Author Topic: The pensions crisis  (Read 1881 times)

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Offline zeitgeist

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The pensions crisis
« on: February 16, 2010, 10:22:27 AM »
I can't help wondering if public pensions (for example, teachers, cops, firemen, and other municipal employees)  are 'sustainable'.  

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The pensions crisis
By Cynthia O’Murchu, Helen Warrell, Steve Bernard and Norma Cohen

Published: May 27 2009 14:42 | Last updated: June 16 2009 10:11

The immediate effects of the current economic downturn are highly visible: rising unemployment and bankruptcies are shaking consumer confidence, while ravaged stock markets and failing banks have damaged public trust in the financial system. But there is more damage yet to come.

The financial crisis has wreaked havoc on retirement plans of all varieties, inflicting particular damage to employer-based and private retirement savings, which have gradually come to replace state pension provision.

Meanwhile workers themselves, who have built up a lifetime of savings in pension funds, are being forced to rethink their pension plans and even defer their retirement.

This FT.com multimedia feature explores the dilemmas faced by individual savers, companies and governments. Our experts advise on how to rebuild depleted pension savings and offer potential solutions to the international pensions time bomb.
{snip for fair use}
Link to article>



What happens when taxpayers can no longer afford to pay the freight?  When you can't afford your mortgage today you just walk away.  Does the same thing go with public pensions?  How can you get blood from a stone?



Should one a man of wisdom meet
who points out faults and gives reproof,
who lays a hidden treasure bare,
with such a sage should one consort.
Consorting so is one enriched
and never in decline.

Offline thundley4

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Re: The pensions crisis
« Reply #1 on: February 16, 2010, 10:26:57 AM »
I can't help wondering if public pensions (for example, teachers, cops, firemen, and other municipal employees)  are 'sustainable'.  
 

What happens when taxpayers can no longer afford to pay the freight?  When you can't afford your mortgage today you just walk away.  Does the same thing go with public pensions?  How can you get blood from a stone?





Just keep borrowing against the future when everything will be better once the DemonRats plans are in place.

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Illinois politicians are at it again. They're borrowing from the future to make state pension contributions today. Illinois has one of the most underfunded public pension plans in the nation.
When boomers start retiring, there won't be enough money to pay those pension promises. Both political parties are still trying to hide the magnitude of the problem.

Under Gov. Rod Blagojevich, Illinois borrowed $10 billion for pensions in 2003, with some of the borrowings to be invested in the stock market to beat the 5 percent cost of interest.
In early January, while everyone was busy watching the nasty campaign commercials, the State of Illinois pulled an end-run on the budget process. On Jan. 7 the state sold $3.5 billion of "pension obligation notes." In simple English, the state borrowed money to finance the state's contribution to its five retirement systems.

These five-year debt securities carry an interest rate of 3.84 percent, tax free to bondholders. It's a much higher yield than you could get in the bank because of the risk involved. Moody's and Standard and Poors rated them at least 6 notches below the top AAA rating. In fact, all the rating agencies characterized the outlook for Illinois finances as "negative."
SunTimes

Offline Lacarnut

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Re: The pensions crisis
« Reply #2 on: February 16, 2010, 10:46:20 AM »
The Louisiana state pension fund is in fair financial shape. In fact, the fund has averaged a return on investment of around 8% each year with the exception of the year that the Enron debacle took place.

What should concern those that have 401k's is that Uncle Sam is looking at those trillion in the coffers as means to finance their debt when the day comes that no one wants to buy our bonds. That is when the shit is going to hit the fan because the government is going to force you to put a portion of your contributions into a worthless entity like that of the S.S. fund. Make no mistake about it; liberal politician are foaming at the mouth with that idea. Bankrupt states may be casting their eyes on that pool of money in your 401k also.

Offline thundley4

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Re: The pensions crisis
« Reply #3 on: February 16, 2010, 11:11:37 AM »
The Louisiana state pension fund is in fair financial shape. In fact, the fund has averaged a return on investment of around 8% each year with the exception of the year that the Enron debacle took place.

What should concern those that have 401k's is that Uncle Sam is looking at those trillion in the coffers as means to finance their debt when the day comes that no one wants to buy our bonds. That is when the shit is going to hit the fan because the government is going to force you to put a portion of your contributions into a worthless entity like that of the S.S. fund. Make no mistake about it; liberal politician are foaming at the mouth with that idea. Bankrupt states may be casting their eyes on that pool of money in your 401k also.

There has been some talk about a mandatory "401" for workers, but the fund would be managed by the government.  That's similar to how President Bush wanted to reform SS, but it would have been optional, and not government controlled.

Offline Lacarnut

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Re: The pensions crisis
« Reply #4 on: February 16, 2010, 11:51:19 AM »
There has been some talk about a mandatory "401" for workers, but the fund would be managed by the government.  That's similar to how President Bush wanted to reform SS, but it would have been optional, and not government controlled.

US News had a story about the government mandating 5% of your contributions going into bonds at 3% interest. This is a disaster waiting to happen because if the government can not pay it bills now, how in the world will they be able to pay those bonds off years down the road. Like I said, the crooked Democraps politicians are eyeing that pot of gold in 401k's. If they ever get a foothold, the mandantory rate will keep going up and up.
« Last Edit: February 16, 2010, 11:55:03 AM by Lacarnut »

Offline zeitgeist

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Re: The pensions crisis
« Reply #5 on: February 16, 2010, 12:05:02 PM »
US News had a story about the government mandating 5% of your contributions going into bonds at 3% interest. This is a disaster waiting to happen because if the government can not pay it bills now, how in the world will they be able to pay those bonds off years down the road. Like I said, the crooked Democraps politicians are eyeing that pot of gold in 401k's. If they ever get a foothold, the mandantory rate will keep going up and up.

An excellent example is the box full of IOU's called Social Security.  But I contend that is just the tip of the iceberg we and our children are facing.  Take a look at this headline:

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January 29, 2010|By Marc Lifsher

Reporting from Sacramento — Another pension alarm bell is ringing in Sacramento, this time at the teachers retirement system, where the nation's second-largest public pension fund is reporting a $43-billion shortfall.

The California State Teachers' Retirement System said that as of June 30, 2009, it could meet only an estimated 77% of its future pension obligations -- far less than the 100% recommended by actuaries.
http://articles.latimes.com/2010/jan/29/business/la-fi-calstrs29-2010jan29


It is a lot like playing the old game of musical chairs.  Someone is not going to sit down, soon.
Should one a man of wisdom meet
who points out faults and gives reproof,
who lays a hidden treasure bare,
with such a sage should one consort.
Consorting so is one enriched
and never in decline.