Pension measure wave crests, court slog remains

One of the first local ballot measures aimed at cutting public pension costs, a cap on Pacific Grove payments to CalPERS approved by voters three years ago, was ruled unconstitutional by a Monterey County superior court judge last week.

Judge Thomas Wills ruled Friday that Measure R violated the contract clause of the state constitution, reaffirming the view that pensions promised on the date of hire are a “vested right” that can’t be cut without providing a new benefit of equal value.

In a tough week for the measure‘s backers, the Pacific Grove city council voted 5-to-0 Wednesday to seek a court ruling on the legality of a follow-up measure to roll back police pensions, rather than put the plan on the ballot as the council did with Measure R.

“It’s a constant battle down here,” said Daniel Davis, who worked on both measures. He is a former two-term councilman of Pacific Grove, a city with 15,000 residents located between Monterey and Pebble Beach.

The only pension measure listed so far this year by Ballotpedia was approved by Los Angeles voters in March. Sworn police officers transferring from general services to the police department will be allowed to purchase pension-boosting service credits.

Pensions moved into the spotlight after a deep recession and stock market crash. As other programs were hit by painful budget cuts, pensions stood out — not only untouchable, but often with costs projected to grow at an alarming rate.

All eight local pension measures on the November 2010 ballot were approved, except one in San Francisco. A union-backed alternative to a second pension initiative by Public Defender Jeff Adachi helped Ed Lee win election as San Francisco mayor in 2011.

In Los Angeles voters approved a modest union-backed measure in March 2011. After briefly gathering signatures last fall, former Mayor Richard Riordan dropped an initiative to switch new Los Angeles hires to a 401(k)-style plan.

The wave may have peaked last June when voters in San Diego and San Jose approved widely watched measures. In different ways, both aim to do what some say is needed to get big savings quickly: cut pensions earned by current workers in the future.

The state Public Employment Relations Board (PERB) upheld labor complaints that the measures in San Diego, San Jose and Pacific Grove violated state labor law requiring bargaining.

The board filed an unsuccessful lawsuit to prevent a vote on the San Diego measure. An administrative law judge ruled in February that former Mayor Jerry Sanders should have bargained before putting an initiative on the ballot, triggering a court battle.

“PERB forgets that citizen initiatives are constitutional rights in California,” said the city attorney, Jan Goldsmith. The initiative was placed on the ballot by the signatures of 120,000 registered voters and received 66 percent of the vote.

Now all new hires, except police, are receiving 401(k)-style individual invest plans instead of pensions. The initiative requires the city to begin labor bargaining with the initial position of freezing pay used to calculate pensions through June 30, 2018.

The provision can be overridden by a vote of six of the eight city council members. If a union agrees to freeze pensionable pay, an individual might sue. If the city imposes a freeze after lengthy bargaining, a union might sue.

San Jose was hit in March by a PERB complaint of bargaining violations and providing inaccurate information to unions. A hearing on the issues before an administrative law judge is pending.

“What PERB thinks about what happened is irrelevant,” Mayor Chuck Reed told the San Jose Mercury News. “The voters have already spoken.”

Pending approval by the IRS is a cost-cutting provision in the initiative that would give current workers an option: earn a lower pension in the future or increase their contributions by up to 16 percent of pay or until half the unfunded liability is covered.

If this provision is overturned, the measure calls for equivalent city savings through a pay cut.

A half dozen labor lawsuits against the measure have been consolidated in superior court for a trial July 22 expected to last five days. A hearing is scheduled June 7 on a city motion that the lawsuits have no merit and should be dismissed.

Pacific Grove City Hall

Pacific Grove City Hall

Some of the pension issue in Pacific Grove and San Diego is based on the argument that they are among the 121 California cities operating under their own charters, not general state law used by the other 361 cities.

Davis criticized Pacific Grove officials for failing to defend Measure R on the grounds that “statutory vested pension rights were expressly prohibited by the city in its original charter up to and including” the approval of the first CalPERS contract in 1957.

The city attorney, David Laredo, argued in a 2009 memo that the distinction of being a charter city is unlikely to affect pension vested-rights case law based on contract clauses in the state and federal constitutions.

Much of the oral argument made last week by the attorney representing the city, Steve Berliner, was that several unions have agreed to the Measure R cap on city pension contributions to CalPERS of no more than 10 percent of pay.

He said the police union that filed the suit might agree to benefits, such as a pay bonus, that would offset employees paying the part of the employer contribution above the 10 percent cap.

Judge Wills said police have had no contract since 2010, and the city did not show the court a benefit offsetting the contribution cap. Unless given something of comparable value, he said, employees have a vested right to the pensions promised when hired.

In addition, the judge ruled, the measure is invalid because a decision about employee compensation is delegated to voters, violating a provision in the city charter giving the city council the power to set compensation.

The San Diego city council unanimously voted to sue the city pension system in 2010 to force compliance with a 1954 amendment to the city charter requiring the city and employees to contribute “substantially equal” amounts to the pension fund.

The San Diego City Employees Retirement System contends that the “substantially equal” provision applies to the “normal cost” of pensions earned during a year, not the $2.3 billion “unfunded liability” resulting from investment gains and losses.

Mayor Bob Filner last month urged the city attorney, Goldsmith, to drop the lawsuit. The mayor called the suit a “loser” that has cost the city pension system $3.2 million in legal fees, the U-T San Diego newspaper reported.

Goldsmith said the city position is supported by an outside legal expert and a 1983 state Supreme Court decision. After a judge granted a union request to move the trial to Los Angeles, the city got a reversal from an appeals court. A trial is scheduled July 9.

In Pacific Grove, the new initiative would roll back a police pension increase in 2002. The initiative says the city council was not told of a recently discovered CalPERS report showing the higher pensions would sharply increase city pension costs.

Like many other cities, Pacific Grove adopted a major trend-setting pension increase given the Highway Patrol in legislation sponsored by the California Public Employees Retirement System, SB 400 in 1999.

A 17-page CalPERS brochure told legislators SB 400 would not increase state costs. The lawmakers were not shown a CalPERS actuarial forecast that accurately predicted how much costs would soar if investment earnings faltered.

Actuaries estimated that if investment earnings during the next decade hit the target assumed by CalPERS at the time, 8.25 percent, state pension costs would be $679 million in 2010.

That’s well below the $1.2 billion state pension cost in 1997 before a booming stock market prompted CalPERS to give employers a contribution “holiday,” dropping the state payment in 2000 to $160 million.

What lawmakers weren’t shown, as SB 400 sailed through the Legislature with little opposition, was a CalPERS actuarial forecast that state costs would be $3.9 billion in 2010 if earnings averaged 4.4 percent during the decade.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at http://calpensions.com/ Posted 13 May 13

45 Responses to “Pension measure wave crests, court slog remains”

  1. Tough Love Says:

    Quoting …”Judge Thomas Wills ruled Friday that Measure R violated the contract clause of the state constitution, reaffirming the view that pensions promised on the date of hire are a “vested right” that can’t be cut without providing a new benefit of equal value.”

    The concept that Public Sector workers are “guaranteed” such a benefit and such protection from change (even for unearned FUTURE service) …. when the Taxpayers whose contributions (and the earnings thereon) which pay for 80-90% of Total Plan costs get no such benefit or protections under the (ERISA) rules that govern Private Sector Plans ……. is beyond pale.

    Dear Taxpayers, notwithstanding the State’s Constitution, CA’s Laws & Regs., as well as stupid and unreasonable (and likely self-interested on the part of the Judge) Court decisions, you must find a way to renege on the grossly excessive pension and benefit “promises” made by the Public Sector Union/Politician cabal … clearly a trading of Union campaign contributions and election support for favorable votes on pay, pensions, and benefits.

    What makes Public Sector worker so “special” and deserving of FAR greater pensions, benefits, and protections … on YOUR Dime?

    Isn’t it time you put an end to the financial rape of the Taxpayers ?

  2. Tough Love Says:

    Quoting …”He said the police union that filed the suit might agree to benefits, such as a pay bonus, that would offset employees paying the part of the employer contribution above the 10 percent cap.”

    There’s that insatiable Union greed we see so often. The added pay would itself FURTHER increase their pensions and exacerbate the problem.

  3. Mary Flaig, Pacific Grove Says:

    Minor factual correction: the vote in PG was 6-0. Council member Dan Miller was absent. Prior to receiving the most recent legal analysis on the matter, he had stated that it would probably not influence his vote, which would be to place the ordinance on the ballot. His presence might have made the vote 6-1, although the analysis was very persuasive, so who knows?

    The debate has been difficult for everyone. I appreciate the effort this blog makes to inform the public.

  4. Right to Worker Says:

    Lock em’ out. Fire em’ all, then rehire under a new contract.

  5. John Moore Says:

    In Pacific Grove, the city atty blew the case. On purpose, in my opinion. The police claimed a “vested” in perpetuity pension right. The evidence(not presented by the City), showed beyond a doubt that Pacific Grove employees do not have vested in perpetuity pension rights. Courts can’t create vested rights, only a legislative body can. In every Ca. case discussing Vested pension rights, the issue of whether the legislative bodies had granted such rights was not litigated. It was conceded. That is what happened in the Pacific Grove case.The evidence(not presented to the court.Why not?) showed that not only had a vested pension right never been authorized,, such a right could not be granted without a vote of the electorate(which never happened(in fairness, Judge Willis could not know that) For a discussion of how the city blew the case, ask for my Press Release at jmerton99@yahoo.com. John M. Moore, Pacific Grove Taxpayers ASS’n.

  6. COS Says:

    I don’t claim to be special…..nor do I have FAR better benefits, pensions & protections. I do make SUBSTANTIALLY less money than private sector salaries I was offered prior to coming over to the City. I would LOVE to have the SAME benefits as my peers in the private sector. What was once a very nice health plan that was one of the attractions is now CRAPPY. By having a career in both public and private sector employment, the Social Security benefits I have contributed to will be GREATLY reduced. So it looks to me like the main benefit I will receive by working in the public sector is a reduced amount of overtime work, which just like the private sector, is compensated with time off instead of overtime pay.

  7. Tough Love Says:

    Cos, Rarely are healthcare benefit of active Public Sector workers not cheaper (for the same benefit level) than those of Private Sector workers. Lower premiums, lower copay, lower deductibles, lower co-insurance and better benefits. And as for those already retired … VERY FEW in the Private Sector get ANY healthcare subsidy at all. Wanna trade ?

    As for making less in cash pay than the Private Sector ? Not according to the US Gov’t BLS, and anyway most Public Sector workers think their the cat’s meow and companies like Google, and Apple would be banging down the doors to hire them.

    Really? Keep dreaming.

    Oh, we forgot pensions …what are they, 5-10 TIMES greater in value than your Private Sector counterparts ….80-90% on the Taxpayers’ dime ?

  8. Captain Says:

    “Pension measure wave crests …The wave may have peaked last June…”

    – More like the first rogue wave has washed ashore and those paying attention understand there is much more to come. The current pension reform is superficial while the REAL meat of the pension problem continues to gain mass just off shore. I’m not sure if the swell that is gaining mass & momentum it’s a tsunami or the result of a perfect storm. I do know that it could have been avoided if our states elected officials had been doing their jobs.

    Crest? I don’t think so. The worst is yet to come. The state has way too much debt and I’m not just talking about CalPERS & CalSTRS (and unfunded County plans, Or the underfunded UC plans, Or the Judges retirement plans), or the unfunded medical costs of state, county, city, and special district retiree medical plans.

    Our state has borrowed too much, deferred too much, and juggled too much debt to ever take the current budget seriously. Same can be said for our cities and counties.

    We’re in serious financial trouble and our state, county, city politicians – and CalPERS, are busy protecting union rights while ignoring their commitment to taxpayers.

  9. Bjorne Pedersen Says:

    As so many of us said to the Orange County folks as they lost their lawsuits over and over again…your cause is a total loser. Ed, I have read every single California and US published case in this area of law. There is absolutely no way to take back what you’ve given to the workers who have preformed.

    It’s funny. It is tough that these numbskull deciders always fall prey to the marginal lawyers who sell them on an hourly lawsuit and a pathway to tea bag nirvana. Millions once again thrown down a dark hole for nothing.

    The answer is at the col bargaining table. It always is. American jurisprudence won’t let contracts, the basic unit of commerce, be laid waste. No one on sites like this Ed will ever listen….sad.

  10. Tough Love Says:

    Bjorne, Sounds like you aren’t accepting of the fact that your pension Plan is a Ponzi Scheme and WILL eventually run out of money.

    I can just see you kicking your feet and yelling ….

    “but I was promised”
    “but I was promised”
    “but I was promised”
    “but I was promised”

  11. Bjorne Pedersen Says:

    Calpers value today
    266.7 Billion
    Gonna be awhile pal.

  12. Bjorne Pedersen Says:

    Tough Love– Do you know the “elements” of a Ponzi scheme?

  13. Tough Love Says:

    Bjorne, While the assets may be $266.7 Billion, the Liabilities (under proper accounting of the type mandated for valuation of Private Sector Plans … and what Moody’s will be using for evaluation of Gov’t Plans very shortly) is just about $500 Billion.

    At some point in the not too distant future, the younger newer “actives” are going to realize that all THEIR contributions are simply going out the door to pay the full (but underfunded) benefits of those already (and soon to be) retired and they are going to put their foot down and force a pension cut so there will be something left for THEM.

  14. Tough Love Says:

    Bjorne, Yes, I do know what makes up a Ponzi Scheme, and yes, Social Security is one as well, but the FEDERAL Gov’t can print money. SS can get away with having no real assets (as long as it doesn’t get too out of hand .. ala Greece)..

    While your Pension Plan indeed has significant assets, it’s roughly 50% short… near impossible to fix… barring VERY long and unexpected bull market, and CA, and CalPERS can’t print money and as things deteriorate, borrowing will also become problematic.

    There no “free lunch”. You were promised WAY too much by the Public Sector Union/Politician cabal (who knew that THEY would be long gone when the bill came due), and at some point, your pension and benefits will be significantly rolled back.

  15. John Moore Says:

    There is a distinction between a vested right for work already performed and a claim of a vested right for work not yet performed. The Pacific Grove case dealt only with a claim of right to a vested benefit for work not yet performed. The initiative acknowledged a right to the pension benefits, for a legally adopted pension, for work performed.

    As to a vested right for work not yet performed, the Ca. Supreme Court, in the recent Friends of Orange case, reiterated that a claim of a vested right of either kind does not exist if there was a law denying the creation of such a right at the time it was purportedly adopted.

    . When Pacific Grove granted employees a pension(by joining CaLPERS), the City Charter had language that said the City could adopt a non-vested benefit by ordinance, but for a vested pension benefit of either kind, a vote of the electorate was required. No vote was held. So the granting a vested pension was specifically prohibited by law, except by a vote of the people, which was not done. I offered to make my research available to the city, but the attys defending the initiative were ordered not to interview me, or, chose not to. Why? I am a licensed attorney(Ca. Bar # 34749, Av rated), and they knew that.>John M. Moore, Pacific Grove Taxpayers Ass’n.

  16. COS Says:

    Tough Love……I speak from personal experience; having worked a substantial period in both public and private sectors. When I first came to the public sector, MY salary was substantially less than what I was offered in the private sector. This is not from some randomly potentially biased study. This is ME looking at THREE concrete numbers, two private sector positions and one public sector position. I was willing to take less in salary since my benefits were to be greater. However, NOW my current healthcare is worse than what I had in the private sector and worse that the positions I turned down are still receiving. Again this is ME looking at THREE health plans, my previous private sector plan, one of the private sector positions I turned down, and my current public sector plan. For my current plan, I pay more out of my paycheck (my previous private sector health plan cost me nothing), have higher co-pays, higher deductibles and higher out-of-pocket expenses.

    My pension is still better, but nothing like 5-10 times better. Especially considering the corresponding reduction in my Social Security benefits. Retired health care? Don’t make me laugh….that was gone a LONG time ago.

    At this stage I would gladly accept comparable private sector benefits for a comparable private sector salary. As it stands, the likely scenario is that my benefits that are less that the private sector will stay that way, the benefits that are better will be reduced and instead of having my salary increased to match, it will continue to be reduced.

  17. Tough Love Says:

    Cos, Perhaps you are the exception, and perhaps the Private Sector company to which you refer are one of the few still offering great benefits.

    As to you pension not being 5x better … consider these facts:
    (1) your pension formula factor (per year of service) is likely much greater, yielding 2-3 times the $ pension of your private sector counterpart. Lets average those multiples and call it 2.5 times greater.
    (2) your full unreduced retirement age is likely at least 5 years younger (10+ oif you were a police officer)… that’s worth about 30% more (using the SAME adjustments Social Security makes for early retirees) so that 2.5 times becomes 2.5 x 1.3 = 3.25 times greater in value
    (3) Your pension likely includes post retirement COLA increases whereas Private Sector pensions never do. That pension is worth about 1/3 greater than an otherwise equivalent pension w/o COLA increases, so comparing your pension to your Private Sector counterpart now gives us 3.25 x 1.33 = 4.32 times greater in value.

    Your see it’s not just the formula, it’s ALL the peripheral goodies that make it so valuable. And Ok, I believe you if you say that you are not getting a retiree healthcare subsidy, but in the Public Sector, that’s rare, By far, most do… and the Taxpayer (who do NOT get such coverage) pay for it.

    Your “reduction” in SS is proper. SS calls these reductions “Windfall Elimination” provisions because they “eliminate” an otherwise unjust windfall. In essence, you are NOT being punished, but just prevented from getting an unjust benefit. Google it, and if you have an open mind, you should understand why these adjustments are appropriate.

    No 2 people are alike and perhaps your “Total Compensation” (cash pay plus pensions plus benefits) is less than what you would have earned in a comparable Private Sector job. However, for the vast majority of Public Sector workers their Total Compensation is FAR FAR greater (primarily via vastly more valuable pensions and benefits).

    This is patently unfair to Private Sector Taxpayers and must be changed … and for CURRENT, not just new workers.

  18. SeeSaw Says:

    Well, TL, I think its kinda unfair to me that the same seats I used to occupy at the ballpark for $12 now cost $164.50. I think they should cut those ten million dollar players down to at least a million, so more people like me could go.

  19. Bjorne Pedersen Says:

    Tlove broken record.

  20. Tough Love Says:

    Seesaw, I agree with you, and it’s not just baseball. We pay completely absurd sums to people who are good at getting balls in holes.

  21. Captain Says:

    TL, I’m very thankful for your participation in this debate. I love the consistency and accuracy of your messaging. I’m not big on hero worship but if I were you’d be on the top of my list.

    Thank You!

  22. Tough Love Says:

    Bjorne,

    In denial.

  23. Bjorne Pedersen Says:

    And not nearly enuf to teachers, nurses, cops, firefighters etc.

  24. Captain Says:

    “Bjorne Pedersen Says: Calpers value today
    266.7 Billion”

    Would you care to put that number in the proper context? Do you understand why that number is less than impressive?

  25. Tough Love Says:

    Captain, well thanks, complements and appreciation are a rarity in these discussion, And you certainly add steadiness and reasoned logic … and a milder temperament than I.

  26. spension Says:

    Tough Love says “Oh, we forgot pensions …what are they, 5-10 TIMES greater in value than your Private Sector counterparts ….80-90% on the Taxpayers’ dime ?”

    To get some actual numbers rather than exaggerations back in the discussion…

    See page 24 of http://www.fixpensionsfirst.com/docs/Full_Report.pdf .

    Private pension value (including DC,DB,SS)… about $470,000
    at age 62.

    Public pension values… ranges from $590,000 (for CalSTRS) to $840,000 (for Local non-safety).

    Not a factor of two. At most local non-safety exceeds private by a factor of 1.78. CalSTRS by only a factor of 1.26.

    Captain says `TL, I’m very thankful for your participation in this debate. I love the consistency and accuracy of your messaging.”

    I see the consistency, but I disagree about accuracy. TL greatly overstates the values of public pensions, and does not provide references for his numbers.

  27. Tough Love Says:

    Spension, You have mentioned this study before, and I did say I would (as time permits) look into why it shows less of a difference than other studies,

    I do intend to do so, but haven’t yet had sufficient time.

  28. NTHEOC Says:

    CalPERS investments have hit a record high in 2013, erasing every penny of the investment losses it suffered in the market crash last decade. The pension giant has wiped out nearly $97 billion worth of investment losses it suffered in the market crash, and its portfolio has climbed to a record $261.7 billion. That surpasses the pre-crash high in 2007. Now that the state’s public pension systems are reporting double-digit returns, hundreds of jurisdictions are settling pension issues at the bargaining table across the state, and courts are throwing out unlawful pension changes, it’s no surprise that the attack on retirement security is losing steam!!!!!!!!!! Keep at it TL, you loser…….

  29. John Moore Says:

    Assets equal 261 billion. Liabilities(pension promises) equal just over 400 billion. A 149 billion unfunded deficit that compounds at 7.5% per year.

  30. Tough Love Says:

    Nethoc, You should educate yourself.

    (1) yes, Calper has $261 Billion of assets, but it also has (under the same accounting rules MANDATED for valuing Private Sector pension Plans $500 Billion of liabilities), meaning it is 40-50% underfunded … a level most economists feel teeters on being impossible to fix.
    (2) Ok, so their assets are at the 2007 levels. Well, CalPERS assumes they will earn 7.5% annually. S0 that $261 Billion should now (in 2013, 6 years later) be $261B x 1.075^6 = $402.8 Billion, and under proper accounting even m,ore (see 1 above)

    Ok, you call me a loser because I don’t feel you deserve a better deal (meaning greater total compensation) than Private Sector Taxpayers in comparable jobs. Your Plans will ultimately fail just due tho the impossibility of the math …. and the Union slugs and self-interested politicians who promised you these grossly excessive pensions will be long gone.

    Certainly sounds like you’re gonna be the looser.

  31. NTHEOC Says:

    Sorry John Moore,
    This Unfunded deficit you speak of is nothing more than right wing tea party rhetoric!! Sure, if every public employee in the calpers system were to retire today at once,then about 20years down the road we might be Unfunded. It doesn’t work like that John. You could also say your mortgage is an Unfunded liability!!!

  32. Tough Love Says:

    NETHOC, You really SHOULD educated yourself. Your mortgage analogy is wrong.

    A correct mortgage analogy (to an underfunded pension Plan) is that you have no paid all of the monthly paid due in PAST months.

  33. Tough Love Says:

    Fingers got a bit twisted …. the last sentence in my above comment should say ..

    A correct mortgage analogy (to an underfunded pension Plan) is that you have not paid all of the monthly amounts due in PAST months.

  34. Captain Says:

    NTHEOC, your comments do indicate a complete lack of understanding regarding pension funding/unfunded pension liabilities. Unfortunately you aren’t alone.

  35. Bjorne Pedersen Says:

    Actually, nthoc is correct. The analogue to the home mortgage is spot on. So long as it is a positive system it is just like a mortgage that is called due. I get bored looking at the same old dull mantra out here while calipers grows and grows. But have at it!

  36. Tough Love Says:

    It’s interesting that those with the least understanding of economics are Public Sector workers … who like to refer to themselves as the “Best and Brightest”.

  37. Bjorne Pedersen Says:

    Hubris

  38. spension Says:

    For mortgages, the principal to be paid back is exactly known.
    For a fixed interest mortgage, the interest to be paid back is exactly known (assuming payments are made exactly on time, although recently banks foreclose on borrowers for paying *early*.)

    Of course for a variable interest mortgage, the interest to be paid back has uncertainty due to future interest rates being uncertain.

    For pensions, the uncertainties are far greater than for mortgages, at least for public pensions under current law.

    The uncertainties include:

    1)Future securities markets returns; even when averaged over 30 years, these have uncertainties at the level of -50% and +25%.

    2)Future inflation

    3)Future # of employees and pay scales

    4)Future decisions by pension boards and other pension leaders to increase payouts, make early retirement plans, etc.

    I think for these reasons, the analogy of DB pensions with mortgages is unhelpful.

  39. Bjorne Pedersen. Says:

    The only analogue to a db pension is that a mortgage K isn’t due til the term. A pension isn’t due to be paid until the annuitant retires and then in installments. So to say it is not funded in full is nonsense. It’s a great analogy.

  40. spension Says:

    ??? If you miss enough mortgage payments, banks foreclose on you, seize your house, and sell it. The principal is by no means only due at the term of the loan.

    In contrast, in DB pension system for the University of California (UCRP), no payments were made for 20 years.

    Your comment, BP, reminds me of the joke about how most Americans plan to fund their 401(k)s. That is, put in $1000 a year until they’re 63, and then put in $300,000 for two years starting at 63.

    The `full funding’ calculation is just an estimate, with errors. I would never call it nonsense. But it does not mean the balance is due tomorrow, if that is your point.

  41. Bjorne Says:

    Well, you are right in a small way. Your mortgage k allows you to take the freehold rights and allows you to make payments. The balance is not due til the term calls it. These employees continue to pay in and agree to work in exchange. Like your note, it is of course unlawful to just to call it early, due in full. The silly pension argument is the same, all people will not retire at once on the same day.

  42. Tough Love Says:

    To NTHEOC and Bjorne Pedersen,

    Re …. YOUR mortgage analogy to an unfunded liability in a Pension Plan and my earlier comment on how what you said was wrong, with my anology.

    The following quote (between the dashed lines) is by Richard C. Dreyfuss, a business consultant and Actuary when commenting on Pennsylvania’s Public Sector pension problems (and more specifically, their serious unfunded liability):
    ——————————————————————-
    “If you turned off the system tomorrow … we would have $88 billion worth of liability,” he said. “That is not a good place to be.”

    The PSERS system has a negative cash flow – more money going out than coming in – according to Dreyfuss.

    He likened the situation to only paying two-thirds of a mortgage each month and continually applying for a new loan each year.

    “This number is getting away from us. It’s a little bit like running uphill,” he said.
    ——————————————————————–
    Here is the source for this quote.

    http://www.sungazette.com/page/content.detail/id/592894/Analyst–State-needs-pension-reform-now.html

    Looks like at least THIS actuary agrees with me.

  43. Bjorne Says:

    Lol. Love, lol you honestly think that source proves your point? It’s a rehash of the same old tea bag argument. Still misses the point. But thanks for playing

  44. Tough Love Says:

    Yes Bjorne, When you have nothing intelligent to say, you say absolutely nothing intelligent.

  45. Bjorne Says:

    You are a pompous clown sir. I read your link, all rehash.

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