Illinois public pension plans are in critical financial condition and were benefits valued using reasonable assumptions the picture would be even worse. So what is Illinois doing about this? Last summer the state hired an outside actuarial firm to “review assumptions and valuations prepared by actuaries retained by the boards of trustees of the State-funded retirement systems….and…recommend changes.”
Recently released was their work product, all 190 pages, though only these three pages are likely to be read and only this line likely to be publicized:
“Cheiron reviewed the actuarial assumptions used in each of the five systems’ actuarial valuations and concluded that they were reasonable.”
Which is what they were paid to conclude. However though Cheiron avers that “the interest rate assumptions for each of the five systems were reasonable at this time…..for three of the systems (TRS, SURS, and SERS), Cheiron recommended that the Boards consider lowering the interest rate assumption in the future.”
Those interest rates are: TRS – 8%; SURS – 7.75%; SERS: 7.75%;
The others: JRS: 7%; GARS: 7%
Though most people aren’t qualified (or inclined) to read through the report and argue actuarial concepts, there are some obvious questions that would give even a child* pause:
- If 7.75% – 8% is reasonable ‘at this time’ for 3 plans then why would 7% not be unreasonably low for the other two plans ‘at this time’?
- Even if these plans do get 8% returns, considering that they are severely underfunded wouldn’t the actual returns need to be much higher to bring in the dollar amount of money assumed in valuing the liabilities? (See the concept behind this point explained here).
- If 7.75% – 8% are reasonable rates ‘at this time’ then are interest rates expected to go lower in the future from what happen to be historic lows?
Awkward questions that children* are apt to ask. Not sure though about stakeholders in the Illinois public pension system who may scare easier.
.
.
* Assuming children of reasonable intelligence and not in the paid employment of the state of Illinois.
Burypensions Blog 
Posted by Tough Love on January 3, 2013 at 4:36 pm
You have go give the Unions credit for keeping the focus of discussion on the FUNDING of these Plans rather than the Plan’s excessive RICHNESS.
Any Plan, no matter how rich the benefits “can” be appropriately funded, given the availability of sufficient money to do so ………. but when Plan’s are as rich as many of the Public Sector Plans are, finding sufficient money to do so is near impossible (w/o strangling taxpayers or reducing services to unacceptably low levels).
John, of all people you should know that the focus of pension reformers needs to be on the excessive richness of these Plans and the need for a SIGNIFICANT reduction in that richness for CURRENT, now just new workers. Don’t focus on “funding” … few understand (nor care to understand) the details anyway.
Posted by MJ on January 3, 2013 at 7:23 pm
TL, I think that significant reduction is the logical place to start but funding will always be an issue. Defined benefit plans must be done away with all together and alternate retirement options implemented. John’s point, I think, is that honest, ethical and capable actuaries are needed to make sure that the same thing does not happen again in the future despite what the “employer” wants to hear. In which case, I would think that any actuary worth his or her salt would start with the concept that the plans are overly generous to begin with and therefore non-sustainable. Sounds like nothing more than a shell game with a lot of empty promises. And round and round we go…..
Posted by Tough Love on January 4, 2013 at 12:02 pm
I agree. The inherent problem with DB Plans in the PUBLIC Sector is that the politicians who approve these Plans can’t be trusted. Their concern for Taxpayer interests pales in comparison to their desire to both get elected and re-elected … and doing so requires campaign contributions and election support … which the Public Sector Unions clearly offer in exchange for favorable vote on pay, pensions, and benefits.
But switching only NEW workers to DC Plans will save squat for 20+ years. We need to hard freeze all DB Plans and switch CURRENT workers (for FUTURE service) to DC Plans with a modest Taxpayer “match” comparable to what Participants in Private Sector Plans typically get from their employers (2-5% of pay).
Posted by Frank Keegan on January 4, 2013 at 8:48 am
Thanks John. I calculate that to achieve 7-8% from 2006 through 2036 they would have to get about 10%, with no market downturns. What are the odds of that? Meanwhile, even as revenues increase slightly from massive recent rate increases and new taxes, along with tepid economic growth, pols will continue shorting contributions based on those delusional discount rates. If you look at the most recent numbers, it just keeps getting worse.
http://www.statebudgetsolutions.org/blog/detail/states-municipalities-must-make-pension-reform-top-funding-priority
Posted by eatingdogfood on January 4, 2013 at 1:28 pm
Democratic Hustler Politicians + Corrupt Greedy Unions = BANKRUPTCY BABY!
Posted by Al Moncrief on January 6, 2013 at 1:02 am
“THE RIGHTS SECURED BY JUSTICE ARE NOT SUBJECT TO POLITICAL BARGAINING OR TO THE CALCULUS OF SOCIAL INTERESTS.”
In 2010, a majority of Colorado Legislators ignored their oaths to uphold the Colorado and U.S. Constitutions, breached the state’s Colorado PERA pension contractual obligations, and placed our state on a low moral plane.
I recently came across an excellent post from the blog of Illinois writer Glen Brown. The post brings an important moral perspective to the Colorado General Assembly’s pension contract breach in the legislation SB 10-001. Glen Brown is following and writing about the ongoing Illinois pension reform debate. Below, I have provided some of his work and my reactions.
Glen Brown’s thoughts:
“All citizens have rights that must be protected. When legislators swear an oath to uphold the state and federal constitutions, then citizens of Illinois and the United States have also acquired the right to expect that they will uphold that pledge. This is also a matter of important moral concern for all citizens of a state, for all legal claims will be validated by a moral framework since the concept of justice is grounded in ethics. If citizens’ legal rights are abused, then their dignity and humanity will also be violated.”
(In 2010, a majority of Colorado state legislators and the Colorado PERA Board of Trustees acted with immorality. These legislators and pension officials decided to attempt the theft of contracted Colorado PERA pension COLA benefits from a small group of Coloradans in order to further reduce Colorado taxpayer obligations. Accordingly, the Colorado legislators violated their oaths to uphold the Colorado and U.S. constitutions.)
Links:
http://teacherpoetmusicianglenbrown.blogspot.com/
http://www.blogger.com/profile/13435049339082622611
In 2010, the Colorado General Assembly Placed Our State on a Low Moral Plane . . . Diminishing Our State.
“What is at stake right now is not a potential adjudication of conflicting claims that public employees will have against policymakers who want changes to public employees’ earned compensation and rights, but to respect the public employees’ contractual and constitutional promises because they are legitimate rights and moral concerns not only for public employees, but for every citizen in Illinois: for any unwarranted acts of cheating a person’s guaranteed rights and earned compensation will violate interests in morality and ethics and the basic principles of both the State and United States Constitutions that protect every one of us.”
“For that reason, it is imperative that policymakers and stakeholders examine their own ethical and moral principles and their conduct in view of the fact that they will have to justify their decisions to the citizens of Illinois. Certainly, moral responsibility and legal obligation to fund the public pension systems should not be ignored.”
Members of the Colorado Legislature Have Taken an Oath to Defend the Colorado and U.S. Constitutions. In 2010, the Colorado Legislature Decided to Force this Responsibility Onto Colorado PERA Retirees.
“It is a moral concern and legal duty to address the state’s revenue and pension debt problems through restructuring and to tax the wealthy among us more fairly, so the state can provide services for its citizens and fund the public pension systems of Illinois instead of incriminating public employees and forcing them to defend the State and United States Constitutions. It is the State of Illinois that has the ‘primary responsibility for financing the system of public education’ (Article X, Section 1 of the Illinois Constitution). The public employees’ pension is an integral part of ‘the system of public education’ in Illinois.”
Calling Colorado’s 2010 Breach of Contract “Pension Reform” is a Misnomer.
“Like all other citizens, public employees’ legal rights are derived from past political constitutions, legislative enactments, and case law. All citizens of Illinois have a fundamental right to oppose a General Assembly that imposes a violation of their constitutional rights and earned benefits… ‘Any statute which [is] imposed upon [public employees]… in order to redistribute resources and thus benefit some persons at the expense of others [extends] beyond the implicit boundaries of legislative authority. Such laws…violate natural rights of property and contract, rights lying at the very core of the private domain’ (Laurence H. Tribe, American Constitutional Law). Current pension reform is without legal and moral justification; furthermore, to call it ‘pension reform’ when it is ‘breaking a contract’ (Diane Ravitch) is a fabrication.”
The Colorado General Assembly’s Theft of Earned Pension Benefits is Intolerable in a Country Where Freedom Prevails.
“Public employees are promised certain retirement compensation. It is earned; it is not a gratuity. They expect and plan their lives based upon these promises. ‘The very idea that [the state can] hold [public employees’ lives], or the means of [their] living, or any material right essential to the enjoyment of life, at the mere will of another ‘has been thought’ intolerable in any country where freedom prevails” (John Locke, Two Treatises of Government).
“As citizens, we are advocates of a unification of the Bill of Rights in the United States Constitution, which protects all of us from any violations of human rights and contracts, as much as we would wish others to be motivated by a way of life that is also governed by a complete moral system of thinking. There are no good reasons for legislators’ attack on public employees’ rights and earned compensation and their attempt to equate their lives to an exchange rate in dollar amounts. The General Assembly cannot justify pension reform in accordance with fundamental, constitutional principles of reason and morality.”
“State ‘governments must respect vested rights in property and contract…’ (Tribe). We should be able to assume most legislators in Illinois understand this concept of justice and that lawfulness demands that people keep their ‘covenants’ with one another. Regarding current pension reform, no justice is accomplished when subordinating or diminishing public employees’ rights and earned benefits because of past legislators’ negligence, irresponsibility, and corruption.”
“The keeping of promises is the General Assembly’s legal duty. It is something the United States Constitution requires them to do whether they want to or not. Unfortunately, many legislators are willing to act without moral or ethical principles, even though ‘claims of rights [are] prima facie or presumptively valid-standing claims’ (Beauchamp).”
“‘Any law which changes the intention and legal effect of the original parties, giving to one a greater and to the other a less interest or benefit in the contract, impairs its obligation’ (115 A. 484, 486). State statutes which do so are prohibited by Article 1, Section 10 of the United States Constitution.”
“Each person possesses an inviolability founded on justice that even the welfare of society as a whole cannot override… It does not allow that the sacrifices imposed on a few are outweighed by the larger sum of advantages enjoyed by the many. Therefore, in a just society the liberties of equal citizenship are taken as settled; the rights secured by justice are not subject to political bargaining or to the calculus of social interests” (John Rawls, A Theory of Justice).
“There is no justice in granting financial benefits for the wealthy among us and attempting to place the burden of financing public pensions upon schools and taxpayers by Illinois policymakers; there is no equality in granting tax breaks for wealthy corporations and, at the same time, legislating cuts to public employees’ constitutionally-promised compensation. It is ethically wrong to perpetuate unfair distributions of debts in Illinois, especially when Illinois legislators give ‘undeserved weight to highly-organized wealthy interest groups, [those groups] tending to ‘drain politics of its moral and intellectual content’” (Tribe).
In 2010, a Majority of Colorado Legislators Demonstrated That They Have No Respect for Individual Rights or the Rule of Law in Colorado.
“It can be inferred that if policymakers do not take individual rights and contracts seriously, but prefer to challenge them in a court of law, then we can assume legislators of the Illinois General Assembly will not take any of their other laws seriously either. To ‘let the courts decide’ (Speaker of the House Michael Madigan) is a travesty of justice, a costly effrontery and negligence of a legislator’s oath of office.”
Link:
http://teacherpoetmusicianglenbrown.blogspot.com/2012/05/sb-1673-is-without-legal-and-moral.html
Posted by Tough Love on January 6, 2013 at 2:51 am
It’s a new year Al …. give it up …. nobody cares about Colorado and it’s COLA issues..
Posted by Al Moncrief on January 6, 2013 at 10:23 pm
Hi TL, just like Mommy told you, we get to pay our debts in life. FYI, contracts were upheld throughout the Great Depression. If you do not want to live in a country where the rule of law prevails, try Bolivia . . . might be more suitable.
I disagree TL, there are many who care about Colorado’s pension COLA rights,
most assuredly those who are suing the State of Colorado. We can be confident that they would not have filed a lawsuit if they “did not care.”
Anon, when a person sells his/her labor to a governmental entity is that not the free market at work? By your definition, is a private corporation not also a “parasite” when it performs services for a governmental entity? By your definition are defense contractors not also “parasites”? By your definition, are the soldiers defending our nation, working for a governmental entity, not also “parasites”?
Anon, it doesn’t matter that you believe “noboby cares” about the compensation of public employees. The rule of law in the United States does not rest on the popularity of legislative enactments.
Posted by Anonymous on January 7, 2013 at 1:25 pm
Al, there is no honor or “morality” among thieves. Public employment does not operate as a free market but rather as part of the entitlement culture; they make
nothing but take much and for some two and three times as much. Lifelong employment, retirement and life long health benefits with no accountability or fear of losing a job. If there was any morality or justice amongst the joke of individuals we call “leaders” there would be a healthy balance in our society. Sadly, the takers–publics and welfare leeches alike–will continue to drain resources. Fortunately the principals of economics and a free market will prevail as math will never lie to us. As to your comment about our military, they should receive the most but sadly receive the least.
Posted by Al Moncrief on January 7, 2013 at 3:09 pm
Anon, I disagree. The soldiers that defend the United States in their public employment earn their salaries and benefits. They are not collecting “entitlements,” they work for their benefits and expect to be paid. The same holds true for firefighters, police officers, teachers, highway engineers, etc. These people are not “theives.” Your perspective is bizarre. Many would like to steal from these public servants, but thankfully we have the U.S. Constitution and its Contarct Clause.
Posted by Tough Love on January 7, 2013 at 3:40 pm
Al, you’re wrong because while the pay, pensions, and benefits granted the military are reasonable and affordable (and for seriously wounded soldiers could never be sufficient), the pensions and benefits granted ALL (yes ALL) Public Sector workers are FAR FAR FAR to generous and UNAFFORDABLE w/o unacceptable taxation or lack of appropriate societal services.
Nobody is saying that the …” firefighters, police officers, teachers, highway engineers, etc.” are thieves. We’re simply saying that their Unions have successfully traded campaign contributions and election support for favorable votes on these pay, pensions, and benefit packages … all to the detriment of taxpayers, and Taxpayers rightfully should employ any and all means to right this wrong … INCLUDING reneging on the 50-75% share of these excessive pensions that would NOT have been granted in the absence of that Union/Politician collusion.
Now do I expect the Public sector Union/workers to accept MATERIAL pension reform for CURRENT workers and retirees ? Of course not, but in due course , “reality” and the “math” with force the issue, likely with a far worse outcome for many Public Sector workers and retirees.
Posted by Anonymous on January 7, 2013 at 4:28 pm
I meant that the politicians and their ilk are immoral thieves and there is no honor at all among them. There are many hard working publics but that does not justify the outrageous salaries and benefits, early retirement, lifelong health benefits, etc. get with it Al. Can’t fight Mother Nature. She wins every time. It is much much crueler to drag it along than to adjust it now and allow publics to prepare for their retirements instead of leeching off the rest of us. The indignation on your part is humorous. How dare any of us object to these ridiculous public pay outs. As far as our military I am honored to take care of them. Totally different category of public service unlike the over entitled parasites called public unions.
Posted by Anonymous on January 7, 2013 at 3:47 pm
Get off the moral pot – publics largely get their ridiculous benefits thru continued years of blatant union/pol self-dealing at the private sector’s expense (very moral inputs??? yielding very moral outputs???). Yeah right! What does matter however, much more importantly than the vaunted ‘rule of law’ you babble about incessantly, are the rules of economics. All you whiz-kid publics have to do now is figure out long-term how to pay for your massive scamola. Your union-leaders and pols have been suspiciously silent on that front, as have the eminent courts. You’re gonna be in for a real rough ride. Like it or not, your bennies are gonna be set (frozen/reduced/eliminated) at the de facto level private sector TP’s will pay for willingly in the future and not a dime more, all your contract & court blathering notwithstanding. In the case of the UNCOLA, just peruse a PV of $1 Table, then sit back with a good drink and enjoy! NJ’s publics have learned to love it, and they’ve got a lot more reductions to look forward to in the future.
Posted by Al Moncrief on January 7, 2013 at 10:56 pm
Hi Anon, thank you for referring to me as a “whiz kid.” I like the sound of that, it sounds youthful and intelligent! I appreciate the stroke. I agree with you that the Rule of Law in the United States deserves to be “vaunted.” Where would any of us be without the protections afforded by our Constitution?
Anon, there is no need to be silent about funding sources for public pensions, i.e., “the massive scamola.” Here are some ideas: income tax hikes, revenues generated from natural resource extraction, elimination of corporate income tax loopholes, elimination of corporate welfare, returning tax rates to the level of the Reagan era. You can start with those. Anon, prepare to cough up a sufficient amount to cover your debts!
Anon, I know that deep in your heart you simply want to steal from the evil “publics.” Is that asking too much? But Anon, that nasty “Rule of Law” thing keeps getting in the way. You would be safer in Somalia . . . no damn Rule of Law.
Posted by Tough Love on January 8, 2013 at 12:18 am
Al,
Your sources of additional revenue are good ones ……. “income tax hikes, revenues generated from natural resource extraction, elimination of corporate income tax loopholes, elimination of corporate welfare…”
But NONE of the incremental revenue so raised should got to shoring up these grossly excessive pensions negotiated in collusion between the Public Sector Unions and the politicians bought-off with campaign contributions and election support.
IF, (and that a big if) we chose to raise such revenue, uses MUCH MUCH more justified would include …actually improving educational instruction, infrastructure repair, healthcare for those truly in need, etc. etc., etc.
Posted by Anonymous on January 6, 2013 at 7:42 pm
Frank. I agree with TL. Give it up. Nobody cares about over paid, under worked, overly compensated, unrealistic public parasites. Pensions and benefits were way too generous to begin with ergo the unsustainable debacle we have going on now. All those monkey see votes for a bunch of non-sustainable promises. Sooner hopefully than later the sham will come apart at the seams. Seems cruel to keep all of the publics clinging to the sinking ship. Lets get realistic and adjust accordingly.
Posted by Mark Glennon on January 7, 2013 at 8:19 pm
John, hope you can comment on this insanity in our pension “reform” efforts in Illinois. The proposal on the table includes a court-enforced mandate to automatically fund pensions, with horribly references to vague actuarial standards. The provision is here: http://www.wirepoints.com/one-particular-bit-of-insanity-in-illinois-pension-reform-efforts-wirepoints-original/
Posted by burypensions on January 7, 2013 at 11:04 pm
Mark,
I read the piece and it pretty well sums it up. It reminds me of NJ in 1997 when Whitman wanted to stop contributing so they placated the unions by saying benefits would be really, really, really protected. Or NJ in 2010 where they arbitrarily slashed the ARC to 1/7th of the amount with 1/7th increments over the next few years but promised they were really, really, really going to pay it.
What the unions seem to be missing is that if it’s the government that gets to write the laws then they can simply rewrite the laws whenever it suits them. When it comes time to make those higher payments what’s to stop a government from deferring again or even making the contributions by selling POBs?
As for referencing actuarial standards, it’s a quaint concept. Oddly enough they could easily define the correct method of valuing liabilities to be what is used in the private sector where we are essentially told what mortality table and interest rates to use. However, that would engender massive increases in the liabilities so the politicians prefer getting somebody who’s due are current with ASPPA who thinks there’s nothing wrong with an 8% funding interest rate these days.
Posted by Mark Glennon on January 7, 2013 at 11:33 pm
John, thanks. We need all the outside help we can get in Illinois. The media are completely AWOL and accept the state’s number blindly. We have no actuaries here speaking up like you do.
Posted by MJ on January 7, 2013 at 8:44 pm
Yes, John, please comment. Where will the money come from? and how will basic services be paid for? I imagine that they can’t get any more blood from the dried up stones they call taxpayers. Where will the money come from to support these ridiculous promises? And wasn’t Rahm Emmanuel talking about the publics coughing up for retiree health benefits? Hmmmmm……..
Posted by Al Moncrief on January 7, 2013 at 11:11 pm
Hi TL, you wrote: “Al, you’re wrong because while the pay, pensions, and benefits granted the military are reasonable and affordable . . . ”
Newflash TL, the funded ratio for military pensions is . . . wait for it . . . . “ZERO.” If a 50 percent Illinois public pension funded ratio is enough to make a TL head explode, I can only imagine the impact of a “ZERO” percent funded military pension on that substantial noggin.
Duty demands that I defend the honor (and earned benefits) of our military personnel, our firefighters, our police officers (risking their lives for us), those teaching our children, those driving snow plows on icy passes to keep the roads open for our small businesses, the engineers designing our bridges, etc.
Posted by Tough Love on January 8, 2013 at 1:02 am
Al, You missed the point. I base my support for (or advocacy against) something based on the fairness and justification of the PROMISED BENEFITS, not based on if and how we chose to fund them (which is mainly a cash flow timing question).
Considering the risks and the REASONABLE pay, pensions, and benefits, I support the compensation structure of our military … even with no pre-funding.
On the contrary, Public Sector (State and Local gov’t) workers are VASTLY over-compensated, primarily via grossly excessive pension promises. I would advocate for material reductions to these promises even if they were over-funded. … as there are MUCH more important ways to spend available revenue.
Posted by Al Moncrief on January 8, 2013 at 12:58 am
TL wrote:
“Al, Your sources of additional revenue are good ones ……. “income tax hikes, revenues generated from natural resource extraction, elimination of corporate income tax loopholes, elimination of corporate welfare…”
But NONE of the incremental revenue so raised should got to shoring up these grossly excessive pensions negotiated in collusion between the Public Sector Unions and the politicians bought-off with campaign contributions and election support.
IF, (and that a big if) we chose to raise such revenue, uses MUCH MUCH more justified would include …actually improving educational instruction, infrastructure repair, healthcare for those truly in need, etc. etc., etc.”
TL, as you know it is difficult for me to identlfy with all of this talk of union collusion with politicians since, in Colorado, it was Republican Governor Bill Owens and a Republican Legislature in 2000 that increased pension benefits in an effort to persuade the more expensive public employees to retire early. Then, a few years down the road, after these employees had retired the Legislature is attempting to break their contracts.
Hey TL, worthy adversary, this post of yours is beginning to sound reasonable. I remain confident that one day we will both agree that public pension reform should be accomplished PROSPECTIVELY. If I ever make it out to NJ, I think we should sit down and drink beer until we both agree that this is the proper course of action.
Posted by Tough Love on January 8, 2013 at 1:20 am
Al, I too would “like” the MATERIAL Pension changes to be prospective (Future Service). That part is a given, but I’m certain that quite a few cities (and more inevitably to come) have passed the financial tipping point where the Taxpayers’ inability to pay more and the citizen expectations of reasonable service levels can be accommodated without there ALSO being material reductions to PAST service pension accruals of current actives and those already retired.
Of course this doesn’t mean that I advocate for impoverishing those already retired with the smallest pensions.
Posted by Al Moncrief on January 8, 2013 at 1:36 pm
Hey TL, here are some questions for you:
At what actuarial funded ratio would you support the breach of partially-vested (active workers) public pension contracts for a plan?
At what AFR would you support the breach of fully-vested (retired) public pension contracts for a plan?
Now, same two questions, but substitute market-based funded ratios. What are your thresholds?
Should governmental entities be permitted (by the courts) to intentionally underfund their pension obligations, lowering these funded ratios, and subsequently use these lower funded ratios as a justification for contract breach?
Al
Posted by Tough Love on January 8, 2013 at 2:42 pm
Al,
(1) Quoting…”At what actuarial funded ratio would you support the breach of partially-vested (active workers) public pension contracts for a plan?”
You are again focusing on the wrong thing. E.g., (somewhat extreme, but gets my point across) …2 Plans, one with a 1.25% formula factor with full retirement no earlier than 65 and another with a 3% formula factor with full reitremetn at age 50 might have the same funded ratio. It wouldn’t matter to me if thetaht ratio is 100% or 40%. I would not support any reduction fro the 1.25% factor Plans and I would for the 3% Plan. You see, I’m consistent in focusing on the generosity of the promised benefit, NOT on the funding. The 3% formula-factor Plan is not justifiable under ANY circumstance and should be reduced …. even for those ALREADY retired.
(2) The SAME logic holds for those already retired, but as I’m not oblivious to the fact that retires most often cannot get their jobs back if pensions are cut, I would suggest that the size of the pension is factored into the decision as to whom (and how much) to cut. While I would have only marginal problems cutting a $50K pension to $40K, I would not cut a $25K pension, and I would not be concerned by cutting a $125K pension to $75K.
(3)Quoting …”Should governmental entities be permitted (by the courts) to intentionally underfund their pension obligations, lowering these funded ratios, and subsequently use these lower funded ratios as a justification for contract breach?”
Never … as long as the promised benefits are not excessive …as they ARE today.
Bottom line …DROP the promised benefits to the FAIR level (as compared to comparable Private Sector Taxpayers), then fully fund them.
Posted by Al Moncrief on January 8, 2013 at 10:30 pm
Hey TL, thanks for the honest and detailed response. Essentially, you have arrived at a personal threshold (of public pension “generosity”) where you believe that it is appropriate that the US justice system permit the breach of pension contracts . . . making an exception under the Contract Clause. Remember there is a flesh and blood person who trusted their employer for 30 years on the other side of these contracts.
Is it just overly “generous” public pension contracts that should be breached? Or, are there other spheres of human endeavor where the excessive generosity of existing contracts warrants their breach?
Al
Posted by Tough Love on January 8, 2013 at 11:10 pm
Quoting …”Essentially, you have arrived at a personal threshold (of public pension “generosity”) where you believe that it is appropriate that the US justice system permit the breach of pension contracts . . . making an exception under the Contract Clause.”
Yes, because under the totality of circumstances is both fair and necessary.
Quoting …”Remember there is a flesh and blood person who trusted their employer for 30 years on the other side of these contracts.”
Yes again, becuase for each such Public Sector worker, there are 5 comparably-paid Private Sector workers with 1/3-1/2 the pension, yet their taxes are called upon to pay for 80-90% of the Public Sector worker’s much richer pension.
Quoting …”Is it just overly “generous” public pension contracts that should be breached? Or, are there other spheres of human endeavor where the excessive generosity of existing contracts warrants their breach? ”
There such are. Here’s one example, the Taxpayers should seize 99.99% of the multi-billion dollar “profit” that that hedge fund manager (Paulson ?)”earned” by colluding with Goldman Sacks to structure a mortgage-backed securities fund that he would BET AGAINST.
Here’s another one … the guy who killedthe 20 kids …. forget the trial, Microwave him !
Posted by Al Moncrief on January 9, 2013 at 2:00 am
Hey TL, I place much of the blame for the mortgage crisis on the banks that issued “liar loans,” and on politicians that permitted these liar loans to be issued. I agree with you on those who murder kids . . . microwave, slowly. Al
Posted by Tough Love on January 9, 2013 at 2:51 am
Al, The bulk of the blame for mortgage crisis lies with Gov’t regulators who failed miserably in keeping the banks in check by forcing them to have sufficient “skin in the game” (perhaps by keeping 10-25% of each loan in-house).
The bulk of the blame for the Public Sector Pension crisis lies PRIMARILY with our elected representatives (aka the politicians) for abrogating their responsibility to the Taxpayers. Following on their heel with “blame” is the insatiable greed of the Public Sector Unions & workers.
Posted by MJ on January 8, 2013 at 9:00 pm
TL, you are more generous than I thought. I would cut a lot more with advance notice especially since there is no “law” that pensions be fully funded in NJ. I would also send notice that retirees may stay on the lifetime health benefits (another ridiculously non-funded overly generous empty promise) and provide a choice of plans that the retirees would like to pay for. Of course, they could shop around for their own health insurance but since publics are used to the government doing everything for them…..make it easy. 25,000 a year pensions? some people don’t make that in a year working at cashier jobs, clerical etc. and have to work until they are 68 or older. Of course, the glorified public cashier jobs such as toll takers and the like make 50-65k a year plus all of their perks.
Way too overly excessive to begin with and should be reformed ASAP. Way, way too cruel to keep the publics hanging without having a chance to plan for themselves before the sh** really hits the fan.
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Posted by Mark Glennon on July 10, 2013 at 12:23 pm
At WirePoints.com we have been reporting the baloney in Illinois pension numbers the state uses. http://www.wirepoints.com/dont-frighten-the-children-an-actuarys-view-of-illinois-phony-pension-numbers/
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