Frontline Pension Gamble

They do not trust their eyes or ears, but only their imaginations. What convinces masses are not facts, not even invented facts, but only the consistency of the illusion.

Hannah Arendt

Two things I watched today – Hitler’s Hollywood from which that quote is taken and the Pension Gamble episode of Frontline. The linkage is that the Frontline people imagined that the pension crisis has its roots in Wall Street greed and a move to 401(k) plans so they tailored their narrative to maintain those illusions. The sad part is that they stumbled upon the real problems but did not follow up.



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And why is that? Could it be because Defined Benefit plans are expensive in a low-interest rate environment and plan sponsors who have to come up with their own money and obey funding rules are reluctant to pay the honest cost?
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And why is that? Could is be because government entities are allowed to make up their own funding rules and pick their own contribution amounts since federal regulation is nonexistent in that area?

79 responses to this post.

  1. Posted by Tough Love on October 24, 2018 at 12:25 am

    Quoting ……..………

    “The sad part is that they stumbled upon the real problems but did not follow up. And why is that? Could it be because Defined Benefit plans are expensive in a low-interest rate environment and plan sponsors who have to come up with their own money and obey funding rules are reluctant to pay the honest cost?”

    and quoting ………

    “And why is that? Could is be because government entities are allowed to make up their own funding rules and pick their own contribution amounts since federal regulation is nonexistent in that area?
    —————————————–

    THANK YOU John for the FIRST quote above. I too watched the Frontline program and came away feeling the producers/writers only understand only HALF the story ….. and were either too ignorant of (or uninterested in) the OTHER half. While they let the teachers complain that they contribute “significant” sums into their pension, I saw ZERO commentary that:
    (a) the generosity level (richer formulas + younger retirement ages + COLA increases) TYPICALLY makes Teacher pensions is ROUTINELY 3+ times MORE generous (and hence costly) than those typically granted to (the few lucky) Private Sector workers still accruing benefits under Final Average Salary DB Plans, or
    (b) that those supposedly “significant” sums that the teachers contribute (and INCLUDING all the expected investment gains thereon) rarely accumulate to a sum upon retirement sufficient to buy more tan 1 0% to 20% of those VERY generous pensions. Good journalism requires an in-depth knowledge of your subject matter and NOT letting factually-incorrect or misleading statements go unaddressed. They failed miserably in that regard.

    As to your SECOND Quote. Yes, those reasons are contributory to the Public Sector pension mess in which many States and Cities now find themselves, but the ROOT CAUSE is indeed the LUDICROUSLY excessive Public Sector pension (AND benefit) generosity when measured by every/any reasonable metric.

    Reply

    • Posted by MJ on October 25, 2018 at 8:00 am

      I just watched the Frontline episode…..from what I observed they placed inexperienced cops on one of the boards who had little if any experience with these types of financial vehicles (public pensions), they then made very risky investments to try and make up for losses due to the downturns and recessions, and I thought someone mentioned if the legislature did not make the changes the plans would be bankrupt in 3 years although it seemed a backhanded way to pass the legislation

      The state used money for roads, schools, libraries, all that feel good stuff so then could not afford to pay the pensions.

      I do give that elected governor credit as he appeared to be speaking honestly about the problem during his campaign

      The one teacher stated that she gets lousy health insurance and lives paycheck to paycheck without stating exactly what her salary or benefits are or how much she actually has to pay into anything………..

      A very simple solution would be to make some changes, have the teachers, public workers contribute a little more, people can retire when they see fit but no pensions until age 62-65 and no life time health benefits…..go on Medicare and purchase supplementary policy like everybody else

      Inner city/urban cops and firemen, etc deserve every penny they get due to the nature of the job

      So in other words, same old, same old……..promises made with no money to pay for them

      Just my two cents

      Reply

      • Posted by Tough Love on October 25, 2018 at 10:46 am

        Quoting ……………..

        ” ……. people can retire when they see fit but no pensions until age 62-65 and no life time health benefits…..go on Medicare and purchase supplementary policy like everybody else”

        Of course sensible ideas …….. especially because that’s the way it works in the PRIVATE Sector (who are responsible for 80% to 90% of the Total Cost of PUBLIC Sector pensions & benefits) ……… but the Public Sector Union/workers don’t want to hear, demanding “all that was promised” (ignoring that their ludicrously generous pension & benefit “promises” were the result if COLLUSION between their Unions and Elected Officials, and NOBODY at any “negotiating table” was rightfully looking our for the interests of the Taxpayers).

        Reply

      • Posted by Stephen Douglas on October 25, 2018 at 8:25 pm

        “…that’s the way it works in the PRIVATE Sector …”

        That’s the way it works in “some” of the private sector. There are still some who can retire with 30 years, at … any age… and thousands who still receive retiree health care.

        Is that most private sector employees? No. Most private sector workers have no pension at all.

        Reply

        • Posted by Tough Love on October 25, 2018 at 11:47 pm

          Yes ……….. “. Most private sector workers have no pension at all.”.

          My comparisons are often to the few Private Sector workers still lucky enough to still be accruing benefits under a Final Average Salary DB Plans (the type granted virtually all Public Sector workers).

          If I made my comparison of Public Sector Pensions to the “retirement security” most-commonly granted in the PRIVATE Sector, the Public Sector ADVANTAGE would VERY CLEARLY be even GREATER than what I have shown …………. because the far-more-common 401K Plans now commonplace in the Private Sector are FAR less generous than the still in place than the now-mostly-frozen Private Sector DB Plans.

          Happy now ……….. all you did was ask me to point out that I’ve been CONSERVATIVE in showing the PUBLIC Sector ADVANTAGE.

          Reply

        • Good grief, Charlie Brown.

          You’ve been CONSERVATIVE in showing the PUBLIC Sector ADVANTAGE….

          For PENSIONS!

          Thank you, Mr. Obvious. It’s a given that pensions and benefits are a larger portion of total compensation for public workers than for private.

          It’s (still) called deferred compensation.

          If you have two private sector accountants, and one earns $85k/year with a non – contributory DB pension, while the other earns $95k with a 3 percent 401(k) match, are you telling us the DB pension is, a priori, “excessive”?

          In keeping with your previous post, let’s throw in a third accountant who earns $100k with no pension at all. (Happy now?)

          Stop me if you’ve heard this before. ..

          It is invalid to compare pensions outside the context of total compensation.

          Whether in the public or the private sector.

          Don’t be invalid.

          And please stop being a boor.

          Reply

          • Earth to Sweet Stephen… (I like the name… Shakespearian reference?)

            I think you’ve got him, Stephen. Surely he can see his logical inconsistency now.

          • Seriously, when it comes to public sector compensation, including the value of pensions and benefits, most experts agree…

            The lower educated, unskilled public workers earn much more than similarly situated private sector workers.

            The more highly educated, professional public workers earn much less.

            Logically, and empirically verified, between these extremes are a large number of public employees whose compensation is roughly equal to their private sector counterparts.

            It’s axiomatic.

          • Posted by Tough Love on October 26, 2018 at 8:03 am

            Yes ………. “good grief” is an accurate way to describe YOUR unwavering support of MUCH MCUH Greater Public Sector total Compensation, which per the Biggs AEI Study is 23%-of-pay (33% with the value of the much greater PUBLIC Sector job security included) GREATER (on average for all workers taken together in one group ……. which is the measure which financially impacts the Taxpayers) than those of comparable Private Sector workers.

            And with Safety workers paid MUCH higher than average wages and having the richest pensions & benefits, had they not been EXCLUDED from the AEI study, the above 23% and 33% PUBLIC Sector Total Compensation ADVANTAGES would have assuredly been materially GREATER.

            And you choose to ignore this. Should I repeat for the readers AEI-Study-author Mr. Biggs impeccable credentials (PHD, London School of Economics, etc….) vs yours (retired CA Public Sector worker whose duties included changing light bulbs) ?

            Again……….. “good grief” !

  2. What is also interesting is NO ONE in the second interview mentioned the retroactive goosing/jacking of the public pensions. Or how the public pensions have become so out of control and are so costly to fund, many times exceeding more than 50% of the base salary, and most likely exceeding 100% of base salary when using a legit discount rate on “public safety” jobs where one can retire after 20-30 years and as young as age 50 (and then live another 30-50 years). Nor was there a mention of the fact that the muni/gov is many times paying the entire costs of a public employee pension because the employee and their union have “negotiated” to have their portion “picked-up” by the muni. It is not uncommon to see public employees contributing as little as 5% of their overall pension costs. It would be nice to see PBS address: 1) The true cost of these public pensions; 2) How much/little the employee is contributing towards them; 3) and how the salary for almost all unskilled and semi skilled government jobs today are being compensated at multiples of what the private sector compensates unskilled and semi skilled labor. As much as 10-20 times higher. PBS does say the government spent the money on other “worthwhile” expenses, like roads, infrastructure etc, but leave out the BIGGEST expense that most of this alleged pension money went to: HIGHER GOV EMPLOYEE SALARIES. Which in turn leads to higher pensions…..

    Reply

  3. Posted by The Analyst on October 24, 2018 at 11:10 am

    there are two sides to a coin…we have two ears and eyes. If everything you are saying is TRUE..then you are ignoring the side they are telling…..the way these workers pensions are abused and the lack of good governance. …and how many get away with it…….I just saw a study by mary pat cambell ( not a liberal) who seems to say that 50-60% of pension portfolio comes from market returns…10-20% from employees and 20-30% from employers. John seems to at least that PBS is half right. SO.. lets put the TWO together and address the whole problem.

    Reply

    • Posted by Tough Love on October 24, 2018 at 9:20 pm

      I have the utmost respect for Mary Pat Campbell. She very well-informed, articulate and in my opinion likely brilliant.

      That said, while I too read her commentary noting the portion of pension costs “paid for” via investment earnings, I believe she did a VERY big disservice to her readers in not elaborating on what those investment earning come from, and WHAT THEY REPRESENT (i.e., REALLY ARE). Did she never hear of the concept ….. Interest FOLLOWS Principal ?

      The Public Sector Unions, the workers, and many Plan administrators would like us to believe that there are 3 REAL distinct entities that “pay for” Public Sector pensions …….. the employee (if they contribute), the employer (meaning Taxpayers), and investment earnings.

      I disagree. There are ONLY 2 distinct contributing entities, the employer and the employee, without whose REAL $ contributions there would be no “investment earnings”.

      For discussion purposes only (to make it simpler), let’s assume that the employees do not contribute.

      As a Taxpayer, let’s assume I contribute a level annual $1,000/yr (at the BEGINNING of each year) towards the total cost of my town employees’ pension, and the town invests that money and earns a level annual (compound) return of 7%. Let’s also assume that that contribution combined with similar contributions from all the other households in Town, and the investment earnings turned out to be exactly sufficient to fully fund the employee’s pension as of his/her date of retirement.

      I (as well as all other town households) would have contributed $1,000 x 25 = $25,000 by the end of the 25-th year (the employee’s retirement date) and the accumulated funds (INCLUDING my $1,000 annual l contribution) would be:

      {1000 x [(1.07^25)-1]}/([.07/1.07) = $67,676.47, of which $67,676.46-$25,000 = $42,676.47 or $42,676/$67,676.47 = 63% coming from investment earnings …… a % not inconsistent with the figures we read in such articles.

      Well ……….. BECUASE the promised pensions are so LUDICROUSLY excessive (when compared to what comparably situated Private Sector workers get in retirement security from their employers) AND hence ludicrously COSTLY (generosity and cost being directly correlated) not only I should not be responsible for the funding of such a generous pension, but those supposedly separate 3-rd entity called “investment earnings” really represents FOREGONE INVEST EARNINGS that should have stayed in MY and other Private Sector Taxpayers’ pockets …….. perhaps to help fund their much SAMLLER retirements.

      Bottom line I (and the other residents) paid for ALL of the cost of the pension, part in annual outgoing dollars, and part in foregone investment earnings which would have stayed in MY pocket had this Plan not existed ………… and MORE egregiously so BECUASE it’s so LUDICROUSLY excessive and hence unjustifiably costly.

      —————————————————-

      Reply

      • Posted by Stephen Douglas on October 25, 2018 at 12:34 pm

        Deferred compensation…

        The compensation is deferred. The contributions are not. Both employee and employer (taxpayer) are ideally required to make the Actuarially Required Contributions in the year earned.

        True enough… Interest follows principal. Once the contribution has been made, the principal no longer belongs to the taxpayer. It is held in trust by the Plan, and all the principal plus interest is used to pay the agreed upon pensions.

        Ask Ed Ring. In one of his many diatribes told us that firefighters make $220,000 a year in total compensation, and can retire at age fifty with ninety percent of pay. No, Ed. There is no “and”. The pension is …included… in the total compensation calculation. Because part of that $220,000 is the employer contribution to the pension fund, which, from that day forward, returns on investment follow the principal which now belongs to the retiree.

        Reply

        • Posted by Tough Love on October 25, 2018 at 12:57 pm

          Yes, a pension is deferred compensation, but per the Biggs AEI State-specific Compensation study, in BOTH our home States of CA and NJ, on-average (for ALL workers taken together ….. which is what indeed FINANCIALLY IMPACTS the Taxpayers) PUBLIC Sector Total Compensation is 23%-of-pay GREATER than that of Private Sector workers in comparable jobs.

          —————————————————————-

          Quoting …………..

          “Because part of that $220,000 is the employer contribution to the pension fund, which, from that day forward, returns on investment follow the principal which now belongs to the retiree.”

          BS ………….. re-read my above comment. Yes the investment earnings associated with the 10% to 15% of the total cost of that Fireman’s incredibly generous pension tags along with HIS contributions (as foregone investment earnings on his contributions) but the investment earnings on the other 85% to 90% of total contributions that are the responsibility of the Taxpayers (whether being paid today or tomorrow) tags along with Taxpayer contributions and represent foregone investment earning TO THEM, effectively being an element of ADDITIONAL Taxpayer contributions.

          I really don’t expect you to “get it”. You’re WAY too biased.

          Reply

        • Posted by Stephen Douglas on October 25, 2018 at 5:19 pm

          Sorry, Charlie, according to Ed Ring, you paid this average firefighter $75,684 in regular pay, $60,142 in overtime pay, $23,322 in “other pay”, $44,309 pension contribution, and $14,061 for health insurance.

          You paid this to him that year (2012, in this case).

          That $44,309 is, as of that year, his money.

          His principal.

          Ergo, his interest.
          ————————————

          “……………  re-read my above comment.”

          His interest follows his principal. Just as it would in a 401(k).

          I really don’t expect you to “get it”. You’re WAY too biased.

          Reply

      • Posted by Earth on October 25, 2018 at 12:47 pm

        Earth to Brother Love:

        {1000 x [(1.07^25)-1]}/([.07/1.07) = $67,676.47, of which $67,676.46-$25,000 = $42,676.47 or $42,676/$67,676.47 = 63% coming from investment earnings 

        LOL!!!

        All that math for naught. Logic is not your strong suit.

        Reply

        • Posted by Tough Love on October 25, 2018 at 1:01 pm

          Earth, why don’t you post under your real name …. Stephen Douglas ?

          What’s wrong with you ?

          Reply

        • Earth to Brother Love:

          What on Earth makes you think Stephen Douglas is my “real” name?

          What’s wrong with you ?

          Reply

          • Posted by Tough Love on October 25, 2018 at 9:35 pm

            Because you and the person who posts as Stephen Douglas are one and the same, and Stephen Douglas posts on other websites (clearly the SAME person posting form the content/style of the comments) with his Facebook link and Picture.

            P.S. You are LYING when you say that you and Stephen Douglas are not one and the same.

            (1) the little pictures that are to the left of each comment (forgot what they are called) almost always differ by commentator, but the pictures are ALWAYS the SAME when coming from Earth or Stephen Douglas meaning that they are coming from the SAME IP Address.

            (2) some time ago we has this same discussion, and I challenged YOU at that time to ask Mr. Bury to respond to this question (as he likely wouldn’t respond to such a request from me) …………. are Comments from EARTH and Stephen Douglas coming from the SAME IP address.

            You wouldn’t (and didn’t) ask Mr. Bury to respond to that question.

            So if you are saying that EARTH and Stephen Douglas are NOT one and the same, ask Mr. Bury to respond to that question NOW.

          • Posted by Stephen Douglas (AKA "Sweet Stephen) on October 25, 2018 at 11:04 pm

            LOL!

            Logic ain’t your strong suit. Reading comprehension isn’t, either.

            LYING?

            When did I say that Earth and Stephen Douglas are not the same person? (Not saying they are, either.)

            “Earth” asked ; What makes you think Stephen Douglas is my “real” name?

            For all you know, my real name might be “Anonymous”.

            What’s the difference? This board, and countless others are full of Anonymice. You were one your own self for a spell, as I recall.

          • Posted by Tough Love on October 25, 2018 at 11:36 pm

            Stephen Douglas/Earth,

            So I guess your NOT going to ask Mr. Bury to answer that question – if comments from EARTH and Stephen Douglas come from the SAME IP Address ?

            Gee………….. I wonder why ?

          • Posted by Stephen Douglas (AKA "Sweet Stephen) on October 25, 2018 at 11:58 pm

            Asked and answered.

            It’s irrelevant.

          • Earth to… anyone:

            Is it getting hotter, or is it just me?

  4. Posted by Tough luck on October 24, 2018 at 11:42 am

    It was a good program that left the viewer with a better understanding of the lack of retirement security in this country.no matter how hard people may have worked and planned for their so-called golden years.

    Reply

  5. Posted by Eric on October 24, 2018 at 12:47 pm

    John:
    David Sirota indicated that the politicians, in Kentucky, did not make the pension contributions that they were “morally” required to make. In New Jersey, the LAW requires that pension contributions be made, however, the corrupt politicians sitting on the New Jersey Supreme Court refused to acknowledge this legal requirement. In the Burgos case, the overpowering stench of corruption from the New Jersey Supreme Court was most evident and appalling when the “justices” ruled that the contribution amount need not be made due to the Debt Limitation Clause of the New Jersey Constitution whose purpose was solely to limit long-term capital expenditures not short term recurring expense obligations.
    Eric

    Reply

    • Posted by Tough Love on October 24, 2018 at 8:25 pm

      Any “stench” associated with the Burgos Decision PALES in comparison to the huge “stench” that emanates from the decades-long Public Sector Union/Elected-Official COLLUSION (the trading of Public Sector Union campaign contributions for the favorable votes of our Elected Officials on Public Sector pay, pensions, and benefits) that led to these LUDICROUSLY excessive pensions.

      THAT (NOT underfunding) is the ROOT CAUSE of the pension mess.

      Reply

      • Posted by El gaupo on October 24, 2018 at 9:08 pm

        Run for office TL. Unless you have a problem with EQUAL!!!
        I think you’ll be surprised at the revenue taken in by online sports gambling. As well as casino sports book. The Borgata is absolutely ROCKING now on football Sundays.

        Reply

        • Posted by Tough Love on October 24, 2018 at 9:25 pm

          I wouldn’t say a word if your pension is ultimately cut in half (or more) ……….. but I’d have a grin from ear-to-ear.

          Reply

          • Posted by El gaupo on October 24, 2018 at 9:59 pm

            Guess those frown lines will be around for quite some time.

          • Posted by El gaupo on October 24, 2018 at 11:27 pm

            Uh….and I guess I wouldn’t say a word either if your 401k became a 201k….I’d just grin ear to ear. 🧐
            Didn’t think that till just now but….I guess if you would take pleasure in my (hypothetical) misfortune than I’ll return the favor. Glad it won’t happen to the boys in blue thanks to our pal Murphy.

          • Posted by MJ on October 25, 2018 at 8:05 am

            TL and El gaupo……does it ever occur to either one of you that if the pensions crash and burn or if private retirement accounts crash and burn due to another big recession, economic downturn, mismanagement etc. that we all will suffer the consequences……….so many already living pay check to pay check, very hard to safe money to retirement

            I find it very sad that either of you would be happy and grinning to see another fellow citizen suffering in their retirement years when any of us would then be too old to seek additional employment …….just very very sad

          • Posted by El gaupo on October 25, 2018 at 10:39 am

            Not everyone MJ and certainly not you for sure. Just those that would “grin ear to ear” if I lost half (or more) of my pension. Most people are decent people. You seem like one. I hope that she was joking …..but her past comments included calling me “the epitome of greed” so who knows. I prefer to think of myself as part of the community and I care for my neighbors. As well as of course my first priority my family. As is yours and hers(I hope).
            If she really feels that way then she is beyond the help that can offered by me and you. I comment here but obviously have other interests. Outdoors, vacations, many other interests beside who gets what.

          • Posted by Tough Love on October 25, 2018 at 10:53 am

            El Gaupo, if we eliminated the share of your pension ………. that reflected your age at retirement and years of service, and wage identical to a Private Sector worker …….. we would need to reduce your pensions “value” (which reflects all of those elements entering into your pension calculation) by about 75%. And if your COLAs hadn’t been suspended, it would be over 80%. Yup THAT’S how ludicrously excessive your pension is.

            I was being GENEROUS by being willing to grin with only a 50% reduction !

          • Posted by Stephen Douglas on October 25, 2018 at 1:31 pm

            For better or worse, “early” retirement for police (and military) is common practice not just for U.S. states and local government, but for many OECD countries also. It’s not just “traditional”; there are pragmatic reasons that, at least some persons believe, make this cost effective.

            Before trying “reforms” based on knee jerk reactions, best to try to understand the history and logic behind the plans.

          • Posted by Tough Love on October 25, 2018 at 2:55 pm

            Letting Police retire earlier does NOT mean that we should NOT reduce the pension to reflect the TRUE value (a reduction of about 5% per-year-of-age) of collecting an unreduced pension at an earlier age(typically 65) than the Taxpayers who pay for 85%-90% of the Total Cost of Police Office pensions.

          • That would defeat the purpose of early retirement.

            Especially in the military and safety occupations, early retirement for the older employees makes room for new employees, keeping the average age younger. How do you encourage people to retire at an earlier age?

            Anyone?

            Yes, it costs more money than a regular retirement. Thousands of governments around the world have apparently concluded that the benefit is worth the cost.

            (You could also/instead, simply set a mandatory retirement age, as many states/cities do, But if that isn’t accompanied by an enhanced retirement, it won’t help attract and retain qualified applicants.)

            Thousands of applicants have concluded that early (unreduced) retirement makes the job worthwhile.

          • “Taxpayers who pay for 85%-90% of the Total Cost of Police Office pensions.”

            Taxpayers pay for 100% of Police Office pensions. That’s the only place it can come from, ultimately.

          • Earth to Stephen Douglas (if that’s your real name):

            Taxpayers also pay 100% of Police “Officers” pensions.

          • Posted by Tough Love on October 25, 2018 at 9:20 pm

            Quoting Stephen Douglas/Earth ……………….(re Police young age unreduced retirements):

            “Yes, it costs more money than a regular retirement. ”

            “more” hardly tells describes the HUGE value. Social Security permanently reduces the retirement benefit by just about 6% for-each-year-of-age that someone elects to retire before their Normal Retirement Age(NRA) now 66.

            Even if the Police pension “formula” was no-greater than that of the pension granted a Private Sector worker (with the same wages and years of service) an unreduced pension that can be collected beginning at age 55 “has a “value” just about DOUBLE that of the Private Sector worker who can collect his/her unreduced pension until age 65.

            Add in that NJ Police pension “formula” of 65% of final pay after 25 years (90% of final pay after 30 years in your even crazier State of California) is almost TWICE as generous as most Private Sector Final Average Salary DB pension Plans. Combine the 2x and 2x and is REAL ewasy to see how NJ Police pensions are often 4 TIMES greater in “value”. And this is if the COLA STAY suspended. If they are reinstated, the 4x rises to over 5x because Private Sector Plans do NOT include COLA-increases.

            And an ACTUAL example show it’s OFTEN even WORSE …….. a few months ago, I looked at the online data for a recent full-year of Bergen County NJ Police retirees. Average retirement age was 51 …… yes 51 and then a life of leisure (on the Taxpayers’ dime) with pensions TYPICALLY at the $100K level, and because they started COLLECTING their pensions at age 51, and even greater multiple than 4x applies because the 4x assumed they wouldn’t start collecting until age 55.

            It NOT just “more”. These ludicrously excessive pensions (AND benefits) are a monumental FINANCIAL “mugging” of Private Sector Taxpayers.

          • Posted by Tough Love on October 25, 2018 at 9:24 pm

            And THAT is what should have been FRONT-AND-CENTER on the FRONTLINE presentation

  6. Posted by S and P 500 on October 24, 2018 at 5:02 pm

    The Frontline show left out some key parts of the pension crisis, such as pension funds assuming Madoff 8% investment gains, which allows the state to underfund pensions. However if the show had discussed that detail, most viewers would have been lost and turned off their TV’s. The teachers in Kentucky came off as completely clueless although that one loud mouth lady finally has to admit that she may not get the pension she’s been promised. The show did a good job of communicating to viewers that the pension crisis is real and pensions are not an unbreakable promise. Let’s hope a few viewers got the message.

    Reply

  7. Posted by dentss dunnigan on October 24, 2018 at 5:29 pm

    Dow down 600 pts ….nasdq no gain for all of 2018

    Reply

  8. Posted by Dubra Karnes-Padilla on October 24, 2018 at 7:54 pm

  9. Posted by MJ on October 25, 2018 at 9:33 am

    TL and El gaupo……does it ever occur to either one of you that if the pensions crash and burn or if private retirement accounts crash and burn due to another big recession, economic downturn, mismanagement etc. that we all will suffer the consequences……….so many already living pay check to pay check, very hard to safe money to retirement
    I find it very sad that either of you would be happy and grinning to see another fellow citizen suffering in their retirement years when any of us would then be too old to seek additional employment …….just very very sad

    Reply

    • Posted by El gaupo on October 25, 2018 at 1:03 pm

      @TL. Lucky for me you’re opinion of a generous pension is not applicable to whether I receive it. I shudder what u think would be stingy. Again, you don’t get to decide my pension and benifits. Go get a life….instead of trying to tear down mine.

      Reply

      • Posted by Tough Love on October 25, 2018 at 3:00 pm

        And I suggest that you stop BELIEVING that you are “entitled” a pension (AND benefits) as LUDCIROUSLY excessive as what has been “promised” you.

        Hopefully (and justifiably) it WILL be cut down at some point in the future.

        Reply

  10. Posted by El gaupo on October 25, 2018 at 2:21 pm

    Interesting read. Similiar to the comparison to amazon and Sears. A sears salesman back in the 70’s retired w a very good pension and benifits. Somewhere along the line, Thru
    Stingier removed ex boards, longer life spans etc.
    TL would lead you to think that all is rosy in the wonderful red state America. And by slicing my pension, she will feel better because she does not enjoy having one herself. She would whistle a different tune if she were in my shoes and she knows it. Fraud. Instead I’m a greedy bastard lining his pockets instead of trying to pay bills and put kids they college. Let’s her feel comfortable by not having to confront the real problem.

    Reply

    • Posted by Tough Love on October 25, 2018 at 3:06 pm

      The “REAL” problem ………….. the underlying ROOT CAUSE of the Public Sector pension mess now impacting more & more States & Cities, is the Ludicrouslygenerosity Public Sector pension (AND benefits), ROUTINELY 3 to 6 times greater in “value” upon retirement than those of comparably situated (in wages, age at retirement, and years of service) Private Sector workers.

      Reply

      • Posted by Tough Love on October 25, 2018 at 3:09 pm

        And those multiples are factually CORRECT with the higher multiples applicable to Safety worker pensions, being the richest (and hence MOST egregious in terms of their financial impact upon Taxpayers).

        Reply

      • Those multiples are mathematically CORRECT (perhaps), but not logically valid, unless you have a whole lot more substantiating data.

        GIGO, in other words.

        Reply

        • Posted by Tough Love on October 25, 2018 at 8:27 pm

          I have provided those demonstration on Mr. Bury’s Blog several times …… with all the necessary detail and assumptions (which are NECESSARY to do such calculations ) for anyone WITH the ability/intelligence to read/critique them, hopefully doing so WITHOUT bias …… which certainly excludes you Stephen Douglas (aka Earth).

          Reply

        • Posted by Stephen Douglas on October 25, 2018 at 9:56 pm

          Posted by PatB on April 17, 2016 at 11:50 pm

          Of the actuaries and accountants who must read this blog, I can remember no one defending your math. Maybe this is the time for them to come to your rescue, for the sake of truth, which there seems to be so little of in public pensions.

          Who can really understand the opaque rules and numbers that make up these pensions? Obviously not the pols, since they have not made a sound pension decision since before 1990. Not the unions, since they don’t want to be bothered at who will pay for the promises. And certainly not the members, who only understand what is promised, and believe in “the full faith and credit” of government to deliver.

          So if anyone supports your math, speak now. If they agree but find fault in it, they should say so, maybe we can all learn something. And if its mostly BS, I hope you can handle the truth.

          Reply

          • Posted by Tough Love on October 25, 2018 at 11:29 pm

            PatB is another Public Sector worker, who like you protests my commentary.

            And a LACK OF actuaries (VERY few of whom even appear to read this Blog) isn’t a critical review ……. it’s a NON-Review.

          • Posted by Stephen Douglas (AKA "Sweet Stephen) on October 26, 2018 at 12:20 am

            Absence of evidence is not evidence of absence.*

            Hmmm… Since no actuary has found fault in your “demonstration”, the demonstration must be true?

            *Ironically, this is also called the “argument from ignorance”.

            Very apropos.

            Your demonstration is a logical morass.

            Still GIGO, in other words.

      • Posted by El gaupo on October 25, 2018 at 8:00 pm

        Wrong again!!!! While there are pension issues in many states, this article has to do with public employees slipping further down the scale of the middle class lifestyle. It’s not just Public employees but many in those states. The problem is the salaries are so non competitive that no one wants to do the jobs. That’s why the teachers had the school boards by the balls and got every demand filled. Even the tax averse gop all voted to give them everything they want. Those states all suck to educate your kids. My friends kid is in the coast guard. Like West Point, he is in an elite class. Academically, these are all kids with honors etc. The educated kids from NJ had a much easier time with the curriculum than almost any other honors kids did. You can spout of 4-6 or 3-6 times what private sector pensions are….it is completely irrelevant!!! Pfrs is here to stay….you can throw every stat at me. I’m going to start collecting in a few years. I’ve earned it. Regardless of what you think. It is simply not taken into consideration at all when towns and unions negotiate Salaries yes. Pension no. You should’ve became a cop my friend. Then you’d be shoulder to shoulder with me defending your pension.
        NJ simply will not become Arkansas or Alabama or Mississippi or any backwoods stomping ground where folks buy into the God, guns, grits and gravy nonsense that keeps them poor!!!!

        Reply

        • Posted by Tough Love on October 25, 2018 at 8:32 pm

          Quoting …………

          “You can spout of 4-6 or 3-6 times what private sector pensions are….it is completely irrelevant!!!”

          Irrelevant TO WHOM ……… CERTAINLY not PRIVATE Sector Taxpayers who YOU and your Public-Sector brethren want to pay for the LUIDICROUSLY generous pensions (AND benefits) that Public Sector workers (everywhere) have been “promised”.

          Reply

        • Posted by Tough Love on October 25, 2018 at 8:56 pm

          Quoting El Gaupo ……………..

          “I’m going to start collecting in a few years. I’ve earned it. ”

          When an VERY CLEARLY unjustifiably generous pension (or benefits) is Granted because:

          (a) Our Elected Officials are acting in COLLUSION with the Public Sector Unions, trading their favorable votes on Public Sector pay, pensions, and benefits for BRIBES disguised as campaign contributions and election support, and

          (b) When absolutely NOBOBY on EITHER side of any “negotiating table” setting Public Sector pensions & benefits is rightfully representing the TAXAPYERS’ best interests …. as someone SHOULD BE ……… then pension & benefit so-granted are NOT “earned”, but simply STOLEN from the Taxpayers.

          ————————————————————————————-
          And we (NJ’s Taxpayers) should find a way to renege on the 50+% share of such LUDICROUSLY excessive pension & benefit “promises” that assuredly would NOT have been granted in the absence of that Union/Elected-Official COLLUSION and rightful Taxpayer-representation in any negotiation of matters where THEY (the Taxpayers) will be footing the bill.

          Reply

    • “A sears salesman back in the 70’s retired w a very good pension and benefits. Somewhere along the line.”

      Retired public employees starting shopping elsewhere to get a better deal, leaving other workers worse off.

      Reply

      • Posted by El gaupo on October 25, 2018 at 7:50 pm

        And apparantly we all did.

        Reply

      • Posted by MJ on October 26, 2018 at 7:30 am

        I would think that a Sears salesman back in the 70s was retiring very close to age 65 and perhaps life spans were a bit shorter back then. IMHO a huge part of the problem with pensions is that public employees are retiring way too early and the formulas were never adjusted to reflect that people are living longer. I realize that safety and military are different in that the need exists to retire at younger ages due to the nature of the job……..and I still don’t understand why the same level of health benefits “for life” are given…….maybe back in the day but health insurance is way too expensive today and that was never addressed in compensation packages and now here we are……

        Although, personally I think it is too far gone so its anybody’s guess what might happen in the next few years….all the same blame all the same story

        Reply

  11. The bottom line is the Frontline report basically said (by not saying) that there were no retroactive pension increases anywhere in the U.S., and/or that they were irrelevant.

    Just as a prior Wirepoints piece basically said that there was no taxpayers underfunding of the pensions public employees had been promised to begin with, or that it was irrelevant.

    They are equivalent.

    As for “blame Wall Street,” over the past 40 years or so, have Kentucky’s pension funds met their average expected return, or not? If the answer is yes, then you can’t blame Wall Street — even if average returns were bad from the peak of any of three bubbles (2000, 2008, and now). And if the average returns were lower than the peak, they why isn’t the expected rate or return being cut?

    Reply

  12. Good grief, Charlie Brown.

    You’ve been CONSERVATIVE in showing the PUBLIC Sector ADVANTAGE….

    For PENSIONS!

    Thank you, Mr. Obvious. It’s a given that pensions and benefits are a larger portion of total compensation for public workers than for private.

    It’s (still) called deferred compensation.

    If you have two private sector accountants, and one earns $85k/year with a non – contributory DB pension, while the other earns $95k with a 3 percent 401(k) match, are you telling us the DB pension is, a priori, “excessive”?

    In keeping with your previous post, let’s throw in a third accountant who earns $100k with no pension at all. (Happy now?)

    Stop me if you’ve heard this before. ..

    It is invalid to compare pensions outside the context of total compensation.

    Whether in the public or the private sector.

    Don’t be invalid.

    And please stop being a boor.

    Reply

    • Posted by Tough Love on October 26, 2018 at 8:08 am

      Repeating my reply to your identical post up above …………..
      ———————————————-

      Yes ………. “good grief” is an accurate way to describe YOUR unwavering support of MUCH MCUH Greater Public Sector total Compensation, which per the Biggs AEI Study is 23%-of-pay (33% with the value of the much greater PUBLIC Sector job security included) GREATER (on average for all workers taken together in one group ……. which is the measure which financially impacts the Taxpayers) than those of comparable Private Sector workers.
      And with Safety workers paid MUCH higher than average wages and having the richest pensions & benefits, had they not been EXCLUDED from the AEI study, the above 23% and 33% PUBLIC Sector Total Compensation ADVANTAGES would have assuredly been materially GREATER.
      And you choose to ignore this. Should I repeat for the readers AEI-Study-author Mr. Biggs impeccable credentials (PHD, London School of Economics, etc….) vs yours (retired CA Public Sector worker whose duties included changing light bulbs) ?
      Again……….. “good grief” !

      Reply

  13. Posted by Stephen Douglas on October 26, 2018 at 11:07 am

    When all else fails, try the “light bulb changer” defense.

    Reply

    • Posted by Tough Love on October 26, 2018 at 5:46 pm

      Tell that to Mr. Biggs, PHD, London School of Economics, etc…… It’s HIS Study, not mine.

      Sorry……… but I choose believing the PHD, London School of Economics Graduate, etc. vs a self-interested, retired CA Light Bulb Changer, any time.

      Reply

      • Posted by El gaupo on October 26, 2018 at 8:18 pm

        Hey , HEY hey. That’s “light bulb changer with a wonderful pension because he made a wise career choice” to you!!!

        Reply

        • Posted by Tough Love on October 26, 2018 at 9:41 pm

          Only BECAUSE the uninformed/hoodwinked/lied-to CA Private Sector workers never understand the HUGH magnitude of the ripoff being perpetrated upon them by the Public Sector Union and their Union-beholden Elected-Officials. Sb400 and the follow-up Local pension-increases should NEVER have happened ……..…. nor should have the legal “protections” that now make it so hard to unravel.

          But ……….. a BIG market downturn, and your pension could become “toast” .

          Reply

  14. The same study, as I recall, which determined that, nationwide, considering total compensation, approximately 60 percent of state workers are either roughly equal to private sector equivalents, or undercompensated.

    Reply

    • Posted by Tough Love on October 26, 2018 at 9:47 pm

      Yes, but most of that 60% that has ANY “disadvantage”, has ONLY a TINY one.

      The other 40% of Public Sector workers have (when taken together) a very LARGE “advantage” over their Private Sector counterparts …………… which is why when you compare ALL of them (100%) to their Private Sector counterparts, there is a material PUBLIC Sector Total Compensation ADVANTAGE .

      Am I surprised that you left that part out?

      Not at all ………….. it’s what self-interested/biased people do.

      Reply

  15. Posted by Stephen Douglas on October 26, 2018 at 10:08 pm

    “Yes, but most of that 60% that has ANY “disadvantage”, has ONLY a TINY one.”

    Disadvantage or equal. Got a problem with equal?

    Reply

  16. Bottom line, for both the Teamsters and public employees.

    The “REAL” problem ………….. the underlying ROOT CAUSE of the Public Sector pension …and… the Multiple Employer Pension mess is not the “Ludicrouslygenerosity”? pension (AND benefits).

    Many of the less generous pensions, both public and private, are in just as much trouble as the more generous. Actual reform… not just “reductions” are needed. They were needed twenty years ago. For some it may be too late. They may need reforms… and… Federal bailouts of some form.

    Josh Rauh…
    “While citizens of states that are particularly hard-hit by the pension crisis may be able to escape to other states, an acceleration of this demographic phenomenon would leave a dwindling taxpayer base behind in the states facing the largest liabilities. This would increase the likelihood of a federal taxpayer bailout in which taxpayers in all states would bear the burden of the states in default. The problem of state and local pension liabilities is therefore a problem for all US taxpayers, not just those in the states with the largest deficits.”

    Reply

    • Posted by Tough Love on October 27, 2018 at 8:13 pm

      Corporate-sponsored PRIVATE Sector Plans (NOT MEPs) currently have a average “funding ratio” in the mid-high 80s% …………. using a MUCH more stringent standard in it’s calculation that that used in Public Sector Plan “funding ratio” calculation. On average …… on a comparable basis ……… Corporate-sponsored PRIVATE Sector Plans are TWICE as well funded as are Public Sector Plans. In fact that mid 80% would be well over 100% using Public Sector assumptions/methodology.

      Don’t believe me …………. ask Mr. Bury.

      As usual …………… you’re wrong, by a MILE.

      Reply

    • No need. I believe you. I’ve said it before, MEPs and Public Pension Plans need serious reform. I even agreed that …some… of that reform may need to be in reduced pensions, in some cases, even reduced for future accruals of current workers. And in the worst cases (you know who you are, NJ, et al.), even in reductions for current retirees.

      “Bailouts”, should they occur, either for MEPs or public plans, should be tied to enforceable reforms.

      It’s axiomatic.

      Reply

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