old. The only way to pull them up is to be a subscriber for 9.99 a month (lol.) I wouldn't mind copying the articles but I don't know their copyright policies.

    Mike Krauss is a proponent of public banking ( http://www.publicbankingpa.org/ ) and the article was basically about how (in his opinion) investing public pension $$$ in public banking could "fix things."
     
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  8. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  10. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    My little city hosted a outdoors political speaking event today. People running for office in the local towns and cities, for state office, and Ran Paul spoke.
    For the state offices, the number one issue addressed were state pensions. The Democrats here made state legislature pensions a "state secret" years ago [they have controlled the house for over 100 years], local state republican reps report that the state legislature members pensions are fully funded, while our other state pension funds are among the worst in the USA, yet they were funded at 141% in 2001, when the then Governor (D) and democrats in the legislature stopped funding and used the money for "other projects". Over and over, the word corrupt and corruption were used [and cheered]. People know the deal, they are crooks. Rand Paul gave a good speech after his wife spoke, first time I heard her speak in person, nice lady. Pretty too. Rand focused on downsizing FedGov and returning power to the States and the People. Well received speech and he got a lot of applause. Many Rand t shirts etc in the crowd. A guy spoke for Clinton and was booed continually, however I think he was compelled to speak on her behalf as no other person from the Democrat party would, I guess you would say he reluctantly took her side. A guy spoke for Trump but really he spoke against Clinton for the most part, he said several times "Trump isn't perfect, I don't agree with all he is or is for, but he ain't Clinton. He was very well received I might add, and I felt compelled to shout out "Hillary for Prison 2016" a couple of times, which got some laughs and applause.

    Notable were many yard signs bumper stickers etc for Trump and Rand Paul on display and to take home, I did not see even one Clinton anything, but the local democrats had many booths and signs for local and state candidates. I guess they see associating themselves with Clinton means lose, lose, lose, at least in the counties around me.
     
  11. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Pension Shortfalls Could Be 4X To 7X Greater Than Reported


    -- Published: Friday, 23 September 2016

    By Daniel R. Amerman, CFA

    [​IMG]

    • The reported shortfall for the California Public Employees Retirement System (Calpers) is $139 billion - but that is based upon investment assumptions that may be unlikely in current markets.
    • As developed using a 40 year financial model and recent actual results, the real present value shortfall could be in the $500 billion to $1 trillion range, which is 4X to 7X as great as reported.
    • Calpers is used as a real world example to explore nationwide issues that could change our financial futures - and our choices - as investors, taxpayers and pension beneficiaries.
    The California Public Employees Retirement System is the largest public pension in the United States. It is considered to be the bellwether for pensions nationwide, and among the most sophisticated of long-term investors.

    Calpers also faces an extraordinary dilemma. It is drastically underfunded, even using relatively aggressive assumptions about future long-term investment returns. These assumptions do not take into account the current policies of the Federal Reserve and other central banks. As analyzed herein, when lower returns are taken into account, there can be a multiplying of the shortfalls - and a multiplying of taxpayer burdens.

    [​IMG]

    Above are the most recent full year results for Calpers, for the fiscal year ending June 30th 2016. Calpers has a target return of 7.5%. For the most recent fiscal year they had an actual total return of 0.6%, meaning they came up short by 6.9%.

    Calpers ended the fiscal year with assets of $295 billion, but they needed $434 billion to be fully funded - assuming they can earn 7.5% on average for each year in the future. The difference between those two amounts is a shortfall of $139 billion.

    Another way of looking at this is that if we say $434 billion is 100 cents on the dollar, and the amount they actually have on hand is $295 billion, then their funding percentage is 68 percent (292/434 = 0.68). This compares to a national average funding percentage of 72 percent, so Calpers is just a little bit below the national average.

    To better understand the dilemma that Calpers is facing and why it's likely considerably worse than $139 billion, we need to understand the nature of a pension fund - which is also very similar to the requirements of a long-term individual investor.

    As retirement investors, we invest today so that we can slowly draw down our savings over a period of many years as a retiree. What Calpers is doing is investing money today to cover anticipated payouts to their pensioners over a very long period of time. The calculations involved are complex, and require three types of projections - economic, actuarial and investment (with those same factors also being quite relevant for individual retirement investors).

    To isolate the importance of the investment assumptions without getting bogged down in the complexity of the economic and actuarial assumptions, we are going to use a round number illustration of the dilemma faced by Calpers and other pension funds.

    [​IMG]

    We are going to assume that Calpers is investing to cover even annual payouts over the next 40 years. Using a bit of reverse financial engineering, if $434 billion is full funding, and 7.5% is the investment rate, then 40 annual payments of $34.5 billion can be supported.

    [​IMG]

    So this means total payments of $1.378 trillion can be supported, which are consolidated in the graph above.

    Pension funds share an assumption with individual financial planning as well as other forms of long term investment to support obligations, and that is the idea that we can estimate today what our earnings will be not only next year and the year after, but (on average) for decades into the future.

    [​IMG]

    So we don't need to set aside almost $1.4 trillion, but $434 billion will suffice. Because $434 billion invested at 7.5% and evenly drawn down over 40 years will generate $944 billion in earnings. Every dollar available today (the purple bar) is assumed to generate another $2.18 in earnings (the green bar) over the next 40 years, and that is the rationale that enables governments and corporations to make much larger promises for the future than the cash that is actually being set aside today.

    [​IMG]

    However, Calpers doesn't actually have $434 billion. Instead, they have $295 billion, as shown in the purple bar above. There is a gap between what they have and what they need, which is a present value shortfall of $139 billion, as represented by the red bar. Full funding would be 100% or $434 billion, actual funding is $295 billion, or 68%, and the deficit is $139 billion, which is 32%.

    We know the size of the purple bar, the investments on hand. We know that the red bar, the present value shortfall, is the difference between the green bar and the purple bar. But what we don't actually know is the size of the green bar. It is all an assumption, in terms of being able to earn the average of a 7.5% annual rate of return into the indefinite future.

    We also know Calpers only earned 0.6% in their previous fiscal year. Calpers earned a negative return of -3.4% on their equity portfolio last year. Interest rates in the United States are at near historic lows. Global interest rates are at the lowest levels in recorded history when we include the negative interest rates in Europe and Japan.

    From that perspective, a 7.5% investment assumption seems outdated, or even antiquated. So a reasonable question becomes: what happens to the present value shortfall if actual returns are less than 7.5%?

    [​IMG]

    As the next step, we need to consider what our new full funding amount is at various possible future returns. Remember - full funding being $434 billion is only accurate if we get a 7.5% return, meaning $2.18 in future earnings for each dollar on hand today, as shown in the rightmost column above.

    If we drop to a 6.5% average return over the next 40 years, then there is only $1.83 in future earnings for each dollar on hand today - and we therefore now need $487 billion to be fully funded.

    Much more dramatic is what happens if returns average only 4.5%. In that case, there is only $1.17 in future earnings for each dollar on hand to today. So, to be able to make all promised pension payments, the State of California would need to have $634 billion set aside today.

    Again, this is a very similar dilemma to that which is faced by many individual retirement investors. If we don't get the yields we assumed, then we either need to save a lot more money, or we may need to delay retirement, or we may need to reduce our retirement standard of living (or perhaps all three together). But yet, for many investors and savers today - a 4.5% rate of return would be highly desirable and quite difficult to achieve. What happens if we go much lower?

    [​IMG]

    If Calpers were to roughly repeat last year's results, and earn a 0.5% average return over and over again, then as shown with the purple bars, they would need to have $1.2 trillion set aside today to fully fund the promised pension payments.

    At 1.5%, the State of California would still need to have over $1 trillion set aside to invest and use to make future payments. By going up to an average 2.5% return over 40 years, the amount of future earnings (the green bars) would dramatically increase - from $348 billion to $513 billion - but $865 billion (the purple bar) would still need to be available to invest today.

    The far left columns with returns of -0.5% and -1.5% may seem quite bizarre, but such is the world in which we live today. The concept of negative interest rates is I think hard for most of us to grasp, but that is exactly what is happening with government debt in Europe and Japan.

    Based on current interest rate levels, there has been discussion that if the United States enters another recession, then negative interest rates may come here as well. And if that were to happen and if low or negative economic growth were to also bring stock yields into negative territory, then there is an inversion, and more money must be set aside today than what will be paid out in the future.

    Meaning full funding could require $1.5 trillion, or even $2 trillion. (The preceding is based on nominal interest rates, however in real or inflation-adjusted terms the United States already has negative returns and an inversion for many investors has already occurred, as explored in this link.)

    However, Calpers doesn't have $2 trillion set aside today, or $1 trillion, or $800 billion. It has $295 billion.

    [​IMG]

    When we assume an average 6.5% return, the needed assets grow to $487 billion, but we still only actually have $295 billion, so then our present value shortfall grows to $192 billion, and the pension is only 61% funded.

    At a 4.5% average return, then our shortfall shoots up to $339 billion, and Calpers is only 47% funded, or less than half.

    [​IMG]

    The shortfalls grow to stunning amounts when we reach the lower returns, as can be seen above. The purple bars of what Calpers has on hand today is fixed in each possible investment return scenario. The green bars shrink with great speed as assumed future investment returns are brought down. And it is the red bars of the present value shortfall that must expand to cover the gap.

    If Calpers were to repeat its investment results from last year, year after year, then the red bar of true PV shortfall is $952 billion. That is close to $1 trillion and is almost 7X greater than the current official shortfall of $139 billion.

    At a 1.5% average return, the green bars of future earnings would almost triple from $132 billion to $348 billion - but the present value shortfall is still $736 billion. With a 2.5% average annual return over 40 years the future interest earnings rise to $513 billion - but that still leaves a shortfall today of $570 billion, or more than 4X the official shortfall.

    Now if interest rates or investment returns were more or less random, or following market norms, then this would hopefully not be a problem. The last fiscal year was very low, maybe the next fiscal year would be very high, and on average, over time, everything would work out.

    The problem, however, is these are not normal times.

    [​IMG]

    In the immediate aftermath of the financial crisis of 2008, the Federal Reserve pushed interest rates to some of the lowest levels seen in history. And despite frequent claims that rates are about to be raised, rates have hardly increased in the last eight years. In Europe and Japan, they have moved even lower over the last year.

    What this creates is a toxic combination when it comes to Calpers, other public and private pension funds, and long term investing in general - including financial planning for retirement accounts.

    Many government bodies, including states, cities and school districts, are all making binding promises about decades of payments to public employees which are based upon relatively high investment yields generating much of the cash. Simultaneously, another part of government - the Federal Reserve - is massively intervening in the markets, and pushing yields to all-time lows. These federal policies have a potentially catastrophic impact on public finances on a nationwide basis, yet are being generally ignored with current pension shortfall estimates of state & local governments.

    These issues can directly impact individuals and particularly individual retirees in at least three ways. The first impact is that individuals and advisors routinely use long-term historical returns as reasonable assumptions - but those returns don't include the current market dominating interventions by central banks on a global basis. Which means they could very easily be dead wrong, and individual plans could be as underfunded as pension plans.

    The second impact is even as cash available from investing may be less than hoped for, the cash needed in retirement may be higher than expected because of higher tax rates.

    The third impact is that impossible public promises will not necessarily be paid, and the new bail-in methodology that has been adopted by the United States and other G-20 nations could slash pension payouts as well as other sources of retirement security, as explored here. So for someone who is investing to supplement their pension, they could see the three way combination of lower investment earnings, higher tax rates and reductions in their pension payments. And again, these issues are not restricted to California and Calpers but could impact any pensioner (or taxpayer) in just about any state.

    These are not pleasant topics. But what needs to be recognized is that the Federal Reserve forcing extremely low returns on the nation as a matter of policy comes with high costs for pensions and taxpayers specifically, as well as all long term investors in general, including individual retirement investors. Yet, there is little public pushback, and arguably the reason is that the public doesn't have sufficient understanding of what is happening.

    This analysis is intended to help close that knowledge gap, and it is also one piece of a much larger and interwoven body of work. Another key component, linked here, is understanding the financial conflict of interest between pensions (and other savers), and a heavily indebted federal government, where pensions and savers getting the higher returns they so badly need, could send the national debt spiraling out of control.

    Contact Information:
    Daniel R. Amerman, CFA
    Website: http://danielamerman.com/
    E-mail: dan@danielamerman.com

    This article contains the ideas and opinions of the author. It is a conceptual exploration of financial and general economic principles. As with any financial discussion of the future, there cannot be any absolute certainty. What this article does not contain is specific investment, legal, tax or any other form of professional advice. If specific advice is needed, it should be sought from an appropriate professional. Any liability, responsibility or warranty for the results of the application of principles contained in the article, website, readings, videos, DVDs, books and related materials, either directly or indirectly, are expressly disclaimed by the author.

    http://news.goldseek.com/GoldSeek/1474647164.php
     
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  12. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    In today's paper...............

    Pension reform divides Democratic, GOP state house candidates


    Three local Democratic school board members are challenging Republican incumbents for seats in the Pennsylvania House of Representatives.

    Democrats Albert DerMovsesian, Neale Dougherty and Stephen Kunkel are all calling for more state money for education and have an aversion to charter schools.

    But after hourlong conversations with the editorial boards of The Intelligencer and Courier Times, it's also apparent the trio won't be pounding their fists to reform state pensions, an ever-increasing drain on district budgets.

    "My view is a pension is deferred compensation," said Kunkel, who lost his seat on the Palisades school board last year. "If lowered, it would in fact be a cut in pay. ... Right now we're not paying teachers enough."

    The three Democrats are seeking to unseat the Republican incumbents with at least five terms in office. DerMovsesian, a school board member in Upper Moreland, is taking on state Rep. Tom Murt, R-152; Dougherty, a school director in New Hope-Solebury, is running against Scott Petri, R-178; and Kunkel is challenging Marguerite Quinn, R-143.

    School funding and the escalating costs of pensions have been the daily double of topics debated in the commonwealth for nearly a decade. Here's why:

    Act 9 of 2001 combined with a stock market crash and deep recession in subsequent years caused a $60 billion liability in Pennsylvania's two largest pension funds — the Public School Employees' Retirement System and the State Employees' Retirement System.

    Act 9, signed into law by Gov. Tom Ridge, hiked the multiplier used to calculate lawmaker pensions from 2 percent to 3 percent, for a 50 percent increase, and to 2.5 percent for school employees and state workers, up from 2 percent, for a 25 percent increase. They also sliced in half the number of years needed to qualify for a pension from 10 to five.

    Plus, to exacerbate the situation, lawmakers put off paying for the whole package by reducing the districts' pension contribution. In 2001 the rate was 1.9 percent; the following year, 1.1 percent. The state pays half of the pension costs. School employees, however, continued to contribute 7.25 percent of their pay.

    This year, and for at least the next two decades, districts will pay at least 30 percent of employee salaries into PSERS. The escalating numbers created the double whammy of property tax increases at the same time cuts were made in classrooms.

    Each Democrat has seen his district's retirement costs double in the last three years and voted to raise property taxes to cover the bill.

    "I still think there has to be an understanding that our public employees, we don't want them hopping around like private company employees," said DerMovsesian, Murt's opponent. "There's a reason that we give them a pension ... because they serve our community for a lifetime. ... We want that continuity in our schools."

    DerMovsesian said he's not a fan of defined contribution plans, like the 401(k), used in the private sector. "It's too market driven," he said. "We've seen what can happen with families' life savings being wiped out."

    He said he would consider an increase in contributions by employees and a slight reduction in benefits "but I don't think we're throwing out the whole system," he said. "I think it needs to be reformed but not thrown out."

    In 2010, the Legislature, through Act 120, reformed public pensions for future employees and new lawmakers. All have to pay more money into their plans, while benefits were rolled back 25 percent to pre-2001 levels and the vesting period for both school and state employees increased from five years to 10 years.

    The deal lessened the impact of a near-term property tax bubble, but cost homeowners more money down the road. It's been described as going from a 15-year to a 30-year mortgage. Your monthly payments are less, but you're paying for a longer period of time.

    In the meantime, the fund's pension liability continues to grow. And after this year's 1.29 percent fund earnings, way lower than the fund's 7.25 percent investment return assumption, taxpayers will be called on to make up the difference.

    Neither Petri, Murt nor Quinn were in office in 2001 for the pension enhancement legislation. Petri was first elected in 2002, while Murt and Quinn were voted into their two-year seats four years later. Each supported the 2010 pension rollbacks.

    Petri, who has voted for and proposed legislation to put new employees on defined contribution plans, contends the pension liability is so dire that the state constitution's "impairment of contracts" should be challenged.

    He refuses to believe "you can't change anything."


    Petri liked a Senate bill that automatically froze pensions and if the employee wanted back in, the cost would increase and that money would be placed in the pension fund "because it bleeds money every day. ... That was something I think made the most sense."

    Like the other Democrats, Dougherty, of New Hope-Solebury, doesn't care for a 401(k)-like option.

    "I think pensions are a reasonable give and take for public service employees," he said. "However, they are a little rich. ... Teachers have good job security. They have good pay. They have good health benefits. And they have a good pension. Perhaps it's not realistic to say we can have all four."

    He would consider the "paring down" of pensions for some employees. For example, a teacher getting 100 percent of his or her salary in retirement "is incredibly generous. ... it doesn't have to be as rich of a pension."

    Murt, a former teacher at William Tennent High School and Penn State Abington, said he would support increases to both sales and income taxes targeted to schools. "We do not fund education to the magnitude that we should," he said. "That's a fact."

    Quinn, who said there's never been more state money invested in education than today, added that "not all of those dollars (are) going directly to the classroom" because of pension and health care costs.

    When she considers measures to address the issue, Quinn said "sustainability" of the system is critical. "Salaries weren't as high, markets were more predictable, people weren't living as long," she said. "I don't see a silver bullet out of this. ... We better darn well stop digging the hole."

    Kunkel, who enjoys "all three legs of the stool" — a pension, 401(k) and Social Security — said that with fewer students graduating colleges with education degrees, now is not the time to cut back on teachers' compensation.

    There's "a crisis brewing with new teachers in the pipeline," he said. "I'm fully in favor of finding a means to finance our education that does not continue to add to (the property tax) burden."

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 33 cents a day.

    Gary Weckselblatt: 215-345-3169; email: gweckselblatt@calkins.com; Twitter: @gweckselblatt

    http://www.buckscountycouriertimes....cle_3303a6b2-329d-57cc-8566-b45103a7bc76.html
     
    Last edited: Nov 4, 2016
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  13. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  14. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  15. TAEZZAR

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

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    a teacher getting 100 percent of his or her salary in retirement "is incredibly generous

    And total abuse of a system !

    Hogs at the trough

    hogs.jpg
     
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  16. TAEZZAR

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

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    The public retirement systems are a time bomb of epic proportions & they shall explode in due time.
    BTW, their time is due !!! LOL
     
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  17. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    Sorry but it's not funny. It's really sad & and not their faults that a bunch thief's mismanaged and stole their money. Lots of people depending on that money so when they get stiffed there is no money going into the economy.
    They were not all fat cats getting rich........... but the ones that were should be held accountable......... at the end of a rope.
     
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  18. TAEZZAR

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

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    The rest of the story is that it used to be that people went to government jobs for the benefits, including retirement.
    The pay was low, but the benefits made up for it & the work was not hard. Now they are being paid MORE than the private sector & the retirement is more than the private sector, even for janitors. It is their fault, no-one will step up & even attempt to fix it. All the while the private sector pays out the ass !!!

    An example is my accountants best employee quit him & went to work for the city of Los Angeles, as an accountant. She came asking for her job back after only 3 months. She was ashamed to be there because they gave her very little work. She got her old job back.

    I have a low opinion of people that want to work for the government, I see it as a form of welfare, or at best, a job for the lazy. But that is just my opinion.
     
  19. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    mtnman Gold Member Gold Chaser Site Supporter ++

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  23. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  24. southfork

    southfork Mother Lode Found Mother Lode

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  25. latemetal

    latemetal Platinum Bling Platinum Bling

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    We have the "Drop" program where I work, if there was one thing I could get rid of, this would be it. When you retire, goodbye...
     
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  26. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  27. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  28. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  29. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  30. oldgaranddad

    oldgaranddad Gold Member Gold Chaser Site Supporter ++

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  31. mayhem

    mayhem Rebel Fire Silver Miner Site Supporter

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    Here is a good one. Scumbag up the street joined the WPB city police force at age 21. Retired with 20 yrs. at age 41, went to work for the PBC Sherriff and put in another 20. Then, went to work for the county school system plus getting all that pension $$. He is way overweight, in bad health but has a $650k home, 50 ft motor home, three boats in the yard, and I'm paying for it. He wonders why we ignore him when he drives by.
     
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  32. mayhem

    mayhem Rebel Fire Silver Miner Site Supporter

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    And when he can no longer afford the taxes on his castle I'll be a sittin on my porch eating my mountain house. :-)
     
  33. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Pension costs will continue to climb for school districts

    The pension problem that has plagued Pennsylvania school boards for more than a decade will get even worse in 2017-18.

    The board of trustees that runs Pennsylvania's Public School Employees’ Retirement System has certified that districts must pay 32.57 percent of an employee's salary into the fund.

    And while a PSERS' press release touts the new number as the "smallest percentage increase" since the 2009-10 fiscal year, the 8.5 percent jump from 30.03 percent is higher than the initial projection of a 32.04 percent contribution after the fund returned 1.29 percent for the fiscal year that ended June 30. The fund's break-even point is 7.5 percent.

    "This is the first arctic blast of the 2017-18 budget development cycle," Centennial business manager Chris Berdnik said of the higher than expected increase.

    Central Bucks business manager David Matyas told his school board that retirement costs are "increasing at a decreasing rate. ... But it's still going to consume a large chunk of our expenditures, unfortunately."

    That's an additional $4.6 million tab for 2017-18. The district's overall PSERS' bill is about $50 million.

    Hatboro-Horsham is spending $13.5 million on pensions in 2016-17, according to business manager Robert Reichert. Five years ago that same budget line was $4.3 million. The state reimburses 50 percent of the cost.

    "This increase is about half of what we've been used to the last couple of years," Reichert said. "I don't know if anybody deserves a pat on the back for that. It's still a significant increase we have to deal with."

    And they're not going away. PSERS projects percentage rates of 34.18, 35.53, 35.95 and 36.4 over the next four years. Those rates are expected to remain steady for two decades. Nearly 75 percent of the rate is payment for the fund's estimated $50 million unfunded liability, which is primarily for past service already earned by PSERS members.

    Quakertown school board President Paul Stepanoff has long been a proponent of ending the defined benefit for new employees and replacing it with a defined contribution plan, similar to a 401(k) in the private sector.

    He admits that wouldn't solve the unfunded liability, "but at least it solves the problem 30 years from now. The defined contribution is the first step in a multistep solution."

    Stepanoff said having to pay 32 percent of someone's salary into a pension "just doesn't happen" in the private sector. With Social Security included, retirement costs grow to nearly 40 percent. "This is scary," Stepanoff said.

    "Nothing has been solved. They are stealing money out of taxpayers' pockets because they make school districts raise taxes. Meanwhile, we have to negotiate teacher contracts too. It's really hard to give teachers any sort of increase in salary and stay with the Act 1 index."

    The formal name for Act 1, the state's property tax law, is the Taxpayer Relief Act of 2006. It allowed districts to accept state gambling revenue, and was intended to limit tax increases to the rate of inflation. It also allowed districts to go over the index by applying for exceptions, for things like retirement costs, which have exploded.

    The problem began in 2001. PSERS was flush with money when lawmakers hiked the multiplier used to calculate their pensions from 2 percent to 3 percent, for a 50 percent increase, and to 2.5 percent for teachers and state workers, up from 2 percent, for a 25 percent increase. They also sliced in half the number of years needed to qualify for a pension from 10 to five.

    On top of that, the increase was applied retroactively so a worker with 25 years on the job would have accrued 62.5 percent of his or her salary in retirement as opposed to 50 percent.

    The next year, lawmakers increased benefits for teachers who had already retired and so were left out of the 2001 pension enhancements, and they put off paying for the whole package by reducing the districts' pension contribution from 5.64 percent to 1.15 percent and spreading out payments over more years.

    When the stock market was performing well, school districts were allowed to lower their contributions. In 1998, for example, they paid nothing into the fund. In 2001 the rate was 1.9 percent; the following year, 1.1 percent.

    School employees, however, continued to contribute 7.5 percent of their pay into the pension fund.

    In 2010, the Legislature, through Act 120, reformed public pensions for future employees and new lawmakers. All have to pay more money into their plans, while benefits were rolled back 25 percent to pre-2001 levels and the vesting period for both school and state employees increased from five years to 10 years.

    The deal lessened the impact of a near-term property tax bubble, but cost homeowners more money down the road. It’s been described as going from a 15-year to a 30-year mortgage. Your monthly payments are less, but you’re paying for a longer period of time.

    "We're in a bind," said Mark Miller, president of the Pennsylvania School Boards Association and a Centennial school director.

    He said the former PSERS board made a mistake during the market crash of 2008 when it sold assets to pay liabilities. "Instead of weathering the storm," he said when the market recovered PSERS no longer owned the assets to make back its losses.

    "Your grandkids and mine are going to be paying for this," Miller said. "What we're doing now is damage control on something that occurred 10 years ago. Without a time machine, there's no way for us to go back and fix it."

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 33 cents a day.

    Gary Weckselblatt: 215-345-3169; email: gweckselblatt@calkins.com; Twitter: @gweckselblatt

    http://www.buckscountycouriertimes....cle_a3d726a4-7a62-55f2-a80b-35aa80058de6.html
     
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  34. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    From the Editorials...............

    Just who is the 'greediest generation'?

    • Updated 11 hrs ago

    Many of us are familiar with "the Greatest Generation," a book by journalist Tom Brokaw that describes those who grew up during the Great Depression and then went on to win World War II, both on the battlefield and on the home front.

    Baby boomers, however — those born in the post-war years between 1946 and 1964 — fall into another category. According to Google, boomers are part of the "greediest generation." The fact that many former Pennsylvania public employees collecting state pensions were born during the baby boom years isn't lost on a York County lawmaker, Republican state Sen. Scott Wagner.

    In an interview this week with the PennLive editorial board, Wagner dumped on the pensioners as greedy for their opposition to any changes to the state's critically ill pension system. Part of the interview went like this:

    "I meet a lot of people, and I hear them talk about their grandkids," said Wagner. "... And they're getting $60,000, $70,000, $80,000 a year. ... And then I ask them a question: '... Would you be willing to give up 10 percent of your pension for your grandkids?'" Wagner said the answer he gets is, "Aw, no, I earned that."

    There you go. Case closed. Greedy, greedy, greedy. "It's all about them," Wagner said. "It's all about me."

    A likely candidate for governor in 2018, Wagner certainly didn't help himself among pensioners who are likely to vote in two years. And judging from the comments posted about the interview on PennLive's website, his fingering former state employees as the collective bad guy in the ongoing pension debacle is way off base.

    Start with this: While some pensioners may be hauling in large five-figure pensions, most are probably not. And those who have or will walk away with the big bucks are just as likely to be Wagner's current or former colleagues, i.e., state lawmakers, who in all the discussion about pension reform never talk about their own pensions. A good first step toward any meaningful reform would be an agreement among House and Senate members to do something about those pensions. After all, the Legislature, because of its own greed over a decade ago, is largely responsible for today's pension problem.

    The latest pension reform effort, which would only have shifted new employees (state workers, teachers and lawmakers) into a 401(k)-style defined contribution plan, couldn't even pass because those who fill the House and Senate chambers for a few weeks out of the year simply can't bear to face the growing pension crisis head-on.

    Perhaps it is they — with their generous salaries, automatic pay raises, per diem payments, other perks and robust pensions — who should be labeled the "greediest generation."

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 33 cents a day.

    http://www.buckscountycouriertimes....cle_fd5d347c-7ac0-5241-b63d-9e2a2bb2727d.html
     
  35. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  36. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    In the Editorials section of today's local rag................

    Higher pension costs coming
    • 9 hrs ago

    Stop us if you've heard all of this before. No, on second thought, keep reading, because ignoring what we're about to say won't make it disappear.

    The board of trustees that runs Pennsylvania's Public School Employees' Retirement System (PSERS) kept the bad but not unexpected news coming last week when it certified that school districts must pay 32.57 percent of every employee's salary into the fund in fiscal 2017-18. That's an increase of 8.5 percent over the current year's 30.03 percent contribution.

    On the bright side — if there can be anything bright about districts (read: taxpayers) having to shell out so much money that will have no impact on the classroom — it's that the 8.5 percent increase is the smallest percentage increase since the 2009-10 fiscal year. Sort of like Capt. Smith telling Titanic passengers the ship isn't sinking as fast as it was.

    And even that smaller percentage increase resulted in a higher payment than originally projected. No wonder. For the fiscal year that ended June 30, the fund returned an anemic 1.29 percent; the break-even point is 7.5 percent. The fund managers could do just about as well if they put the money in an old suitcase and buried it.

    The sad thing is that we've hardly begun to experience what will be monstrous pension payments as far as the eye can see. PSERS projects percentage rates of 34.18, 35.53, 35.95 and 36.4 over the next four years, and those rates are expected to remain steady for 20 years. Almost three-quarters of each year's rate is payment for the fund's estimated $50 million unfunded liability.

    How we came to this point is a story that's been told time and time again. In 2001, when the pension fund was doing quite well, state lawmakers got dollar signs in their eyes and bumped up their already generous pensions by 50 percent. To "sell" the deal, they also increased the pensions of teachers and state workers by 25 percent and cut the time needed to qualify for a pension from 10 to five years. They did some other finagling, including allowing school districts to reduce their pension contributions.

    After the market went south in 2008, lawmakers tried to play catch-up with so-called reforms in 2010. But Act 120 was a weak effort that provided only short-term tax relief. Since then, the Legislature has stood on the sidelines, unable to pass even minimalist legislation to stop the financial bleeding.

    Every member of the House and Senate saw the present crisis coming. Every one of them can see the distress being felt in school districts at budget time, and the increasingly heavy burden being piled on taxpayers.

    What will it take for our elected leaders to finally do something?

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 33 cents a day.

    http://www.buckscountycouriertimes....cle_383e0c21-e35d-5c03-8dd2-d9f90ef26931.html
     
  37. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The System Is About to Burst Open: TRILLIONS In Unfunded Pensions “Foreshadow A Bleak Future”


    Shaun Bradley
    December 22nd, 2016
    The Anti-Media.org

    This article was written by Shaun Bradley and originally published at The Anti-Media.org.

    Editor’s Comment: Decades of benefit promises to state workers, especially by socialistic large cities and left-leaning states, is reaching the point of no return. The promised money is not there, and there is no way to squeeze that much more out of the public – though many will probably try. Somebody is about to get screwed, and it probably won’t be the ones bailing out with golden parachutes.

    Hordes of retirees are ready to cash in their benefits, but the coffers are running dry. Empty promises, smoke and mirrors are about to be exposed by the compounding pressure of debt piled to the roof.

    Will this problem lead to bankruptcy for governments, or to riots and protests in the streets? What happens if the whole system ends up being one big I.O.U.? This is a huge problem that just can’t be overstated…

    Pension Panic: The Coming Financial Bubble Nobody Is Talking About

    by Shaun Bradley

    For millions of public sector workers in the U.S., state-run pension funds are the only chance left for a comfortable retirement. In the hopes of providing a stable future for their families, an entire generation was duped into putting decades of their earnings into these supposedly ‘risk-free’ investments. Unfortunately, those who have entrusted the government to manage their life savings may end up destitute as a result.

    Budgetary shortfalls that have plagued Detroit for years are now spreading to other municipalities. Since 2008, six local governments have been forced to renegotiate their debts in bankruptcy court, with many others on the same trajectory. The scale of the problem has been repeatedly understated by the media, but across the nation, a somber reality is beginning to set in.

    States with large populations, like California, often find themselves in the spotlight when it comes to deficits, but there are several others that are in even worse shape. Illinois, New Jersey, and Connecticut are among those facing the biggest hurdles to meet their obligations to retirees. Instead of maintaining a surplus, politicians have continuously prioritized spending today on things like sports stadiums, for example, to ensure re-election. Policymakers on both sides of the aisle have echoed solutions that involve either massive cuts to benefits or shifting the financial burden onto the taxpayer. The price to prop up these insolvent funds will come in the form of higher property taxes, income taxes, and other stealth forms of subsidization.

    The ongoing exodus of people from the Northeast to states that offer better opportunities and a lower cost of living is putting even more stress on the already fragile system. Pension payouts depend on the contributions of current workers, and as the labor force dwindles, so does the money available.

    Pushing through substantial reforms is counter-intuitive for our representatives. If they do the responsible thing and defer excess spending in the present, it will undoubtedly have a negative impact on their voter base. America’s political pastime of kicking the can down the road continues, but the options to keep this shell game going are running out.

    The rating agency Moody’s released a report in April of this year that outlined the scale of the shortfall:

    “The unfunded liabilities of the various federal employee pensions systems, covering civilian and military employee benefits, amount to about $3.5 trillion, or 20% of US GDP…Additionally, Moody’s estimates that unfunded state and local government pension plan liabilities are of the same magnitude, bringing the total shortfall to 40% of GDP.”

    These calculations don’t even include Social Security and Medicare, which compound the issue by trillions of dollars. As the baby boomer generation gets closer to retirement, the amount of money flowing out of these funds will only accelerate. Just this month, the Dallas Police and Fire Pension Fund was forced to freeze $154 million in withdrawals to prevent total failure. Emergency actions like this only serve to further erode the public’s confidence and foreshadow a bleak future for those anchored to the current system.

    The promise of financial security from a bankrupt government needs to be seen for the fraud that it is. The ability to adapt when presented with unpleasant truths is crucial in this dynamic financial environment, especially when the path of least resistance has been rigged as a trap for those who fail to think critically about the future.

    This article was written by Shaun Bradley and originally published at The Anti-Media.org.

    Click here to subscribe: Join over one million monthly readers and receive breaking news, strategies, ideas and commentary.

    Please Spread The Word And Share This Post

    http://www.shtfplan.com/commodities...d-pensions-foreshadow-a-bleak-future_12222016
     
  38. TAEZZAR

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

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    These parasites are getting double, or even more in some cases, than what they should. If you can't retire on $30K/yr. You don't deserve to retire - keep working.
    Remember, they all went into a gov. job for a low wage, benefits & a decent, not luxurious, retirement. They have lied, cheated & stolen to get the huge salaries & huge retirements (some in the 6 figures) that they claim to deserve. These are the people that have fucked up our lives & they want to retire like royalty.

    Just a couple of examples of gov. overreach.

    The Right to Grow Your Own Food Is Being Hijacked by the Federal Government

    In a document quietly signed into law a few years ago, your right to grow your own food was surreptitiously taken away and given to the Federal government through the right of ‘seizure’ given to the Feds, by the Feds. Was this a preemptive strike to make all Americans dependent upon corporations like Monsanto, Syngenta, Dow, Bayer, etc. for food?



    Sugar Creek, MO — A family in Sugar Creek, Missouri grew the beautiful vegetable garden in the photo above.

    They’ve been given four days to tear out the entire garden or face a fine.

    [​IMG]

    Colorado county criminalizes self-reliance: Off-grid living punished like a crime

    Learn more: http://www.naturalnews.com/051634_Colorado_off-grid_living_self-reliance.html#ixzz4Tm5lwbVZ

    Last night Stossel explained how this man is fighting from losing his home to gov. overreach.

    'Off-the-grid' Huntsville man to keep fighting city ordinances
    Posted: May 03, 2016 8:13 PM PDT <em class="wnDate">Tuesday, May 3, 2016 11:13 PM EDT</em>Updated: May 04, 2016 2:26 PM PDT <em class="wnDate">Wednesday, May 4, 2016 5:26 PM EDT</em> time.prefixdate:before{content:'Posted: ';}time.prefixdate:before{content:'Updated: ';}
    By Jake Berent, Reporter


    [​IMG]
    Truitt is not afraid of what the City of Huntsville might do to him. (Source: WAFF)
    HUNTSVILLE, AL (WAFF) -
    A Huntsville man wanting to live "off-the-grid," providing his own power and sanitation within the city of Huntsville, has been fighting for over a year to keep his home. Just last week, an appellate court upheld a judge’s ruling that Tyler Truitt has 14 days to remove his trailer from his property. Huntsville has an ordinance that trailers must be located within a mobile home park which his is not.

    http://www.inquisitr.com/1369086/wh...d-living-practices-that-they-deem-it-illegal/
     
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  39. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    The more I think about this it's a great thing!
    1. They will be screwed.
    2. They will resist until they figure out they are screwed.
    3. They will then distrust .gov
    4. They will then see the light & become at least fiscal conservatives.
    5. They will tell their kids how they were screwed & pass it on to kids, grandkids, great grand kids.
    6. They will then start to think....... if they had been in control of their own money & fate they may have started a business, paid off house / car sooner, etc.......
    7. They realize if you don't hold it you don't own it.
     
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  40. mtnman

    mtnman Gold Member Gold Chaser Site Supporter ++

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    If by "they" you mean .gov workers you give them wwaaayyyy to much credit in the thought department. Those .gov workers took the .gov jobs because they couldn't hack it in the real world. You're right they are screwed but they will never figure out the real reason.
     
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