The use of the word “unsustainable” had a distant echo this month as the League of California Cities issued a study of CalPERS rates, a move to get stronger local options for controlling rising pension costs.
Over the next seven years, the study found, city CalPERS costs will increase more than 50 percent. The annual pension bite for the average city will reach 15.8 percent of the general fund, nearly doubling from 8.3 percent a decade ago.
A key finding of the study by Bartel Associates actuaries, using CalPERS data and survey replies from 229 cities, is that “city pension costs will dramatically increase to unsustainable levels.”
Nearly a decade ago the CalPERS chief actuary then, Ron Seeling, made a similar prediction at a seminar sponsored by the Retirement Journal in August 2009. The CalPERS investment fund had just lost $100 billion during the financial crisis and market crash.
“I don’t want to sugarcoat anything,” Seeling said. “We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan … unsustainable pension costs. We’ve got to find some other solutions.”
The average CalPERS contribution for local governments in the current fiscal year is approaching Seeling’s “unsustainable” level — miscellaneous 21 percent of pay and safety (police and firefighters) 40.45 percent.
In seven years, the League study expects rising CalPERS employer rates to be well above those mentioned by Seeling. By then a gradual rate increase will be fully phased in, filling the funding gap created by lowering the investment earnings forecast from 7.5 to7 percent.
“In FY 2024–25, half of cities are anticipated to pay over 30.8 percent of their payroll towards miscellaneous employee pension costs, with 25 percent of cities anticipated to pay over 37.7 percent of payroll,” said the study. (see chart)
For safety or police and firefighters: “By FY 2024–25, a majority of these cities are anticipated to pay 54 percent or more of payroll, with 25 percent of cities anticipated to pay over 63.8 percent of payroll.”
A call to “convene the stakeholders” was another similarity between the League study finding of “unsustainable” pension costs and remarks at the seminar in 2009 that followed Seeling’s call for solutions.
“It is our hope that this report today helps inform the discussions that can be used across stakeholders to acknowledge that there is a problem and encourage all of us to come to the table to help forge solutions,” Carolyn Coleman, League executive director, said this month.
At the seminar in 2009 the CalPERS chief executive then, Anne Stausboll, said the CalPERS board had talked about the “cost and sustainability of pension benefits” the previous week and decided that the system should take a “proactive role” on the issue.
“They asked us to formulate a way to convene our stakeholders — employers, labor, legislators and other stakeholders in our system — to convene everybody and start having a constructive dialogue on sustainability of pension benefits,” Stausboll said.
At the League news conference a reporter’s request for a definition of “unsustainability” was answered by Daniel Keen, a former Vallejo city manager with two decades of experience in five cities.
The ability to absorb rising pension costs varies from city to city, Keen said, but one thing unsustainable for all is the erosion of basic services. He said uncertainty causes reluctance to fully staff police, fire departments, and public works maintenance.
As discretionary services such as libraries, parks and recreation are threatened, long-term commitments are less likely. Though the economy is growing and unemployement is low, cities are forced to make tough budget decisions.
“That’s not a good model for sustainability, considering that we will probably see recessions again in the future that will be much more difficult to manage through simply because of these rates,” Keen said.
Managing the scheduled CalPERS employer rate increases over the next seven years will be difficult for many cities, even if a deep recession and plunging stock market does not create the need for additional rate increases.
The League needs to “convene the stakeholders” because the new cost-cutting local options urged in its “Pension Sustainability Principles,” adopted last June, require legislation or a change in the “California rule” court decisions that prevent cuts in the pension offered at hire.
For example, current law prevents cities from negotiating with labor unions to give employees a lower pension for work done in the future, while protecting pension amounts earned in the past.
One of the League sustainability principles calls for converting employees hired before a pension reform on Jan. 1, 2013, (called “classic” by CalPERS) to the lower pension formula given employees hired after the reform.
At a workshop in November on proposed investment allocations that could raise employer rates, representatives of two cities told the CalPERS board their employees are willing to negotiate earning lower pensions in the future but cannot under current law.
“Our ‘classic’ employees, which are about 87 percent of our workforce today, have indicated a willingness to take a reduction prospectively in the benefit package offered if it were allowed,” said the Hanford city manager, Darrel Pyle.
“Many of our employees have signaled that a reduction in the benefit formula going forward would be much more palatable than additional pay reductions or potential reductions in staff,” said the Bencia human resources manager, Kim Imboden.
Cutting pensions earned in the future was the top recommendation of an influential Little Hoover Commission report in 2011 and a key part of a pension reform approved in 2012 by San Jose voters, which was overturned by a superior court.
The League study said “the most prominent source of the pension system’s cost escalation” began with higher pensions granted by state and local governments under legislation around 2000, when CalPERS had a surplus that was said to cover most of the cost.
Other sources of the cost increase, said the study, are investment losses, an actuarial policy that delays payment of debt, demographic change that has pension debt for retirees exceeding the debt for active workers, and automatic pension cost-of-living adjustments.
Another league sustainability principle is a “temporary modification” to COLAs that “are automatically added to a retiree’s pension benefit payment regardless of compensation level or CPI.”
Cities in CalPERS can choose compounding COLAs of 2, 3, 4, or 5 percent, depending on union bargaining. The COLA for teachers in CalSTRS is fixed at 2 percent of the initial monthly payment. COLAs in private-sector pensions are rare.
Last September the CalPERS board was told that a COLA freeze could increase pension funding by up to 18 percent for safety plans and up to 15 percent for miscellaneous plans.
The board rejected a request to analyze the cost savings of COLA suspensions and switching all employees to the lower pension given post-reform hires. The request was backed by cities but opposed by unions.
With the current cost-cutting options, cities that are financially able can pay down debt quickly or set aside money for future pension costs. Some cities have been unable to restore services cut during the recession because rising pension costs eat up improving revenue.
Asking voters to approve tax increases and employees to contribute more toward their pensions also are options. A city that mentioned the possibility of bankruptcy in September, Oroville, did not use the “bankruptcy word” while addressing the CalPERS board in November.
A federal judge ruled in the Stockton bankruptcy that pensions can be cut. But Stockton, like bankrupt San Bernardino, did not try to cut pensions, saying pensions are needed to be competitive in the job market, particularly for police.
The state Supreme Court has agreed to hear appeals of two appeals court rulings that would weaken or eliminate the “California rule,” allowing pension cuts. The high court could make a narrow ruling that does little to alter vested rights precedents.
If the Supreme Court upholds the appellate rulings, cities might have to “convene the stakeholders” to get legislation allowing change. Attempted statewide pension initiatives have struggled with selecting a retirement replacement, funding, and unfavorable ballot summaries.
CalPERS funding, 101 percent in 2007, has not recovered from the huge loss a decade ago, despite a lengthy bull market. Last year the funding was only 68 percent of the projected assets needed to pay future pension obligations, little changed from a low of 61 percent in 2009.
Now CalPERS fears a deep recession or stock market plunge could drop its funding level below 50 percent, a red line some experts warn could be a crippling blow. Critics say the 7 percent earnings forecast is too optimistic.
In December the CalPERS board, as urged by cities, chose a new investment allocation that did not lower the current 7 percent investment earnings forecast, avoiding another large rate increase.
This week the CalPERS board is scheduled to consider a reform shortening payment of new pension debt from 30 to 20 years, triggering a small rate increase. In November some cities opposed the change, saying “the employer pays more option is no longer viable.”
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com. Posted 12 Feb 18
Calpensions 
February 12, 2018 at 9:26 am
Quoting ………….
“The average CalPERS contribution for local governments in the current fiscal year is approaching Seeling’s “unsustainable” level — miscellaneous 21 percent of pay and safety (police and firefighters) 40.45 percent.”
I’m guessing that Mr. Seeling’s 25% for Misc employees and 40% to 50% for Safety assumed a continuation of the VERY liberal (i.e., high) interest rates used in discounting Plan liabilities, because if they were the SAME as required in the valuation of Private Sector Plans (about 3.5%), they would easily be 10%-15% higher just to cover than Plans’ Normal Cost. And they would assuredly be higher than today’s 21% for Misc employees and 40.45% for Police and Fire.
As the Little Hoover Commission proposed, there are no EFFECTIVE solutions to this pension crisis that do not include VERY material (think 50%) reductions in the VALUE * of FUTURE service pensions accrual for CURRENT workers.
* the 50% reduction in value can come from a combination of formula-factor reductions, increases in the youngest age at which an unreduced pension can begin, increases (to the correct actuarial value of about 5% per year of age) in early retirement reduction factors, and reduction/elimination of COLA-increases (almost unheard-of in Private Sector Plans).
February 12, 2018 at 9:37 am
Compare with NYC.
February 12, 2018 at 10:13 am
I have a fix to improve investment returns. It would involve terminating all contracts with existing companies that provide investment consulting services, as well as any existing CalPERS staff who make investing decisions.
These advisors and CalPERS staff could be replaced with one new CalPERS staff member. My recommendation is as follows:
Duty Statement (Proposed)
Calpers Investment Specialist
Salary $250,000
Work Schedule: One day a month (12 days per year)
Job Description: On the first business day of the month, invest 75% of pension contributions into the United States Total Market Index (ticker VTI for example), and 25% of pension contributions into an international stock index (ticker VEU for example).
The remaining days of the month, the employee must not come to work, work from home, log in, check emails or do anything else considered “work related.”
Alternatively, if no one can be found to perform these duties, the process may be automated.
February 12, 2018 at 10:42 am
Assuming the law doesn’t change to allow bargaining of reduced pensions going forward for all employees, not just new ones, what are the options? Perhaps…
Bankruptcy: hard and expensive, but the judge in Stockton said that pensions are adjustable.
Disincorporation: much like bankruptcy, but lays the entire problem on the (former) employees, probably, through a large reduction in their current (already retired) and future pensions. PERS might be able to grab a few assets but most would go to others. Then, of course, the county would have to take over for basic services, which isn’t free.
Eliminate civil service: unlike counties and the state, a formal civil service system isn’t universal among cities. Some smaller ones hire employees “at will” like private businesses, or contract out large chunks of the operation (sometimes with corrupt consequences; see e.g. Vernon or Bell). Are pensions fully negotiable under those circumstances?
Terminate and rehire: probably the worst alternative. Some private companies make people recompete (usually annually) for their present jobs, or terminate a fixed percentage of the work force every year. They then rehire those who rate or compete well at new, entry-level wages. It’s a horrible abuse of the employees, but keeps the cost down, and would make adjusting the pensions easy because nearly everybody would be a new hire every few years.
The government employee haters among the commenters would probably love all of those if they can’t just eliminate pensions entirely. Or issue death pills to all retirees.
PS: COLAs for state retirees are limited and variable. There were none for several years after the recession, and they’re capped at (I think) a few % even when the real COL increase is higher. Many County retirement systems have no COLAs at all; what you get at retirement is what you’ll get forever unless, after 20 years or so, they have spare change and choose to spend it on you. By law for both State and County, IIRC. How is it that local governments are paying so much more?
February 12, 2018 at 1:12 pm
There is no “bargaining” of pensions & benefits in the Private Sector (the employer says this what you get …. take it or leave it), and there is no reason for the Taxpayers (who are the real “employers” of Public Sector workers) to “bargain” or “negotiate” with them to obtain the HUGE reductions that would be necessary to bring the now LUDICROUSLY excessive Public Sector pensions & Benefits all the way down to the level now commonly granted Private Sector workers.
Who in their right mind thinks the Unions/employees would do so ?
February 12, 2018 at 2:14 pm
TL: you should add to your comment about no “bargaining” of pensions and benefits in the private sector: “any more.” For a large part of the 20th Century, there were unions and bargaining in the private sector. They were busted by people like you in order to improve profits for the true capitalist class (and co-opted middle class who wanted to think they were rich). Greed is, of course, good.
Public employment came by unions relatively late – public employee unions were voluntary benefit organizations until collective bargaining was imposed in the late 1970s-80s. As for the benefits of unions, they do equalize the employer-employee power balance somewhat. Pensions *are* part of total compensation, and offer the opportunity to kick a portion of the cost down the road in hopes of getting a discount due to investment performance. You could, after all, pay them more now out of current revenues to cover the cost (and poor performance) of individual retirement accounts.
BTW, in my experience public sector unions often are willing to negotiate adjustments in the compensation package, even downward. Perhaps that was more true in the past before they all got dragged into national political organizations, but it still happens. The union ultimately has no interest in forcing the employer out of business, which would reduce its membership. If laws prohibit that, then those laws should probably be changed.
February 12, 2018 at 4:14 pm
Are WE Really This Bad,
“unions and bargaining in the private sector” is a WHOLE different animal that Unions and bargaining in the PUBLIC Sector.
In Private Sector Union/Management negotiations, BOTH side are truly looking out for their OWN best interests with each side’s negotiating demands tempered by the Unions realizing that demanding what is not affordable is not smart and risks putting the company out of business and their workers out of jobs, and the Company realizing that offering less than a “fair” package will lead to greater turnover and low employee moral/productivity.
In the Public Sector, it is VERY clear that NEITHER side at the bargaining table is looking out for the Taxpayers’ best interests. While management’s negotiators may not be in the same Union (or in any Union), they know that THEY will ALWAYS get more than the rank-and-file, and the more they grant the rank-and-file the more THEY get. Combine that with self-interested Elected Officials (who instruct their “negotiating team”) who are beholden to the Unions for continued campaign contributions and election support, and it’s easy to see why Public Sector Total Compensation (wages + pensions + benefits) has gotten so excessive ………. and materially greater than that of comparable Private Sector workers.
And ………. while Private Sector Unions must always temper demands based upon the company’s ability to pay …… the Unions see no comparable restraints. They know that cities and towns don’t go “out-of-business” and they look at the Taxpayers as SUCKERS who can endlessly be soaked to pay for excessive and unjustifiable compensation.
The pension mess now infecting many Cities and States cannot be effectively addressed WITHOUT VERY (think 50%) materially reducing the value * of FUTURE service pension accruals for all CURRENT workers from their now unnecessary, unjust, unfair to Taxpayers, and now ludicrously excessive level.
———————————————–
* the 50% reduction in value can come from a combination of formula-factor reductions, increases in the youngest age at which an unreduced pension can begin, increases (to the correct actuarial value of about 5% per year of age) in early retirement reduction factors, and reduction/elimination of COLA-increases (almost unheard-of in Private Sector Plans).
February 12, 2018 at 5:07 pm
Strongly opposed to the COLA freeze on retirees. Too much pain on the elderly with modest pensions. Many of the older members retired prior to SB400 and would be punished for a problem they didn’t contribute to!
If we really have to freeze COLAs do it on those with pensions of $100k or more.
February 12, 2018 at 6:06 pm
CalPERSon,
How about THIS ….. you know, just for “fairness” sake …… since Private Sector pensions almost never include COLA increases but SS benefits (which max out at $32K for recent retirees) are COLA-increased……… for Public Sector workers who also participate in SS, ZERO COLA increases on their pensions (just like their Private Sector counterparts), and for Public Sector workers who do NOT participate in SS we allow COLA-increases but only on the first $32K of the annual pensions (again, just like their Private Sector counterparts).
What say you ?
February 13, 2018 at 10:55 am
In the private sector, it was executives who grabbed the rank and file’s pension funds, through financial swindles and fraud… all documented in Pulitzer-winning WSJ reporter Ellen Schultz’ book “The Retirement Heist” http://www.retirementheist.com .
In the private sector, golden parachutes that of William McGuire, CEO of UnitedHealth of >$800 million are frequent: http://content.time.com/time/specials/packages/article/0,28804,1848501_1848500_1848464,00.html.
In the public sector, reforms are needed, but look closely, in Wisconsin, San Diego, etc… safety employees still keep their DB pensions, and safety benefits are the ones that let people retire at 50 with 90% of their pay.
Then in the military sector… you can retire at 37 and collect benefits until you die… there is a $1-trillion level deficit in the US military pension fund. There is no “Transparent Military” to allow citizens to see the pensions and other benefits of military retirees, which are also lavish.
The bottom line always is: there are terrible debts and shortfalls in public pensions. People who point those out, however, want their political friends (CEOs, Wall Street, safety employees, military) to keep lavish benefits, and they only want to cut the pensions of political foes, like schoolteachers.
Just like the Trump administration folks like Mulvaney are no longer against deficits, as long as the deficits benefit their political allies.
February 13, 2018 at 1:27 pm
No spension,
The “bottom line” is that “market rate” compensation is set by the 85% of all workers who are employed by in the Private Sector, where employers freely compete for talent, unencumbered by the underhanded dealings and Union/Elected-Official COLLUSION that is rampant in the Public Sector and distorts compensation levels.
Unless there are demonstrably lower wages for a Public Sector worker in the same job (or one requiring similar experience, education, skills, and knowledge) as a Private Sector worker (and then only after adjusting for hours worked and “productivity” where measurable), there is ZERO justification for ANY greater pensions or benefits.
The taxpayers have grown weary of being the “suckers” in the equation.
February 13, 2018 at 2:35 pm
spension hit the nail on the head with his or her post. Well said, thank you.
The COLA freeze idea is being put forward without careful thought. It hurts the oldest retirees with the smallest pensions the most. OTOH, those with the extravagant $200k pensions won’t have to do much belt-tightening, if it all. A COLA freeze is highly regressive.
February 13, 2018 at 4:26 pm
CalPERSon,
“regressive” vs what ?
Other than for Social Security, employer-sponsored Private Sector PENSIONS very rarely include ANY COLAs, and yet PRIVATE Sector Taxpayer contributions (and the investment earnings thereon) are now responsible for 80% to 90% of the total cost of these grossly excessive (and MULTIPLES greater in value) PUBLIC Sector pension (AND benefit) promises.
It’s time for RADICAL change ……… meaning VERY material reductions in pension accruals rate for the FUTURE service of all CURRENT workers, and where dire financial circumstances so necessitate, for the PAST service accruals of both Actives, and those already Retired.
February 14, 2018 at 8:37 am
Well, Tough Love, the” “market rate” compensation is set by the 85% of all workers who are employed by in the Private Sector,” is the result of they buying off of politicians by the private sector… buying off so that the fraudulent draining of rank-and-file private sector pensions by private sector execs was overlooked by bought-off US regulators. It is all well documented by Wall Street Journal reporter Ellen Schultz in http://www.retirementheist.com.
In the “private sector” there are massive public subsidies… our current President grew rich on HUD subsidies. Same with William McGuire, who grew rich off of Medicare and Medicaid subsidies from the taxpayer.
The goal of the private sector is to grab taxpayer subsidies for themselves, to endeavor to buy off prosecutors, regulators, the military, and law enforcement, and get befuddled people like you to conduct a propaganda operation to falsely claim there is a “market rate”. Ask Mick Mulvaney how to do it.
February 14, 2018 at 9:44 am
spension,
You’re trying to justify one WRONG (the gross overcompensation of Public Sector workers vs that granted their Private Sector counterparts ….. via their ludicrously excessive pensions & benefits) with a completely unrelated other WRONG.
That called attempting to DISTRACT THE READERS’ focus from the issues under discussion.
It’s not working.
February 14, 2018 at 10:37 am
Well, Tough Love you are the one that related private sector retirement compensation with that in the public sector compensation, not me!
The fact is that private sector (rank and file) retirement compensation was greatly reduced because CEOs and other execs drained the pension funds of private companies, usually by adding their own $10 million/year pensions to the funds, and then declaring the fund bankrupt (after they drained). All documented in The Retirement Heist.
So you are using the corrupt looting of the private sector pension system to justify elimination of the public DB system, well, elimination of DB for those whose politics you disagree with… but you never call for elimination of DB for military, safety, etc.
And you never seem to notice the vast corruption in the private and military sectors in the US. All other readers notice that, you are somehow selectively blind to that corruption.
For me.. for sure, lots of corruption in the public sector… maybe as much as 1/3 as bad as private sector corruption.
February 14, 2018 at 1:17 pm
spension,
Just MORE attempt to distract and re-direct the focus……….
The ISSUE under discussion is ………… the gross overcompensation of Public Sector workers TODAY vs that granted their Private Sector counterparts ….. via their ludicrously excessive pensions & benefits.
February 14, 2018 at 4:32 pm
“….vs granted their Private Sector counterparts”… by the fraud, crime, and theft of Private Sector execs, as exhaustively documented by Wall Street Journal Pulitzer Prize Winner Ellen Schultz in the Retirement Heist… http://www.retirementheist.com .
Your benchmark comparison is a distraction that everyone ignores. Private Sector Executives ruined the Private Sector retirements system because *Private Sector Executives* granted *themselves* $600 million+/per executive benefits (like William McGuire).
Tough Love, you just want to distract readers from the truth that your comparisons are completely irrelevant, corrupt, and involve fraud at a level far higher than anything the public sector has done.
And you really just want to give your friends in safety and the military gross overcompensation… you have no logical argument against overcompensation *if your buddies and you get it*.
February 14, 2018 at 5:35 pm
spension,
Since you’re not “getting it”, lets try again………
———————–
No spension,
The “bottom line” is that “market rate” compensation is set by the 85% of all workers who are employed by in the Private Sector, where employers freely compete for talent, unencumbered by the underhanded dealings and Union/Elected-Official COLLUSION that is rampant in the Public Sector and distorts compensation levels.
Unless there are demonstrably lower wages for a Public Sector worker in the same job (or one requiring similar experience, education, skills, and knowledge) as a Private Sector worker (and then only after adjusting for hours worked and “productivity” where measurable), there is ZERO justification for ANY greater pensions or benefits.
The taxpayers have grown weary of being the “suckers” in the equation.
February 14, 2018 at 6:00 pm
Sigh… talk about not getting it… you are a broken record, Tough Love, defending the corruption that overcompensates your buddies, while you trash good people who you politically disagree with.
I’m completely happy if every debt category (every single one, from contract obligations to bond coupon payments to all pensions and all salaries) owed by the State of California gets marked down by exactly the same amount.
Within a category, cut payments to people with lowest assets and income the least, and payments to people with highest assets and income the most.
Tough Love, you want the richer to have debts to them honored (like bondholders), while debts to the poor (like my 6th grade teacher, worked 42 years for her $55K/year pension) are defaulted on. Sigh.
I’m beginning to suspect you are Russian bot, programmed to hate the USA.
February 14, 2018 at 8:50 pm
spension
I win !
I made a bet with a friend that withing 3 more comments you would (for at least the hundredth time) bring up your 6-thgrade teacher.
Talk about a broken record……….. lol
February 15, 2018 at 8:50 am
No, I win. I had a bet that you would never post an original idea that involved human thought. I won big time, according to a board of clinical psychologists, who have indeed determined that you are Russian bot that has never set foot in California.
February 15, 2018 at 9:07 am
Once again, spension is spot on and correct. Private sector compensation is no model to follow — at the working level, they have been undercompensated for decades. Look at this chart:
The chart shows that despite rising productivity, companies are not rewarding their employees with wages commensurate with their increasing output. Essentially corporations have been skimming money off of their worker’s backs and funding lavish pay and golden parachutes for the guys at the top. And then there’s the stock buyback scam: CEO’s often have stock options. Use revenues to buy back stock (instead of paying your workers more) to boost the stock price, which inflates the value of the CEO’s options, who in turns laughs all the way to the bank.
Brian Roberts is the CEO of Comcast and makes $33 mil a year. Is that really necessary? Makes the “outrageous” $100k+ public sector pension look like peanuts. How about paying Roberts a nice salary of $1 mil a year (plenty to live on) and using the $32 mil to fund better salaries and pensions for his workers?
TL thinks that pension reform is only needed on the public side while the private side is the perfect model to follow. I suppose that’s true if your ultimate goal is to have zero retirement security for most people.
February 15, 2018 at 10:16 am
CalPERSon,
I don’t disagree with the divergence of productivity and earnings in the Private Sector. Clearly that’s partly behind the rise of the ratio of the very large company CEO compensation to that of their average worker for about 25 times in the early 1970s to over 300 times today.
But that ignores a VERY big problem …….. BECAUSE of the out-sized Public Sector permissions & benefits (vs their Private Sector counterparts), Public Sector Total Compensation (wages + pensions + benefits) greatly exceeds that of the Private Sector, yet RIGHT NOW, those LOWER compensated PRIVATE Sector workers are responsible via pension contribution (and the investment earnings on those contributions) for 80% to 90% of the total cost of those out-sized Public Sector pensions.
That’s an untenable situation ……. and WILL blow-up …… and hiding one’s head in the sand will NOT a stop it.
February 15, 2018 at 5:18 pm
Tough Love says… “Clearly that’s partly behind the rise of the ratio of the very large company CEO compensation to that of their average worker for about 25 times in the early 1970s to over 300 times today.”
but Tough Love overlooks that the CEOs *also* drained the average worker’s pension funds through corruption, as documented in http://www.retirementheist.com. Making any use of private sector rank-and-file retirement benefits useless.
Of course many public pension systems, most prominently that of the US Military, are in terrible trouble. But Tough Love nor any Pension Hawks ever mention the US Military.
I’ve not hid my head in the sand… but why does the US continue to make Treasury Bond coupon payments to China with not threat of a haircut on the Chinese… the only haircuts are threatened to non-Military retirees, and Social Security & Medicare recipients. I’ve many times proposed haircuts for all… rich folks and foreigners who hold US and California debt should be just as subject to cuts as poor US citizens.
Because the whole thing is not about the money but about politics. Tough Love and other pension hawks don’t really want to solve financial problems.
They all just want to whomp on political foes.
February 15, 2018 at 7:29 pm
spension,
Brilliant spension absolutely “brilliant” …. a suggestion for the US Gov’t to default on US treasury Notes & Bonds.
LOL
February 16, 2018 at 8:33 am
You are an advocate of default, just on contractual obligations to US citizens, Tough Love. But you want to leave payments to the foreigners in China and Japan intact.
February 16, 2018 at 3:32 pm
No spension, I advocate to freeze, or if not possible, to VERY (think 50+%) materially reduce the value of FUTURE service Public Sector pension accruals because they are right now 2 to 4 times (4 to 6 times for Safety workers) greater in value upon retirement than those granted comparable Private Sector workers who retire with the SAME wages, the SAME years of service, and at the SAME age.
February 16, 2018 at 6:46 pm
Sorry, “freezing” COLAs is the equivalent of the US government defaulting on Treasury Inflation Protected Securities. You are in favor of a form of default, but only to US Citizens who hold existing contracts.
February 16, 2018 at 9:55 pm
spensions,
Oh I’m not just looking to freeze Public Sector pension Plan “COLAs”.
That’s a given considering that Private Sector Plans almost NEVER include COLA increases. I’m calling for a hard freeze on the ENTIRE Public Sector DB Pension Plan ……. ZERO future growth.
For FUTURE service they should be replace with something (a Cash Balance Plan or a 401K-style DC Plan) where the Taxpayer contribution is EQUAL TO (but no greater than ) what Private Sector workers typically get in retirement security contributions from their employers.
That’s called FAIR & EQUAL.
The Taxpayers are tired of being the “sucker” in the equation.
February 17, 2018 at 8:40 am
In direct language, Tough Love, you want the State and US governments to default.
February 17, 2018 at 10:52 am
Spension …………. re-read my last above comment (THAT is what I call for) …….. and stop telling ME what I want.
February 17, 2018 at 3:29 pm
In that post you say that you want the State and US governments to default on their obligations to US citizens, by not honoring contracts for COLAs on existing pensions. Same as if the US government defaulted on Treasury Inflation Protected Securities.
You oppose defaulting on debt to foreigners in… China, Japan, Ireland, the Cayman Islands, Luxembourg, Belgium, Brazil, Switzerland, Hong Kong, Taiwan, Saudi Arabia, and India.
That you support default on US obligations to US citizens while you oppose default to foreigners is evidence that you are really a foreign (most likely Russian) bot, intentionally disrupting the US.
February 17, 2018 at 7:55 pm
Sorry spension but “default” commonly refers to the non-payment of Bond interest or principle.
I’ll make it REAL simple for you …….. Freeze Current Public Sector DB Plans.
No “default” is involved. They just don’t won’t get more accruals for FUTURE service. And FYI, it’s perfectly legal and done all the time in Private Sector pensions.
What make Public Sector workers so “special” that they should get greater protection form a freeze or reduction than the Private Sector Taxpayers who are now responsible for 80% to 90% of Total Public Sector Pension Plans costs ?
—————————-
I oppose defaulting on US treasuries (to any of the holders of those NOTES/BONDS) because doing so could trigger a worldwide financial meltdown. Sounds like you wish for that to happen, but it wouldn’t be pretty. Besides those who simply LENT the US Gov’t money by buying these BONDS didn’t hoodwink, collude, or cheat the issuers of that debt ……….. unlike Public Sector Unions/workers who indeed hoodwinked, colluded, and cheated to get the out-sized pensions they now enjoy.
February 18, 2018 at 8:45 am
Sorry TL but any time any Government fails to make a payment that it is contractually obligated to make, that is a default.
You have said you want default by our Governments on future COLAs to US Citizens hat are dictated by a contractual obligation.
Japan (in WWII) and China (in Korea) killed and tortured US Citizens. You want to tax US Citizens to keep paying those foreigners, but you want to default on obligations to US Citizens.
That proves who you are really working for, just like Trump and the Republicans work for Russia.
February 18, 2018 at 11:28 am
As part of the eminently justifiable freeze or reduction in (the current ludicrously excessive) Public Sector pensions Plans, elimination of COLA increases seems fair and appropriate because Corporate Employer-sponsored Private Sector Plans almost never include COLA increases (which get us back to the ….. you’re NOT “special” argument).
Because Social Security is COLA-increased, the ONLY segment of Public Sector pensions that might justifiably be COLA-increased is for the pensions of Public Sector employees who do NOT participate in SS, and then ONLY for the share of their pensions not exceeding the Maximum SS payment (about $32K for 2017 retirees).
But I’m sure you will disagree …….. as you always do, fair and equal never being a reasonable goal for you.
February 18, 2018 at 4:16 pm
I’m for governments respecting financial contracts… maybe you think that isn’t fair or equal.
If US local and federal governments find they can’t pay their debts, I say spread out the haircut fairly and equally.
Tough Love, you put US financial contracts to foreigners in China and Japan, who weren’t just corrupt but in WWII and Korea killed and tortured US Citizens, ahead of US financial contracts to US taxpayers.
And somehow that is fair and equal in your mind.
Taxing US citizens to pay foreigners while allowing the US governments to default on their payments to US citizens is fair and equal to you.
Not to me.
February 18, 2018 at 7:54 pm
Quoting spension …………..
“I’m for governments respecting financial contracts”
So am I …………. EXCEPT when NOBODY at the negotiating table was looking out for the Taxpayers best interests, and the Public Sector Unions BOUGHT the favorable votes of Elected Officials with BRIBES disguised as campaign contributions and election support.
February 19, 2018 at 11:50 am
Your usual tiresome excuse, Tough Love. You fancy yourself judge and jury, but it is not you, it is the courts who decide whether any given contract is of corrupt origin.
Meanwhile, you make no exception for Treasury Bonds held by countries that tortured and killed US soldiers during WWII and Korea… China still imprisons and tortures perceived US sympathizers today… and you want to respect US financial contracts with those governments.
As for corruption, look how your beloved private sector stole the pension funds of rank-and-file workers in the private sector, and transferred their assets to the private sector executives… documented by Pulitzer Prize winner Ellen E. Schultz in http://www.retirementheist.com.
You love corruption in the private sector that you seek US Government default on financial obligations just so the public sector pensions can be reduced to the levels achieved by US private sector corruption.
Corruption is what you love, and for those who dislike corruption like myself, your reaction is, “tough”.
February 19, 2018 at 3:20 pm
Excuse? No excuse and nothing to be excused for. By calling to a freeze (or very material reductions) in future service Public Sector pension accruals, I looking to right a wrong, while you’re looking to perpetuate it.
I’ll repeat it for you…. eventually it might sink in::
————————————————-
Quoting spension……….
“I’m for governments respecting financial contracts”
So am I …………. EXCEPT when NOBODY at the negotiating table was looking out for the Taxpayers best interests, and the Public Sector Unions BOUGHT the favorable votes of Elected Officials with BRIBES disguised as campaign contributions and election support.
February 19, 2018 at 3:48 pm
Quoting spension ………
“Meanwhile, you make no exception for Treasury Bonds held by countries that tortured and killed US soldiers during WWII and Korea… China still imprisons and tortures perceived US sympathizers today… and you want to respect US financial contracts with those governments.”
Clearly you are calling for the US Gov’t to default on it’s deb’t obligation (e.g., Treasury Bonds), apparently unaware (or unconcerned) with the consequences of such actions. Do you realize that 40% of ALL Federal Gov’t expenditures are paid for with BORROWED funds. What would happen if no one would lend the US money because we were untrustworthy ?
I’ll get right to the point…….. you’re a fruitcake.
February 19, 2018 at 4:40 pm
Your usual tiresome excuse… if there were bribes and corruption, take your case to court. That you don’t proves you don’t really mind lies and corruption, which of course pervade the private sector, as well as the entities that receive bond payments from the US government.
February 19, 2018 at 6:27 pm
Spension,
Take your fight to Congress. Reflect on the looks you get when suggesting that the US default on it’s Treasury Bond debt.
Fruitcake.
February 20, 2018 at 8:32 am
TL says… “What would happen if no one would lend the US money because we were untrustworthy ?”…. well, you are the one who repeatedly states that US (state & federal) debt decisions are dominated by corruption. There should be no illusion on the part of lenders… you should tell every single one that they are lending to a corrupt institution, and consequently they should expect a default.
February 20, 2018 at 2:14 pm
Quoting spension ………..
“well, you are the one who repeatedly states that US (state & federal) debt decisions are dominated by corruption. ”
Seems like you are again putting words in my mouth. SHOW THE READERS where I stated the above, particularly with respect to “debt decisions”.
I’ve like stated that there is plenty of corruption in Corporate America, but certainly NOT ………… “that US (state & federal) debt decisions are dominated by corruption.
Since you said that I stated the above “repeatedly”, I’ve leave it that unless you can prove I did so by providing a link to such statements ….. that you are a liar.
February 21, 2018 at 12:01 pm
Tough Love 2/17/2018 here… “.. unlike Public Sector Unions/workers who indeed hoodwinked, colluded, and cheated to get the out-sized pensions they now enjoy.” Those out-sized pension are paid by government (through legal instruments) **DEBT**.
That is just one of the many examples you’ve posted through the years.
Sorry, Tough Love, the BS meter is screeching from detecting your misdirection… you say public pensions are the result of corruption but other government debt is pure as the driven snow. Haha.
February 21, 2018 at 6:05 pm
spension,
I called you out for saying that I repeatedly stated ……..”that US (state & federal) debt decisions are dominated by corruption. ”….
Now, somehow you think that my above-quoted statement that …………….. “Public Sector Unions/workers who indeed hoodwinked, colluded, and cheated to get the out-sized pensions ” ………… constitutes what you accused me of saying.
Spension, you indeed are a fruitcake and continuing this discussion with a “fruitcake” is ridiculous.
Enjoy the rest of your irrational existance.
February 22, 2018 at 7:21 am
Haha, when you are wrong on the facts, you name call, TL. And misspell…. “exi-stance” haha. What is ridiculous: supporting corrupt grabs of taxpayer money by the private sector, while exclusively focusing on grabs by your political enemies. For you it is not about solid, rational public policy, but about corruptly grabbing taxpayer dollars for yourself and your buddies.