Carillons That Ring Out In the Fog*

In explaining why Rhode Island seems to have succeeded in reforming public pensions while Chicago, Illinois, and New Jersey remain mired in a morass of lawsuits and plummeting funding ratios Mary Williams Walsh called upon her inner-Baudelaire:

Ms. Raimondo, who started her battle as state treasurer, faced obstacles not unlike those confronting Mayor Rahm Emanuel of Chicago: entrenched political machinery, powerful unions, a decades-old practice of promising rich pensions without setting aside enough money to pay them, truculent taxpayers, record numbers of retirees and an all-enveloping fog of discredited numbers.

The upshot of the story is that the pension promises made in Rhode Island were not contractual so they could be changed by a legislature scared into action (which Central Falls did) but it was that last phrase, thrown out there and not explored, that hit home.

The ‘all-enveloping fog of discredited numbers’ I see as referring to those actuarial reports certifying bogus liability valuations at the behest of short-sighted stakeholders who are either incapable or disinclined to see the truth so they wallow in that convenient fog as the vast majority follows their lead.  But there are people out there who know (and care) enough to be that carillon.  I see myself as one.  Others that come to mind:

The late Dunstan McNichol

Jack Dean at pensiontsunami

Mary Pat Campbell at Actuarial Outpost

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.

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* from Charles Baudelaire’s ‘The Broken Bell”

Bitter and sweet it is on these long winter nights
To sit before the fire and watch the smoking log
Beat like a heart; and hear our lost, our mute delights
Call with the carillons that ring out in the fog.

What certitude, what health, sounds from that brazen throat,
In spite of age and rust, alert! O happy bell,
Sending into the dark your clear religious note,
Like an old soldier crying through the night, “All’s well!”

I am not thus; my soul is cracked across by care;
Its voice, that once could clang upon this icy air,
Has lost the power, it seems, — comes faintly forth, instead,

As from the rattling throat of a hurt man who lies
Beside a lake of blood, under a heap of dead,
And cannot stir, and in prodigious struggling dies.

— Edna St. Vincent Millay, Flowers of Evil (NY: Harper and Brothers, 1936)

 

 

23 responses to this post.

  1. Posted by Anonymous on September 26, 2015 at 10:38 pm

    Hey John, just quickly skimmed through some of the RI reforms and it seems like their slightly relaxed from NJ’s P&B Commission recommendations. Also, as all readers of your blog know, NJ future COLA was eliminated effective July 1, 2011.

    If I can impose, a couple of questions. Are NJ’s average salaries by pension fund significantly higher than RI? What if any post retirement health care is provided, type of coverage (ie, gold) and applicable premium share. Lastly, how does RI ARC payments compare to NJ’s over the past 25 years?

    Appreciate your feedback, thank you.

    Reply

  2. Posted by Jim Palermo on September 27, 2015 at 1:18 am

    No one covers Illinois and Chicago matters better than Mark Glennon at WirePoints.com

    Reply

    • Posted by Tough Love on September 27, 2015 at 3:16 am

      He does.

      With Illinois’s iron clad pension/benefit “guarantees” (per their Constitution), sadly Chicago (and perhaps much of Ill) will have to File for Bankrupt to unburden themselves of THEIR grossly excessive public sector pensions & benefits.

      Wake up greedy Public Sector retirees/workers ….. the party is OVER, one way or they other.

      Reply

      • Posted by Anonymous on September 27, 2015 at 8:57 am

        TL why don’t you just focus on the reforms that you think will help to solve the problem and stop taunting the public workers. If they don’t agree with what you have to report then they can research it for themselves.

        Reply

        • Posted by Tough Love on September 27, 2015 at 8:04 pm

          I DO focus on fair, necessary, and JUST reforms. Specifically, for their FUTURE Service, grant all Public Sector workers (including CURRENT workers) pensions and benefits for which the Taxpayer contribution is equal to what Private Sector workers’ employers typically contribute to their workers’ pensions and benefit … if Public Sector workers want MORE … that’s fine as long as YOU (not Taxpayers) pay for it.

          And right now for PENSIONS …. Private Sector workers get 401k Plans, typically with 3-4% of pay as the employer contribution ….. but Public Sector workers get DB Plans with a TRUE level annual total cost of 25-50% pf pay, and all but what the workers contribute (usually 5-10% of pay) becomes the responsibility of the Taxpayers. That remainder is TYPICALLY 5+ times what Private Sector workers get from their employers, and there is ZERO justification for these grossly excessive TAXPAYER-FUNDED promises.

          And right now for Retiree healthcare benefits, Public Sector workers with 25 years of service get heavily subsidized “Platinum+” coverage (and often FREE with 20 years of service as of 2011), vs for PRIVATE Sector retirees, typically NOTHING (yes NOTHING) but access to group coverage fully paid for by the Private Sector retiree. With Private Sector workers typically getting NOTHING, there is ZERO justification for THEM to subsidize the retiree healthcare costs of Public Sector workers.
          ———————————————–

          It’s VERY clear. Public Sector workers now have a VERY significant pension & benefit ADVANTAGE (that far outweighs any cash pay disadvantage) and thry REFUSE to give that up even for FUTURE Service not yet worked. How do you “negotiate” with that mindset?

          Frankly, I think Gov. Christie has handing it perfectly ….. as long as the Unions/workers refuse to give up that advantage, he’ll starve the Plans of the funds need to honor these grossly excessive pension/benefit promises ….. and the NJ Supreme Count agreed that he has the right to do so.

          Reply

    • Posted by george on September 29, 2015 at 5:40 am

      Some might be interested in some history.

      Book about Chicago financial crisis during the Great Depression.

      Taxpayers in Revolt: Tax Resistance During the Great Depression
      https://mises.org/library/taxpayers-revolt-tax-resistance-during-great-depression

      Reply

  3. Posted by Anonymous on September 27, 2015 at 7:08 am

    Hey TL why don’t you implore some of that private sector free market strategy you spew. Move to WI. Walker’s back now, with his anti-Union rhetoric tucked between his tail.

    Reply

  4. Posted by Anonymous on September 27, 2015 at 9:44 am

    Two things are cettain:; P&B reforms and increased taxes. Slice and dice any way that makes you happy but no escaping this inevitable reality!

    Reply

  5. Posted by Anonymous on September 27, 2015 at 5:53 pm

    http://www.nj.com/politics/index.ssf/2015/09/republicans_say_they_had_good_reason_for_about-fac.html#incart_2box_politics_index.ssf
    AGAIN, I know it’s unrelated to this blog’s topic BUT it underscores the inability for ANY willingness to negotiate!

    Reply

  6. Posted by george on September 28, 2015 at 4:05 am

    Multi employer plans, foggy numbers

    Woodworking Machinists Union Lobbies for Pension Protections
    http://www.woodworkingnetwork.com/management/woodworking-machinists-union-lobbies-pension-protections

    “The IAM National Pension Fund is the fifth largest multiemployer pension fund in the U.S. It is fully funded with approximately $10.9 billion in assets and provides benefits for more than 90,000 retirees. Visit mypension.iamnpf.org for more information. ”

    $10.9 billion /90,000 retirees = $120,000 per retiree

    Reply

    • Posted by Jim Palermo on September 28, 2015 at 10:36 am

      Calculating pension benefits would only be a guess, but with $121,000 in assets per retiree and $1,800 in assets per member, retirement benefits in this plan are not nearly as generous as most public sector plans.

      Reply

      • Posted by S Moderation Douglas on September 29, 2015 at 1:58 pm

        If this is a somewhat typical example, it doesn’t look too shabby.

        I don’t know what Bob’s final salary was, but $4,400 for life beginning at age 51 is nothing to sneeze at.

        ” Bob is age 51 when he retires. He has 30 years of credited service, and he also has 600 hours of service in 1999 or later. He thus satisfes the requirements for 30 and Out, so his pension is not reduced for age. If we assume his service and employer contributions are the same as Len’s (see example on page 14), his pension amount, payable at age 51, will be the same as Len’s normal pension — $4,452 per month — with no reduction.”

        http://mypension.iamnpf.org/national-pension-plan.aspx

        Reply

        • Posted by Jim Palermo on September 29, 2015 at 2:16 pm

          I took the $4,452 monthly payment and discounted it at 5% for 30 years and came up with a present value of $862,000. The plan has just $121,000 for each retiree. Ow can it be fully funded?

          Reply

        • Posted by Tough Love on September 29, 2015 at 2:17 pm

          Likely with no COLAs (it’s a PRIVATE Sector pension Plan) …… which means that a PUBLIC Sector pension (with a 3% annual COLA increase) of $3,300/month would be equivalent in value to this non-COLA $4,452/ month Private Sector pension.

          Reply

        • Posted by S Moderation Douglas on September 29, 2015 at 2:26 pm

          Caveat:

          Just glancing at the booklet, other “examples” look much more meager. On the order of $900 to $1,500 per month.

          I haven’t yet seen the relation to salary. The pensions seem to be calculated according to “employers contribution” per hour times number of years.

          Reply

          • Posted by Jim Palermo on September 29, 2015 at 2:48 pm

            S Moderation, you’ve unknowingly made a point for me: Those who negotiate and grant public sector pensions likely don’t realize how costly they are.

          • Posted by S Moderation Douglas on September 29, 2015 at 3:03 pm

            They are learning more every day. Most of the negotiations in the last decade have been downward. In California, the call has been to return to pre-1999 formulas (SB400). In fact, formulas for new employees are LESS than in 1999, and employee contributions have nearly doubled.

          • Posted by Tough Love on September 29, 2015 at 7:21 pm

            Quoting …S Moderation Douglas ….. “Most of the negotiations in the last decade have been downward.”

            Almost all downward changes apply ONLY to NEW workers …. NOT to CURRENT workers ….. who will CONTINUE to accrue unnecessary, unjust, unfair (to taxpayers) and affordable pensions until the retire, which for some will be 30+ years in the FUTURE. We can’t afford it.

            It doesn’t work that way in Private Sector Plans, where VERY VERY few are “grandfathered”, and it is both legal and ROUTINE to reduce or completely freeze further accruals for CURRENT workers.

            Public Sector workers should be treated no better, not because we are being mean-spirited, but because it’s OUR MONEY that pay for YOUR pensions & benefits.

          • Posted by S Moderation Douglas on September 30, 2015 at 5:03 pm

            1. Half a loaf is better than none.

            2. Especially when a whole loaf is illegal.

            3. Assuming the pensions were excessive to begin with. That is still an “opinion.”

          • Posted by Tough Love on September 30, 2015 at 6:13 pm

            S Moderation Douglas,

            It’s NOT 1/2 a loaf, it’s 10% of a loaf until all of the workers hired prior to the NJ Ch78 hinges that were implemented in 2011 retire. And the Ch78 changes for 2011 & later hires are far to little, as their pensions remain MUCH MUCH greater than those of comparable Private Sector workers with VERY little difference in cash pay in NJ to justify it.

            And reducing FUTURE Service pension accruals (or freezing them completely) in NJ is NOT illegal. It’s just that NJ’s Democratic Legislature, BOUGHT-OFF with Public Sector Union campaign contribution and election support aren’t willing to confront their Union benefactors and implement such DESPERATELY NEEDED changes ….. as proposed by the NJ Pension Commission.

          • Posted by S Moderation Douglas is Wrong Again on October 2, 2015 at 1:25 pm

            In fact, formulas for new employees are LESS than in 1999, and employee contributions have nearly doubled.
            100% FALSE. In fact the CHP, which started 3%@50 with Senate Bill 400 in 1999) is still at 3%, but at age @55- whopped doo.
            Your claims are, as usual, false.

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