Connecticut’s Fund-Split Scam

A Wall Street Journal story linked  General Electric Co.’s planned move to Boston to worries over Connecticut’s woeful funded ratio for its public pension system.

So Connecticut has a plan and it would not change what union members would receive when they retire nor would it add or cut pension benefits.  All it would do is raise the funded ratio just like Pension Obligation Bonds (POBs) have been doing.

Here is how it would work…..

 Taking numbers from the WSJ story:

Under Mr. Malloy’s proposals, one pension fund would cover employees and retirees hired before July 1, 1984, who account for 72% of the system’s $14.9 billion unfunded liabilities. This fund would be a so-called pay-as-you-go plan: The state would make dedicated annual payments from its operating budget to pay for the benefits but no longer invest the contributions.

And just like magic those liabilities are off the books.  As with bond repayments on POBs they move into debt. As for the other participants.

A separate fund would cover workers and retirees hired on or after July 1, 1984. Benefits for these workers would be almost entirely paid for using the state employee pension fund’s current assets of $10.6 billion which would continue being invested.

This then becomes the plan that is valued and doing some quick math (in billions):

  • Total liabilities: $14.9 + $10.6 = $25.5
  • Funded ratio: $10.6 / $25.5 = 42%
  • Pre-1984 participant liabilities: .72 x $14.9 = $10.7
  • Post-1984 participant liabilities: $25.5 – $10.7 = $14.8
  • Official funded ratio after the split: $10.6 / $14.8 = 72%

Without changing any benefits Connecticut raises their magic number from a scary 42% to what other big companies and bond-buyers might be gulled into considering a manageable 72% with the only question being whether there will be a footnote in the pension part of the financial statements about the pay-go part. I don’t remember ever seeing one about New Jersey POBs and that passes for honest disclosure these days.

87 responses to this post.

  1. Posted by Sean on January 30, 2016 at 12:21 am

    Even 72% is scary enough, considering a full blast bull market for nearly seven years (and counting)…and even the 72% is a total fantasy!

    It’s amazing the lengths that politicians will go to in order to avoid reality. At what point do they finally put their hands in the air and say, “Ok, Ok. We don’t have a prayer. We never did. These promises are toast. We admit it.”?

    Reply

    • Posted by Tough Love on January 30, 2016 at 1:38 am

      Illinois may soon give us a picture of what you mean by ……. “At what point do they finally put their hands in the air and say, “Ok, Ok. We don’t have a prayer. We never did. These promises are toast. We admit it.”?”

      Illinois is just about there, and has little ability to kick-the-can-down-the-road any longer.

      Heck, maybe a catastrophic Plan failure in Illinois (WITHmaterial pension reductions) will get NJ’s Unions off their duff.

      Reply

      • Posted by Sean on January 30, 2016 at 2:51 am

        You’d think so, anyway. Still, I somehow believe that they will somehow, someway, manage to deny and pretend until the end of time. I mean, I think they would even go so far as to send retirees checks that were literally no good, before they would own up.

        Sounds stupid, I know, but the atmosphere in Illinois is just…surreal. You wouldn’t believe how many people who are soon to retire, and still have no clue, about how deep the doo doo is. Well, maybe you would.

        Reply

  2. Posted by Tough Love on January 30, 2016 at 1:33 am

    Quoting from the linked Wall Street Journal story ….

    “Neither approach would change what union members would receive when they retire, and neither adds or cuts pension benefits.”

    THAT is the key take-away…. and ALL the rest is political double-speak.

    WHAT is so hard to understand ? These Public Sector pensions (AND benefits, especially retiree healthcare promises) are grossly excess (by any reasonable metric), unnecessary to attract and retain a qualified workforce, unfair to taxpayers, and VERY clearly unaffordable.

    Proposals that address only the TIMING of funding but do not … AT A MINIMUM …. call for VERY materially reductions the pension accrual rate for the FUTURE Service of all CURRENT workers are financially meaningless …. and simply more of our Elected Officials catering to the wishes of the Public Sector Unions who fund their campaigns and provide Election support.

    Reply

    • Posted by Sean on January 30, 2016 at 3:13 am

      The very material reductions will happen, and soon. I think they are just going to stall until they are forced to do so; that way, no one will have to be the bad guy. Of course, waiting longer will only make it worse, but that’s the price of cowardice.

      Reply

      • Posted by Tough Love on January 30, 2016 at 3:19 am

        It’s a shame that not one of the many Elected Officials that (by calculated/deliberate INACTION) directly contributed to the pension/benefit failures sure-to-come in Ill, NJ, CA, RI, CT, KY, PA, and elsewhere will be held accountable.

        Reply

        • Posted by Sean on January 30, 2016 at 3:42 am

          Yep. Same as the Wall Street crooks. It’s just too damn hard to prove “intent to defraud.” Ineptitude is just as costly in the end, though.

          Reply

          • Posted by Anonymous on January 30, 2016 at 11:08 am

            Isn’t this cute, TL and Sean pension pillow talking at 3 am, NJ pension legislation and constitution supports pay-as-you-go. Have either of you made appointments to speak to legislators in your respective states to air your grievances? You two actuary geniuses are really wasting your time ranting on this blog, be strategic, move to the next level, actually become real change agents, walk your talk otherwise give it up. Just saying!!! Sean I see you stopped stealing work time, good for you. Keep us abreast of your job search and retirement savings plan.

          • Posted by Tough Love on January 30, 2016 at 3:00 pm

            No Anon, what NOT “cute” is the image I get of you and your ilk …….

          • Posted by Sean on January 30, 2016 at 5:09 pm

            You know, you make a good point (unwittingly of course) about the whole 3 am thing. My posts seem to be stamped three hours later than when I actually submit them. I’m in central time, so I could see the hour difference, but I don’t know why about the other two.

            Speaking of the other two, I love your responses, and the Nutcases. It only goes to prove which side really has no argument. I recall reading nonsense like yours during the housing bubble build up. Oh yeah, they were gleefully mocking all the “haters” and “naysayers” and “gloom and doomers.” My my, did they ever enjoy themselves. Strangely, you don’t hear anything from them anymore…

            So, when you and Nutcase are going over the cliff together, you can grab hold of one another’s hooves, and say, “oh well, at least we showed Sean and TL who the boss was. Yeah, we really showed ’em, didn’t we?”

            It would be comical, if it weren’t such a tragedy in the making. Again, your responses are proof positive that you have no perception as to the magnitude of your problem. Won’t effect me one way or the other. Just saying…

  3. Posted by The Resident Nutcase on January 30, 2016 at 7:55 am

    Holy cow batman!!!!
    TL and Sean sound like two insane lunatics talking to a wall or is it each other??? Or is it to themselves…… Maybe…. Just maybe..!!!
    Ahhhhhhhhhh ….. Lol. Can’t be. Nevermind.
    Carry on……

    Reply

    • Posted by Sean on January 30, 2016 at 5:11 pm

      Ahhhhh yes. Another “contribution” from the hot air balloon himself. As always, informative, substantive, and instructive. Gotta love him!

      Reply

      • Posted by Anonymous on January 30, 2016 at 8:13 pm

        Sean we do not need to develop any arguments based on you and TL’ s “facts”. There is constitutional language and readopted legislation in NJ that protects public employees. There are presently six providers under NJABP, right now all NJ employees in NJ are eligible to add as a supplemental retirement fund or transfer their existing pensions. If NJ Prudential can take on GM and others Verizon, it seems to me private insurers can divvy up members and handle a trust to provide pensions. The local, county and school districts can handle their employee pensions, there are answers.

        Reply

        • Posted by Sean on January 30, 2016 at 8:31 pm

          Yes! Now, just click your heels together three times, and repeat those words to yourself, over and over. Soon the money fairy will be on her way with truckloads of cash…

          None of us doubt that there will be pension payments. It’s just not going to be quite like you hope or imagine…

          Sorry

          Reply

          • Posted by Anonymous on January 31, 2016 at 9:58 am

            See delusion and arrogance is clouding your thoughts, NJ pension issues will be addressed long before the actuarial reality clock runs out, your faux grim reaper comments have no real impact on NJ public workers future pension payouts, the whole pension spectrum is evolving in both the private and public sector, there are answers. I truly don’t see NJ public employees turning to a blog commenter that steals time from his employer and early morning pension pillowcases with the likes of the anti-public employee pensions rage queen TL.

          • Posted by Sean on January 31, 2016 at 1:44 pm

            I’ll try to say this in language that even you can understand:

            NONE of the comments posted by ANYONE here on this blog are going to have ANY effect whatsoever on public pensions, there funding levels, and the future changes that are coming. I have said this many times, but your pattern of obsessing over triviality clearly keeps you from seeing what’s going on.

            Finally though, you have said one thing that is true:
            “…the whole pension spectrum is evolving in both the private and public sector, there are answers.”

            Well, DUH! THAT’s what we are talking about here! You bet your ass these plans are evolving, in both private and public sectors, and you can also bet your ass there ARE answers. Unfortunately, you and your friend are not going to like those answers, plain and simple, which is why you and your friend cannot stop obsessing over those people who disagree with your viewpoint.

        • Posted by Tough Love on January 30, 2016 at 8:45 pm

          Quoting Anonymous …..” If NJ Prudential can take on GM and others Verizon, it seems to me private insurers can divvy up members and handle a trust to provide pensions. ”

          What is so difficult to understand? When you tell Prudential exactly what benefit (i.e., annuity payout) is being purchased, Prudential will tell you exactly what that will COST you to buy it. The trouble is, you only have about 1/3 of the money necessary to purchase just the already accrued pensions.

          Reply

          • Posted by Sean on January 30, 2016 at 9:14 pm

            What is difficult to understand, is reality, especially when you have been promised, for a long, long time, something that is…not reality. THAT is what is hard to understand.

            Besides they “do not need to develop any arguments based on you and TL’s ‘facts.'” See, all of our arguments can be written off as mere personal attacks coming from jealous haters. That way, the reality of it all doesn’t have to be faced.

            You guys are correct: You certainly do NOT need to formulate ANY arguments against Sean or TL, or anyone else that opposes your viewpoint.

            On the other hand, just over the horizon, that freight train barreling towards you at about ninety miles per hour? Yeah, you might want to do something about that.

          • Posted by Anonymous on January 31, 2016 at 10:09 am

            The insurance based plans are long-term group policies connected to a group trust. Prudential and other large insurers have been handling public and private pensions both defined benefit and defined contribution for decades. TL as an actuary you fully know how deferred annuities work through group plans and policies.

          • Posted by Tough Love on January 31, 2016 at 3:05 pm

            Anon,

            While I consider that a compliment, when did I become an actuary ?

            You don’t have to be an actuary to have a brain, lean some math, and understand basic finance and economics……. and yes, learn the basic workings/funding of a DB pension Plan.

            You should try it.
            ————————————
            P.S. Prudential’s “handling” of public and private pensions, has NOTHING to do with having to actually PAY FOR the products (e.g., annuities) they sell …. and NJ’s Public Sector Plans don’t have the money to do so.

          • Posted by Anonymous on January 31, 2016 at 4:25 pm

            Now that we know for sure that TL is not an actuary, we can conclude she and her fellow night creeper co-commenter Sean know nothing about public/private sector group retirement plans through insurance companies using insurance/investment products, as previously stated you have no influence in this matter because you have an information void.

          • Posted by Sean on January 31, 2016 at 5:05 pm

            And yet, he remains fixated on trivial pursuits.

            Instead of continuing this futility of chasing your own tail, why don’t you spend some time thinking about the levels of funding in these plans?

            I’m sure you don’t have time for such “nonsense” but it could actually help you to learn something new.

          • Posted by Tough Love on January 31, 2016 at 5:17 pm

            Anon,

            You keep going back to ……… “group retirement plans through insurance companies using insurance/investment products”.

            Let’s try explaining it another way ……….. Public Sector Plans are “BMW”-generous, and when you buy “BMW”-generous annuities from an insurer, you must pay them the price of a BMW.

            But NJ’s Plans only have enough money to buy Honda Civics. Better ?

          • Posted by Anonymous on January 31, 2016 at 7:23 pm

            As I suspected TL and Sean are clueless about insurance/investment based public pensions purchased through policies/annuities both immediate and deferred through a pooled employer group plan, pay these insomniacs no attention.

          • Posted by Tough Love on January 31, 2016 at 7:48 pm

            OK Anon, we can try again …. let’s see if the readers believe you or I …

            Form THIS source:

            https://burypensions.wordpress.com/2015/12/20/gasb68-numbers-for-new-jersey/

            The funding ratio for all of NJ’s Public Sector Plans combined is 42.46%. That means that for each $100 in PRESENT VALUE (i.e. needed cash in-hand TODAY) of promised pension benefits, we only have $42.46 in assets.

            If NJ’s Plans were to BUY the CURRENTLY promised pension benefits (just for PAST service alone) from a company such as Prudential, it only has in hand $42.46 for each $100 needed to make that purchase.

            ——————————————————-

            Yup ………… keep the blinders on, and it will all be fine.

          • Posted by Tough Love on January 31, 2016 at 8:02 pm

            Follow-up to my last comment :

            Actually, it is quite a bit WORSE than I described because the GASB assumptions and methodology are MORE liberal than the assumptions an insurer/annuity-writer would use in pricing it’s products.

            It’s likely that all of the Plans’ assets on hand today could buy (from a company such as Prudential) not 42.46% of already accrued Past service pension accruals, but only about 1/3 (33%) of such accruals.

          • Posted by Anonymous on January 31, 2016 at 8:44 pm

            It’s an insurance policy, from pooled contributions, please expand your knowledge so that you can add something to the solutions section of this discussion that adds value.

          • Posted by Tough Love on January 31, 2016 at 9:27 pm

            Interesting Anon, you’ve chosen a group of words …..”insurance/investment based public pensions purchased through policies/annuities both immediate and deferred through a pooled employer group plan” …. and apparent assign some grand meaning to them.

            Foolish man ,….. It’s an insurance company PRODUCT, plain and simple. That’s what insurance companies sell (like car companies sell cars). They don’t give away something of $100 value for $33.

          • Posted by Anonymous on January 31, 2016 at 10:12 pm

            TO you do not know what you are talking about, employer and employee contributions are premium payments. By the way thus Anon.is totally female!!!

          • Posted by Sean on January 31, 2016 at 10:17 pm

            “please expand your knowledge so that you can add something to the solutions section of this discussion that adds value.”

            Again, it’s hard to tell which is greater, the ignorance, or the arrogance.

            See, TL, it is YOU that needs to learn more, so that you can contribute “something of value” to these “discussions.”

            This, coming from the one who has added exactly zero to any discussion of “solutions.” Zip. Zilch. Nada. Nothing.

  4. Posted by MJ on January 30, 2016 at 9:33 am

    John, when you say that bondholders might be “gulled” into believing 72% I find it hard to believe that anyone with any sense of accounting or math facts let alone someone who works in the financail markets would not be wiser and more worldly than to risk being involved with these pension funds. Especially in light of other scenarios such as Detroit where the bond holders are the ones getting screwed when the bankruptices come along. Would you explain this in simple terms?
    Thanks

    Reply

    • Very simple really. If this goes through Connecticut’s funded ratio number that gets included in their financial statements and Public Fund Surveys across the country goes from 42% to 72% which is in the range of other states. Nobody, especially those who sell municipal bonds, will dig to see how they got to that number (because it would result in fewer sales) so a perception problem (a correct perception in this case) is partially solved while the real problem (imminent bankruptcy of either the plan or the state) persists.

      Reply

  5. Posted by Anonymous on January 30, 2016 at 11:17 am

    Can a contracted investment firm be a party in a class action suit if they act in a way that is “not in the best interest” of the members of the state pension systems. Do the new fiduciary rules about fees and advice apply to groups, like public employees and the private firms contacted by the NJ Office of Investment? I think the unions should explore, the fees paid and bonuses provided appear exorbitant.

    Reply

  6. Posted by Tough Love on January 30, 2016 at 2:34 pm

    The FAR-REACHING consequences of Grossly Excessive Public Sector pension & benefit promises ….. ANDthe legal barriers that exist (ONLY in the “PUBLIC” Arena) to reducing such excessive promises even just for CURRENT workers’ FUTURE Service…..

    http://www.barrons.com/articles/flints-problem-was-money-not-water-1454131669

    Reply

    • Posted by Anonymous on January 30, 2016 at 4:20 pm

      TL if you don’t want to disconnect from the mothership by removing the tinfoil hat, tilt your head to the left, the NJ pension matter will be addressed before the end of this administration or very early in the new administration because it must be solved. Don’t worry the spouses won’t be too upset about the early morning rendezvous with Sean.

      Reply

      • Posted by Tough Love on January 30, 2016 at 4:27 pm

        And what does “addressed” mean ….. specifically, where will enough money come from to keep these grossly excessive Plans in place EVEN FOR just the FUTURE service of current workers ….. let alone fill the $150 BILLION asset-shortfall for PAST Service accruals?

        Keep dreaming …. it’s ALL you have, just a dream.

        Reply

      • Posted by Sean on January 30, 2016 at 5:24 pm

        “the NJ pension matter will be addressed”

        Well, it’s nice to know all the worry about the pension mess “will be addressed.” I thought they have been “addressing” this for decades. Oh yeah. They have. They have “addressed” this the same way they always do: empty promises and shell games. The problem is, none of this “addressing” of the issue creates any CASH, and it never will. They are simply borrowing more time until the inevitable moment when they are forced to admit it.

        The scariest part of all this is to look at funding levels AFTER a seven year (and counting) bull market. They are still not gaining ground, and the unfunded liabilities continue to grow, while the assets continue to dwindle. Now, what happens when the inevitable correction or bear market hits?

        They have no idea how to “address” this. So, go ahead, elect new Santa Clauses into the legislature. They’ll give you more “victories” in the form of more empty promises. After all, it has worked wonders for Illinois.

        Reply

        • Posted by Tough Love on January 30, 2016 at 5:46 pm

          And Let’s not forget, even Sweeney’s proposal …. a new “grade-in” to the full (rosy-assumption, and clearly too low by 1/3 to 1/2) ARC over the next 5 years will (just by itself) ADD and additional; $15+ Billion to the underfunding.

          Yeah….. THAT’s “addressing”.

          Reply

          • Posted by Sean on January 30, 2016 at 6:02 pm

            And I love how Anonymous uses the words “addressed” and “solved” in the same sentence!

            But remember, TL, you and I and all of us holding opposing viewpoints are disconnected from reality, and need to leave the mother ship. I mean, who’s REALLY wearing the tin foil hat?!

            I really don’t know which is greater, the arrogance, or the ignorance.

          • Posted by Tough Love on January 30, 2016 at 6:27 pm

            I believe it’s more ……. “fear and denial” than ……. ” arrogance or ignorance”.

          • Posted by Anonymous on February 1, 2016 at 6:52 pm

            Sean, you and your immediate supervisor can be suspended or terminated for official misconduct. You nor TL knows zip about long-term premium payments in public sector pension schemes that can be converted to lifetime annuities from insurance companies, even the Illinois public pension system offers this option. It is the responsibility of union members/ public employees to understand available options. You nor TL have ever researched group options for public and private sector retirement plans, therefore you have no valid solutions to offer.

          • Posted by Sean on February 1, 2016 at 8:29 pm

            “Sean, you and your immediate supervisor can be suspended or terminated for official misconduct.”

            Dude, are you like, mentally insane or something? Seriously, you are one deranged individual. It wasn’t my immediate supervisor, it was the executive VP of the company you half wit. For the life of me, I don’t know where people like you come from. “Official misconduct.” Is this some kind of joke?!

            “You nor TL knows zip about long-term premium payments.”

            If we know zip, then where does that put YOU? You love to come around swinging your big stick and monitoring everyone’s time card, yet you still have put up NOTHING in the way of answers to the issues we are talking about. Seriously. All you have ever done on this blog is attack people personally.

        • Posted by Anonymous on February 1, 2016 at 7:45 am

          Sean, seriously you nor TL knows anything about the accumulation and distribution processes for defined benefit and defined contribution pensions so you repeat the doom and gloom taped message over and over again. There is so much attention being paid to public and private pensions that employers and different levels of government will devise workable solutions to reinforce the purpose of employment based retirement benefits.

          Reply

          • Posted by Tough Love on February 1, 2016 at 10:08 am

            Business as usual for you ……..

            Deny that those who seek reform have any knowledge, and how history has shown just how incapable/unwilling our (Public Sector Union-BOUGHT) gov’t is in devising REAL”solutions”……………. which anyone with a modicum of common sense (and minimal math ability) knows MUST include material pension/benefit level reductions.

          • Posted by Sean on February 1, 2016 at 11:50 am

            “Sean, seriously you nor TL knows anything about the accumulation and distribution processes for defined benefit and defined contribution pensions”

            And of course, YOU ARE the expert, right, Anonymous? Why don’t you go ahead and share with the class your “expertise”?

            “employers and different levels of government will devise workable solutions”

            YES, they are, and WE have been saying it ALL ALONG. They most certainly will devise “workable solutions.” The problem for you is, you are not going to like those “workable solutions.”

            So, go ahead and continue to bash those of us who present a viewpoint that doesn’t line up with yours.

            Here, I’ll give you something you can handle, something more at your level:

            I am posting this from my work computer!

            Oh boy! Hurry up and jump on it, dude. Never mind of course, that I am granted permission and am completely authorized to do so.

          • Posted by Anonymous on February 1, 2016 at 8:46 pm

            Tell us what you actually know about pension maneuverability for NJ public employee, 401a accumulation and distribution schemes, exclusive benefit, hybrid pension plans, group annuities and group trust fund. Sean the VP isn’t the President of the company same applies, it’s still a misuse of company equipment and paid work time dude.

          • Posted by Tough Love on February 1, 2016 at 9:35 pm

            Anon, Are you serious ?

            Books could be written on each subject ….. although “pension maneuverability for NJ public employee” seems like some words your Union must have coined.

            Seriously, how about stopping with throwing out buzzwords with no follow-up FROM YOU.

            Just suggest a “solution” …. ANY “solution” …..OTHER than simply raising taxes.

          • Posted by Sean on February 1, 2016 at 9:57 pm

            “Sean the VP isn’t the President of the company same applies, it’s still a misuse of company equipment and paid work time dude.”

            Wow. You are willing to hang onto anything aren’t you? Ok, Einstein, here goes: Our company’s policies and procedures manual was written by our President, and our Executive Vice President. I am in complete compliance with those policies and procedures, in addition to speaking with the VP. You really cannot be this dense, just very, very desperate.

            “Tell us what you actually know about pension maneuverability for NJ public employee, 401a accumulation and distribution schemes, exclusive benefit, hybrid pension plans, group annuities and group trust fund.”

            So, when I asked you to share with the class YOUR expertise, THIS is what you come up with? Trying to turn it around and make me report to Sgt Stupid?

            Ok. I’ll play along. I am quite confident I know more than you do about these things that you just listed. More importantly, I also know that NONE of these things means a hill of beans. Here’s what DOES matter:

            Your public sector pension funds are far too under funded to pay these plans, as currently put forth. With ROSY assumptions and accounting trickery, they are still in the neighborhood of having only 50-60 cents for every dollar needed. That’s with fantasy blinders on. AND, that’s AFTER a seven year bull market. Now, if the politicians were forced to use accounting methods and standards required by law for the PRIVATE sector, these plans are LUCKY if they have 30-40 cents for every dollar needed, and no hybrid, 401a, group annuity, or trust fund is going to somehow cause all of that REALITY to go away. Now, what do you think will happen to the already abysmal funding levels of these plans when the next correction/bear market comes? I know that you cannot possibly bring yourself to answer that question. I will tell you this much, though: You cannot possibly tax your way out of it. You cannot possibly count on investment returns to make up the lost ground. And no amount of “legislation” is going to create the money needed. So, where do you think that leaves you?

            Just keep telling yourself that we are all just stupid, jealous haters. The money fairy is on her way. She’ll be here any moment now…

          • Posted by Anonymous on February 1, 2016 at 10:07 pm

            If you knew about hybrid public pension plan you would know that employee contributions can be moved strategically amongst asset groups by the employee. You would know that employer/employee contributions are used to purchase premiums and each account is supported by an individually held or group contract. You would know that the portion of the vested accumulation used for lifetime income amounts to premiums paid out from a group policy with the state being the policyholder and so much more. The NJ legislation governing pension grant each employee the opportunity to transfer their pensions to the NJABP or to open a supplemental account. Since there are presently six providers under NJABP there is opportunity to come up with a system that gets the state out of the pension business. Some of us understand employment law and workplace ethic codes, which explains questioning your commenting during work time and using work equipment for non work.

          • Posted by Sean on February 1, 2016 at 10:13 pm

            In all of your tap dancing, you have yet to offer a real solution to the very simple problem of not having enough money to fund the promises. You can try all the smoke screens you want, but at the end of the day, it really is that simple. Really.

          • Posted by Tough Love on February 2, 2016 at 12:16 am

            Anon,

            I have never met someone as “thick-headed” as you. It’s astonishing someone could be so ill-informed, yet so convinced that they are correct…. and apparently at no time has it entered into your thought-process that there is a very lage shortfall in available money to privately purchase exactly what you call for as the “solution”.

        • Posted by Anonymous on February 1, 2016 at 10:27 pm

          Sean, if your company executive wrote an employee manual approving the businesswide use of company computer to comment on blogs throughout the workday, you now have more motivation to find a better job because bad management practices will eventually destroy your present workplace. Who would write a employee manual that sanctions getting paid for homework activities by every employee, that’s a disaster waiting to happen, workplace train wreck, who’s an idiot?

          Reply

          • Posted by Anonymous on February 1, 2016 at 10:33 pm

            Not homework “nonwork”. Sean I did offer solutions, you do not have the knowledge base to recognize.

          • Posted by Sean on February 1, 2016 at 10:53 pm

            One hour lunch break. Two fifteen minute breaks. All three to be used at my discretion. Keep dreaming, Desperado. Not hard to see why a guy like you has no business in the real world.

            As for the “solutions” you pretend to have offered… um, no, you have not. You have simply recited something that reeks like the first page of a brochure.

            No, Amigo, you have not offered a single, solitary solution, and you and I, and everyone else, knows it. And when you say that I, or anyone else, does “not having the knowledge base to recognize” your pearls of wisdom, dude, you take the cake.

            It’s one thing to be a pompous ass; it’s quite another to be an ignorant, yet pompous, ass. You really should have quit when you were only a few miles behind, but you just cannot accept it.

          • Posted by Anonymous on February 2, 2016 at 12:28 am

            Sean, in NJ some of us have participated in hybrid pension plans for decades, if my responses sound like page one of the brochure outlining the plan then since it is my experience it rings true. I suggest you read some brochures and perspectives to gain a better knowledge base, related to public sector hybrid plans. GM and Verizon took assets from their company-sponsored pension plans and purchased insurance/investment-based annuities. The annuities in hybrid plans are based on what the employees wish to use from their vested accumulations to purchase lifetime income. The existing state accumulation can be divveyed up amongst providers to expand existing hybrid 401a and 403b programs. The present accumulations would purchase a group premium an insurance policy to provide retirement and death benefits. These plans already exist, just need to expand. Stop with the juvenile retorts, the things you do and share just given”pause” to ask the question etc is up with this man and what impact will pension reductions have on your finances. You sound like the hater not me. You blog comment throughout your workweek plus extra forty hours a month and I “have no business in the real world”. You would be fired in the real world for misuse of company time and property.

          • Posted by Tough Love on February 2, 2016 at 12:36 am

            Quoting Anon …… “GM and Verizon took assets from their company-sponsored pension plans and purchased insurance/investment-based annuities.”

            Yeah …… barbecue THEY had (in their pension Plans) 100% of the funds necessary to purchase their employees promised DB pension benefits form a Private insurer.

            NJ has (on the pricing basis that the Private insurer certainly uses in pricing it’s products) on 30% to 40% of the needed funds.

          • Posted by Sean on February 2, 2016 at 1:19 am

            That was my question, as I was reading his garbage. Gee, how are they going to take $35 and purchase $100 worth of benefits? Yet, he’s going to school me on “the real world.” What a joke. “You would be fired in the real world.” Right, grandpa. Keep telling me about your “real world.”

  7. Posted by dentss dunnigan on January 31, 2016 at 12:57 pm

    here is not a dooms day prediction but a run of the mill likely one ..The other thing to realize is that the long-term performance of the stock market is mostly a myth. Yes, you could have made about 10% a year if you’d gotten in 100 years ago and stayed in. But that figure is subject to some important qualifications.
    If this hold true ,this pension will be drawn down faster than imaguined .forget about the magic of compounding …http://www.zerohedge.com/news/2016-01-31/forget-about-stocks-long-run

    Reply

  8. Posted by Anonymous on January 31, 2016 at 10:58 pm

    Sometimes the messenger shoots himself. Isn’t Tyler Durden also prominent in the Flat Earth Society?

    Reply

    • Posted by Now retired Pat on February 1, 2016 at 11:47 am

      February first (and loving it). 1st retirement check deposited in the bank. KaChing! (:

      Reply

      • Posted by Anonymous on February 1, 2016 at 1:32 pm

        : )

        Reply

      • Enjoy it while it lasts. I’d say you have at least another 5 years or so before the SHTF.

        Reply

      • Posted by Tough Love on February 1, 2016 at 2:12 pm

        Better develop a financial Plan “B” …. as all hell will break loose when you plan runs out of assets is just a few years (as there is no way Tax increases will fill that hole).

        Reply

      • Posted by Sean on February 2, 2016 at 2:28 pm

        Pat. I’m curious. Are you the same Pat that said in an earlier post that you needed your benefits to last for 25-30 years? Was that you, or someone else? If it was not you, please accept my apology, as I do not know. If it was you, I would offer you a few suggestions. First, I would quietly take my checks and put half of the money into savings, “just in case.” I mean, it’s not hard to see the surroundings we are currently in. Second, IF you truly do need these benefits to keep coming, unchanged for the worse, I would maybe hold off on doing a victory lap until maybe AFTER the race. I’m not sure that you want to raise your hands in victory after the first fifty yards if you still have another twenty six miles to go. Just a thought. (ancient proverb: The king who is just now putting ON his armor should not speak like a king who has already removed his armor). Nothing wrong with being happy and excited and maybe even bragging a bit; just beware that your friends will be all too happy to remind you if you fall on your face. You don’t want to end up like this guy, who probably wishes that he had waited until AFTER the victory. (I think we could all use a little humor).

        Reply

        • Posted by Anonymous on February 2, 2016 at 3:40 pm

          Pat, pay Sean no attention your retirement monies are protected.

          Reply

          • Let me see… retire at age 53, collect for 5 or 6 years. Still young enough to get a Wal-Mart job at age 58 or 59 when the NJ pension fund(s) go totally broke.

          • Posted by Sean on February 2, 2016 at 3:56 pm

            Hey Drone,
            Lower your voice buddy. You are interrupting Anonymous and his uncanny ability to ignore reality.

        • Posted by Now retired Pat on February 2, 2016 at 11:00 pm

          Yes, I am the same Pat. I will say this blog has been prognosticating the demise of the pension system for many years (and yet we stand). In the end, I do believe draconian measures will be taken to ensure the survival of the fund. After all, most of the VOTERS turn out because they have a vested interest (i.e. employed and retired state employees). Of course, I have also reserved additional funds to supplement my pension checks. I hope I do not need them. If Bernie Sanders is elected, he will bail out NJ via low-interest rate bonds payable over 50 years. The plans will morph into 401Ks within the next 5 years. I am enjoying retirement but found myself a little bored, so I started a new Job managing a small U-Haul business. Life is good….

          Reply

          • Posted by Sean on February 2, 2016 at 11:20 pm

            Amen dude. And please believe me when I tell you, I wish you nothing but the best. Enjoy every day! In spite of the sometimes heated rhetoric on both sides, and in spite of the presence of a couple of first class dumb asses who have the mentality of goons…I truly do not want to see people living in tents and eating cat food. It’s just that the abuses are piling up, and it seems like a collapse is about the only way that some people will wake up. I have many friends who are retired, and it scares them to think they are at the mercy of the very morons who have helped create this mess. Anyway, you are most certainly correct: Life IS good!

    • Posted by dentss dunnigan on February 1, 2016 at 12:25 pm

      I’ve read ZH for 6 years they were spot on the crash as well as the monitizing of our debt ,the oil crash and now the bond bubble …they are now calling for negitave rates soon which will crucify savers and seniors …take it for what it’s worth if anything I would say they are usually early ,not late in what their calls are .

      Reply

  9. Posted by Anonymous on February 2, 2016 at 1:02 am

    Someone please explain to TL and Sean the nuances of pension schemes where the contributions purchase premiums the can be used to purchase lifetime income from a large pooled asset fund provided by an insurance company. These plans are only available to employer access to payout options have conditions and restrictions. Every employee presently enrolled can legally transfer there pension monies to one of the present providers.

    Reply

    • Posted by Tough Love on February 2, 2016 at 1:30 am

      Yes….. please someone do so.
      ————————————-

      John, I don’t know if Anon is really this clueless or just playing us …… but for the benefit of your confused readers, perhaps a comment from you would be helpful.

      Reply

  10. Posted by eric blair on February 2, 2016 at 5:06 pm

    Why make even a cosmetic change if you think the federal government will bail you out?

    ILLINOIS PENSION CRISIS: RIPE FOR FED RESCUE?
    By: Judith Crown

    Should the state of Illinois, with its dubious distinction of running the nation’s most poorly funded public pension system, encourage the federal government to provide financial assistance or even a massive bailout?

    That is a basic, yet controversial question that few power brokers want to confront. Yet it is not going away, especially as the state pension crisis deepens, a BGA Rescuing Illinois report has found.

    Those who oppose federal intervention—and there are many—argue that Illinois alone must fix the pension disaster by using all the tools at its disposal, including raising revenue to fund pensions and reorganizing or cutting retiree benefits.

    Other observers, however, contend that the funding shortfall for the state’s major pensions is so daunting, $111 billion and counting, that it surpasses Illinois’ ability to solve its own problems. As a result, some legal and financial experts suggest federal assistance may become a last-resort option just as it proved to be in 2008 for failing banks and domestic automaker giants.

    Even the politically conservative Rauner administration isn’t slamming the door on the concept although it prefers a state-backed resolution.

    http://www.bettergov.org/news/illinois-pension-crisis-ripe-for-fed-rescue

    Reply

    • Posted by Tough Love on February 2, 2016 at 5:14 pm

      Sure, and perhaps all the (at least modestly) responsible States should then RAISE their DB pension to 3%@50 across-the-board ….. and then wait for a bailout when THEY go broke.

      Reply

    • Posted by Anonymous on February 2, 2016 at 6:48 pm

      and Sean thinks he can sit all day at his work computer and 2 am pension pillow talking with TL and solve NJ’ s pension woes, to that I say ” take care of your home state” then come talk to us about workable solutions, no regurgitating the problem over and over 40 hrs per week underpaid, plus 40 hrs voluntary per month.

      Reply

  11. Posted by Sean on February 2, 2016 at 9:00 pm

    Beautiful, beautiful! You can be certain there will be no bailouts for any of these losers. It is SO much fun watching the rats in Illinois getting the squeeze put on them. For years you hear the warnings, and you know it’s coming, but still, nothing seems to happen. But now, it is downright entertaining to watch these rats as they are starting to realize that they are running out of time; judgement day is fast approaching. Every time they try to wiggle away, the python of mathematical reality puts another squeeze on them. Meanwhile, while Rome is burning, the Chicago Teachers Union feels like they just aren’t getting enough of working people’s money, so a strike is on the horizon. But remember folks, “it’s all about the children.” It couldn’t happen to a better bunch of rats. Stay tuned, because this little scene is going to start playing in theaters EVERYWHERE.

    Reply

    • Posted by Anonymous on February 2, 2016 at 10:58 pm

      Sean, did you take the Sarah Palin course on public communications, she speaks in tongues,ie Donald Trump endorsement, you blog comment in written tongue. You need a break.

      Reply

    • I think one thing that we all have to keep in mind is that this pension scheme has been accumulating for well over 40 years with all of the abuses, corruption, political games, illegal activities, actuarial manipulations…all unchecked, no accountability for anyone, corruption, lies, empty promises in exchange for votes, no questions asked, etc. The public workers are and have been entrenched in a system that is or was a bubble, they know nothing else. The past few years of pension warnings is the tip of the iceberg of what is to come. It is only a matter of how long the money lasts before the state is truly insolvent. The internet has also played a huge role in educating people as to what the nature of this financial hell hole called NJ is all about and how the pensions are bankrupting every town and city across the nation. This my friends is only the very beginning…….the beginning of the beginning

      Reply

      • Posted by Anonymous on February 3, 2016 at 1:33 pm

        Miss Cleo is that you? I thought your IRS problems closed down your psychic hotline, moved the business to the web did you, good for you.

        Reply

      • Posted by Sean on February 3, 2016 at 3:09 pm

        You are correct, MJ. Changes are coming, like it or not, and those who refuse to see it are those who have been “protected” from changes…until now. And they do not want to give up their “protections,” even if they are withering away, little by little. You’re right about the internet, too. Public awareness IS growing. The psychology of the masses is an interesting phenomenon, though. “The masses” can be asleep for long periods of time. It takes a LOT to gain momentum over ignorance and apathy, especially when times are good (the economy is healthy, the market is healthy, etc). When times change, people start to look around and ask questions.

        There are many forces in play, from many different angles, that are loosening the grip of public unions. They can deny it all they want, but it is happening. (Just imagine when the majority of public workers are on “Tier II” type plans, what their attitude is going to become about their retired “brethren.” Imagine what’s going to happen when teachers, cops, and other public workers are forced to do more, with less (like having 40 kids in your classroom); how long are they going to buy into having crappy benefits while their “retired brethren” get taken care of just fine.

        And, of course, you can easily see by the “substantive rebuttals” of the Goon Squad, that they really do not have a clue as to what is going on. There are certainly those on the public side of this argument that DO have respect for, because they actually DO offer valid and legitimate points; I just respectfully disagree with them. The others? No respect at all is warranted.

        In light of what I am saying in response to your post, I think John Bury said it well in a previous post:

        “Posted by burypensions on January 11, 2016 at 2:15 pm

        It won’t be the cops, firemen, and teachers who are doing the jobs at the moment of ultimate plan collapse who wont’ be paid. It will be the 300,000 who are not doing the job at the moment (ie retired) who will not be paid. It has started slowly already (no COLAs) but when trust assets are depleted there will be more benefit cuts for retirees (and here is the twist) so that those 500,000 who are working at the time do get paid.

        The alternative is to pay those 300,000 retirees fully and reduce the compensation (either salaries, health benefits or DC pensions) of those actually doing the work at the time.

        The underfunding numbers and the current tax burden in NJ are too massive to allow for any other alternatives.”

        Reply

        • Posted by Tough Love on February 3, 2016 at 3:52 pm

          I agree with your (and Mr. Bury’s) observations, however I believe the first steps (before the pension payments to retirees are reduced) will be:

          (1) VERY VERY material reductions in taxpayer subsidies toward retiree healthcare …. for those ALREADY retired. Necessary because THIS actually saves CURRENT cash, and

          (2) VERY material reductions (or better yet a Freeze as proposed by the NJ Pension Commission) in the Future Service pension accrual rate for all CURRENT workers. This save little current cash, but certainly stop digging the financial hole we are in deeper every day by ending/limiting these unaffordable “promises”.

          Reply

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