Thread: Federal pension systems’ unfunded liabilities skyrocket

OB,

I would like the option to drop the pension for a one-time infusion into TSP and a greater match percentage. I do not want to be forced to buy 'G Fund' assets managed by politicians...

I think they fail to give us credit for past funds paid into FERS. I believe the FER's retirement fund has a large amount of cash, however that money was spent by Congress each year to cover the deficit, and issued treasury IOU's just like Social Security.

Think about it, FERS started in 84? and other than a few special cases, no one was eligible to retire for 20 year. So there were 20 years of funds paid in. Now this year, FER's is paying out more than it brought in "this year." I believe our "trust fund" has 800 billion to a triillion dollars in it, or at least on paper.

Now CSRS, that is a different story, it was never "pre-funded" like FER's, so it have a deficit with no money in the bank.

Those Congressman need to fair and tell the whole truth. They spent the FER's money, that is why there is an unfunded liability. Don't penalize us for your failures. Maybe we should seize their assets to pay back Social Security and FERS?

Here is a quote from an article on Business Insider in Oct 2012, they feel FER's is a drag on the budget, however, they admit is has a surplus, albeit on a piece of paper

-FERS has a trust fund. Currently there is $775b of Special Issue Treasury securities in the fund. This is equivalent to 6% of our total debt and is therefore a very big deal. FERS holds as much of our paper as do the Chinese and the Federal Reserve.

WARNING: The Federal Employees Pension System Is Running An Even Bigger Deficit Than Social Security - Business Insider

Originally Posted by Kaufmanrider

I think they fail to give us credit for past funds paid into FERS. I believe the FER's retirement fund has a large amount of cash, however that money was spent by Congress each year to cover the deficit, and issued treasury IOU's just like Social Security.

Think about it, FERS started in 84? and other than a few special cases, no one was eligible to retire for 20 year. So there were 20 years of funds paid in. Now this year, FER's is paying out more than it brought in "this year." I believe our "trust fund" has 800 billion to a triillion dollars in it, or at least on paper.

Now CSRS, that is a different story, it was never "pre-funded" like FER's, so it have a deficit with no money in the bank.

Those Congressman need to fair and tell the whole truth. They spent the FER's money, that is why there is an unfunded liability. Don't penalize us for your failures. Maybe we should seize their assets to pay back Social Security and FERS?

Here is a quote from an article on Business Insider in Oct 2012, they feel FER's is a drag on the budget, however, they admit is has a surplus, albeit on a piece of paper

-FERS has a trust fund. Currently there is $775b of Special Issue Treasury securities in the fund. This is equivalent to 6% of our total debt and is therefore a very big deal. FERS holds as much of our paper as do the Chinese and the Federal Reserve.

WARNING: The Federal Employees Pension System Is Running An Even Bigger Deficit Than Social Security - Business Insider

Did you read the article?
Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times



They didn't spend the money. The ONLY thing that changed was that they lowered the expected earnings on the fund by 0.5%. That changed it from a FERS surplus to a slight deficient. The FERS program is fundementally sound. There is nothing wrong with FERS that a slight tweak would not fix.

Yep it looks like they should decrease those CSRS retiree's retirement by about 50% they are sucking the economy dry! It's all their fault and they should pay, the blood suckers.

Originally Posted by James48843

Did you read the article?
Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times



They didn't spend the money. The ONLY thing that changed was that they lowered the expected earnings on the fund by 0.5%. That changed it from a FERS surplus to a slight deficient. The FERS program is fundementally sound. There is nothing wrong with FERS that a slight tweak would not fix.

Yes I read it, and it doesn't mention the Retirement Trust Fund, and the amount of money with interest in it. FER's would be solvent for years, even with a change in the formula. Wonder why? They are trying to blame Federal Employees for their waste of our money, again. They act like it does exist. But it is counted as part of the 16 trillion dollar debt. It is simply IOU's like Social Security. Republicans tend to forget about the Soc Sec Trust Fund and FERS Pension Trust Fund. Probably, because it only exists on paper.

"The Federal Employees Retirement System slipped back into the red. FERS held a projected $12.2 billion surplus at the end of fiscal 2010 — its first in four years. But one year later, FERS reported a $20.1 billion unfunded liability."

This makes the general public believe FERS is draining the budget, when it is not.

http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm

Intragovernmental Holdings - Just under one-third of the Federal debt is owed to about 230 other Federal agencies. How does this happen? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need right now. Rather than stick this cash under a giant mattress, these agencies buy U.S. Treasuries with it.
Which agencies own the most Treasuries? Social Security, by a long shot. Here's the detailed breakdown:

• Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.72 trillion
• Office of Personnel Management (Federal Employees Retirement, Life Insurance, Hospital Insurance Trust Funds, including Postal Service Fund) - $1.12 trillion
• Dept. of Health and Human Services (Federal Supplementary Medical Insurance Trust Fund) - $69 billion
• Federal Deposit Insurance Corporation - $35 billion
• Department of Transportation (Airport and Highway Trust Fund) - $20 billion
• Department of the Treasury (Exchange Stabilization Fund) - $23 billion
• Department of Labor (Unemployment Trust Fund) - $21 billion
• Other Programs and Funds - $933 billion. (As of September 2012. Source: Treasury Bulletin, Monthly Treasury Statement, Table FD-3:Government Account Series)

Originally Posted by James48843

Did you read the article?
Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times



They didn't spend the money. The ONLY thing that changed was that they lowered the expected earnings on the fund by 0.5%. That changed it from a FERS surplus to a slight deficient. The FERS program is fundementally sound. There is nothing wrong with FERS that a slight tweak would not fix.

Congress, senate is lying, stealing from FERS and posturing. The son of FERS will be only TSP and social security. I think the youth will have to prepare for this if they wish for a job in gov't.

I don't think the fine Illinois state employees ever saw this coming:

Yesterday, however, the Illinois House of Representatives finally a passed a bill that looks like the state’s best hope for a solution. The measure aims to increase the funding level of pensions for state workers by forcing workers to pay more into the system, reducing annual cost-of-living increases, raising the eligibility age, and capping pensionable income.

But, then again, when unions demand higher compensation from politicians unwilling to pay them - and, then accept promises of future compensation from future politicians - I begin to wonder. Can anyone say Ponzi Scheme. Apparently the music stopped in Illinois and the late blooming state employees are rushing to the remaining chairs. They knew it was coming. We know our time is coming. Is the FERS pension funded? If so, can we look at our lock box? Or is it a funding line?

Just asking...

Originally Posted by nnuut

Yep it looks like they should decrease those CSRS retiree's retirement by about 50% they are sucking the economy dry! It's all their fault and they should pay, the blood suckers.

Great idea nnuut! Send 50 percent of your annuity to me and I promise to get it back in to the economy.

PO

FERS has already been changed last year. New hires and employee's under so many years service pay more and get less. We current old guys have been grandfathered in just like the CSRS guys were or else you would have had a massive revolt. State workers in Illinois knew this was coming and it is the only solution without a bailout from the Feds. They are fighting the battle but it is more a act than anything of substance. Same for the Postal Service, Dick Durbin told Quincy, IL that their processing plant would never shut down, guaranteed, until they shut down the old plant in the State capital and then Quincy was under the bus. They stroked Columbia, Mo too and now they are on the block. It is what it is and they are doing what they have to do, so it seems. Good luck and don't put all your eggs in one basket.

Originally Posted by Boghie

I don't think the fine Illinois state employees ever saw this coming:



But, then again, when unions demand higher compensation from politicians unwilling to pay them - and, then accept promises of future compensation from future politicians - I begin to wonder. Can anyone say Ponzi Scheme. Apparently the music stopped in Illinois and the late blooming state employees are rushing to the remaining chairs. They knew it was coming. We know our time is coming. Is the FERS pension funded? If so, can we look at our lock box? Or is it a funding line?

Just asking...

I love how this topic always seems to bring surprise to decision makers and outrage to investors.

Pension funds thought the rising tide that began with 401k plans around 1980 would take them right into the sunset with minimal contributions. They never factored in the idea that stocks might not return 8% a year (or that housing would collapse).

Originally Posted by Bullitt

I love how this topic always seems to bring surprise to decision makers and outrage to investors.

Pension funds thought the rising tide that began with 401k plans around 1980 would take them right into the sunset with minimal contributions. They never factored in the idea that stocks might not return 8% a year.

Yes, and by the TSP telling us in our annual statements that 8% was reasonable return, they led us early FERS (young, not market-savvy) folk in the late 80s-through the 90s to believe we'd be doing ok by the time retirement age arrived. Not til the mid-late 00s did I begin seeing articles about underfunded fed retirement liabilities, both CSRS and FERS. 20 years slipped by with TSP putting forward erroneous overestimates of expected returns in our annual statements. Wish I could look some of those people in the eye, but they probably wouldn't have the guts to look me back.

The housing bubble only had relevance to me at the time because it made it too expensive for me as lower-end existing homeowner from before the bubble (and one who only deals in 15 or 30-year fixed rate mortgages) to jobhunt/relocate to communities with homes similar to current one-from 2003 onward til now. Right about now is finally when I could find something similar elsewhere (elsewhere that I'd want to be) that would be near in price to what I have now. I don't want another mortgage when I move again if can help it, I'm socking those funds away these days to max out TSP and Roth to extent I can each year from here forward. Retirement date is a siren calling me. no intention of ending up on the rocks.