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Pensions (are they safe?)

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  • #46
    Thanks.  One board I've been on for close to 20 years requires putting :link on the end of links so it is a habit.

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    • #47
      Good article on the choices being made to address the consequences of prior underfunding.  Cost of Living Adjustments (COLA) is one of the most dangerous benefits to offer pensioners imo.  It is like a mutual fund 'load' in reverse; in that the pension fund has to obtain two to three percent annually just to keep up with CPI under 'normal' inflationary Fed targets.  When an pension actuarial is estimating returns of 6.5% to 8% per year, COLA has just eaten a quarter to a third of your return (with the assumption the returns are actually obtained).

      a. Pension plans have been underfunded for decades, correcting is at best a 40 - 50 year process.  Pension funds have seen corrections (dot.com, housing).

      b. Rate increases are imo tailor made for large properly funded pension to match asset allocation, working/pension population to estimated long term liability.  The State or ERISA is on the hook for underfunded pensions.  Given the underfunding seen, the actions undertaken by the state or private companies to overfund/borrow to make up for prior shortfall and the impact is seen by constraints upon other services, employment levels, and taxation rates.

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      • #48
        "What’s going to happen if we get a correction?"  More like when. From a link on Crixus' link

        Ohio’s public pension systems shift more health care costs to retirees


        From the stuff I've read most state Supreme Courts when having to rule are not giving health benefits the ironclad protection that they are giving pensions.

        "Another concern for retirees: None of the pension systems are required by law to provide health care."   This is Ohio also.  What the heck here is the link

        http://www.mydaytondailynews.com/news/state--regional-govt--politics/ohio-public-pension-systems-shift-more-health-care-costs-retirees/t5k7S4UpAdLvHKo9Rc7HmK/

         

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        • #49
          The problem with all these things is the rules promote terrible behavior. The above stories just make the current problem so much worse. They need to set realistic levels, funding, and not allow early retirement, accelerated draw down or the like. This has bankrupted even solid plans. The people that see the writing on the wall and get out early benefit to the detriment of everyone else.

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          • #50
            My wife is fairly early in her career at Mayo. They have a generous pension in place, but Mayo as an institution has been trying to eliminate any future liabilities for decades. They have already done away with providing health care for their retiring physicians and have modified their pensions for the worse several times over the past 20 years.

            I don't anticipate a pension will still be offered by the time my wife graduates. Mayo's 403(b) match is sub-par and I'm guessing this will be increased rather than providing a pension. I just hope they treat the physicians fairly that were hired under the old model.

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            • #51
              Illinois pension fun;

              "When she retires as majority leader, her salary will likely stand at over $91,000, including her base salary and leadership bonus. That means her first-year pension payment will be more than $77,000.

              Then the spikes kick in. Her second-year pension will total more than $121,000, according to GARS rules.

              Of course, Currie has contributed a portion of each paycheck to GARS throughout her career. But within three years, the state will have paid back more than her entire contribution in pension checks."

              https://www.illinoispolicy.org/currie-to-receive-6-figure-pension-after-first-year-of-retirement/

               

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              • #52
                http://www.mauldineconomics.com/frontlinethoughts/pension-storm-warning

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                • #53



                  Good article stating what we already kind of know.  There will be a lot of disappointment and hardship for those expecting a state pension and comfortable retirement.  What’s even sadder is that many made modest salaries serving us, have little savings and did not pay into social security.

                  In my situation, I’m constantly debating whether to roll my cash balance into IRA (nearing 90k) from a poorly funded state pension from years ago or let some judge in a court decide how much I get in the next 20 years.  I still think there is a decent chance that older workers and retirees will somehow retain their benefits paid for by younger workers and state contributions in my state of Illinois.  The younger workers are really taking it on the chin with reduced benefits.

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                  • #54
                    My husband collects his military pension. I don't have really any concerns. As long as he breathes, the check comes at the end of the month. When he dies I will collect 50%. I did the military buy-back so I have 18 years vested to collect when I hit minimum retirement age.....I figured the only risk to the buy back was not to live long enough to collect. If that happens I'd be dead and not really missing that money......so what the heck. I think I did the math at the time and basically collect just over one year and I get the buy back money back......

                    The military pension is unique because it is not tied to an age.  Our neighbor started collecting his pension in 1960. He died in 2016 (he was 99 years old)....that's a heck of a long time to collect a paycheck. And now his wife is still collecting...she is 97.  In 1960 he started working for the post office and ended up with two pensions....

                    there are other benefits and perks tied to folks who are eligible to collect a  military pensions which don't hold true for non-military pensions. (gotta love my 10% off at Lowes and home depot and all the other places which give military discounts....savings adds up over 50 years........)

                    i

                     

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                    • #55



                      A good blog for following (mostly) CALPERS & Illinois pension news

                      http://www.pensiontsunami.com/

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                      • #56
                        Typically, those most negative on pensions don't have them. I would think that most of the high-income folks on this forum could treat future pension income like SS, and simply factor the payout. In our case, I multiply the pension estimate by .15 to account for potential reductions in the future. Our planning assumptions include zero SS and zero pension.

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                        • #57


                          there are other benefits and perks tied to folks who are eligible to collect a  military pensions which don’t hold true for non-military pensions.
                          Click to expand...


                          There is at least one person alive as of 2014 still collecting a civil war pension.

                           

                          https://www.usnews.com/news/articles/2016-08-08/civil-war-vets-pension-still-remains-on-governments-payroll-151-years-after-last-shot-fired

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                          • #58
                            LOL someone collecting almost 400K in pensions from govt.  Thousands others collecting 200K or more.  How many of you guys going to have a 200K pension?

                            No wonder taxes in California are so high.

                             

                            https://transparentcalifornia.com/pensions/2016/calpers/?page=1

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                            • #59




                              LOL someone collecting almost 400K in pensions from govt.  Thousands others collecting 200K or more.  How many of you guys going to have a 200K pension?

                              No wonder taxes in California are so high.

                               

                              https://transparentcalifornia.com/pensions/2016/calpers/?page=1
                              Click to expand...


                              Not just california. For the longest time i remember hearing how police, etc...are so underpaid, and then sites like that came out and lowest levels easily clear 6 figures and higher ups pull in specialist doctor money with amazing benefits, and full retirement after 40 depending on entry age. Insanity. Now I know why so many cops live in my neighborhood.

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                              • #60
                                Many moons ago I did an internship with a town government in Illinois and did some long term pension projects.  One of the primary data points in the projections was the current salary information for police officer's in the town.  The police officer's with 1 to 2 years experience were making a salary of 19 - 22k/year.  At a time when an $8/hour job were readily available.  Its not only taxpayers that 'pay' for pensions but those who are young and don't continue in a position for several decades.

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