Thread: The Great Pension Deficit

Originally Posted by Bullitt

Ready for it? Sooner than later the retirement age will be raised at least 5 years.

I just don't see any way possible, unless there is some unknown unknown out there waiting to be discovered, for us to cover our deficits in the pension arena. .

At the risk of being called a conspiracy theory guy- there is a different solution....

I am waiting for Glenn Beck to announce that he's figured it out-- Pension shortfalls? It's Obama's fault! and that Obama has decided instead of raising the retirement age, he's simply going to direct the Death Panels to start the killing of the elderly sooner.

I bet we hear that soon.

Originally Posted by OBGibby

When many state and local police officers and firefighters have the ability to make more per year in pension retirement than they made while on the job, eventually that bill will have to come due. Thanks Unions!

Unions are the reason that Pensions even exist.

Without Unions- there would be no pensions. Period.

• Pension plans won by Unions:

Standard Oil of New Jersey (1903); U.S. Steel Corp. (1911); General Electric Co. (1912); American Telephone and Telegraph Co. (1913); Goodyear Tire and Rubber Co., (1915); Bethlehem Steel Co. (1923); American Can Co. (1924); and Eastman Kodak Co. (1929).

Unions continued to push for help for the poor and elderly across America-

• 1935 -- President Franklin D. Roosevelt signed the Social Security Act.
• 1938 -- The Revenue Act of 1938 established the nondiversion rule and made pension trusts irrevocable.
• 1940 -- 4.1 million private-sector workers (15 percent of all private-sector workers) were covered by a pension plan.
• 1940 -- The Investment Advisors Act of 1940 required delegation of investment responsibilities only to an adviser registered under the act or to a bank or an insurance company.
• 1942 -- The Revenue Act of 1942 tightened coverage standard qualifications, limited allowable deductions, and allowed integration with Social Security.
• 1946 -- The United Steelworkers of America made pensions an issue in their strike against Inland Steel. At this time, the National Labor Relations Act did not cover pensions. Steelworkers Local 1010 in Indiana Harbor took the issue to the National Labor Relations Board.
• 1947 -- Labor-Management Relations Act of 1947 (LMRA or "Taft-Hartley" Act) provided fundamental guidelines for the establishment and operation of pension plans administered jointly by an employer and a union.
• 1948 -- The National Labor Relations Board ruled that Congress intended pensions to be part of wages and that they fell under "conditions of employment" mentioned in the act, although this was not specifically defined.
• 1950 -- General Motors (GM) established a pension plan for its employees. GM wanted to self-fund their pension plan because they wanted to invest in stocks. State law prohibited insurance companies from investing pension assets in stocks. The 1950s saw a bull market caused by the release of pent-up demand, due to wartime restrictions and the need to rebuild Europe and Japan.
• 1950 -- 9.8 million private-sector workers (25 percent of all private-sector workers) were covered by a pension plan.
• 1958 -- Welfare and Pension Plan Disclosure Act of 1958 established disclosure requirements to limit fiduciary abuse.
• 1960 -- 18.7 million private-sector workers (41 percent of all private-sector workers) were covered by a pension plan.
• 1962 -- The Welfare and Pension Plan Disclosure Act Amendments of 1962 shifted responsibility for protection of plan assets from participants to the federal government to prevent fraud and poor administration.
• 1962 -- The Self-Employed Individual Retirement Act of 1962, also known as the Keogh Act, made qualified pension plans available to self-employed persons, unincorporated small businesses, farmers, professionals, and their employees.
• 1969 -- The Tax Reform Act of 1969 provided fundamental guidelines for the establishment and operation of pension plans administered jointly by an employer and a union. The act provided that part of a lump-sum distribution received from a qualified employee trust within one taxable year (on account of death or other separation from service) was given ordinary income treatment instead of the capital gains treatment it had been given under prior law. Under this act, the bargain element on the exercise of statutory options is a tax preference item, unless the stock option is disposed of in the same year the option is exercised.
• 1970 -- 26.3 million private-sector workers (45 percent of all private-sector workers) were covered by a pension plan.
• 1974 -- The Employee Retirement Income Security Act of 1974 (ERISA) was enacted. ERISA was designed to secure the benefits of participants in private pension plans through participation, vesting, funding, reporting, and disclosure rules. It established the Pension Benefit Guaranty Corporation (PBGC). ERISA provided added pension incentives for the self-employed (through changes in Keoghs) and for persons not covered by pensions (through individual retirement accounts (IRAs)). It established legal status of employee stock ownership plans (ESOPs) as an employee benefit and codified stock bonus plans under the Internal Revenue Code. It also established requirements for plan implementation and operation.
• 1975 -- The Tax Reduction Act of 1975 established the Tax Reduction Act stock ownership plan (TRASOP) as an employee benefit.
• 1978 -- The Revenue Act of 1978 established qualified deferred compensation plans (sec. 401(k)) under which employees are not taxed on the portion of income they elect to receive as deferred compensation rather than direct cash payments. The act created simplified employee pensions (SEPs) and changed IRA rules.
• 1980 -- The Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") increased multiemployer pension plan premiums and provided for payment of liability to plans for contributing employers who withdraw during the year in which the plan is less than fully funded, thereby effectively shifting primary risk of underfunding from the PBGC to contributing employers.

Union Workers Have a ‘Union Advantage’ in Pensions

Because they have a voice at work, union workers have a “union advantage” in benefits and are much more likely to have pensions—and good pensions—than nonunion workers.

Seventy-nine percent of union workers are covered by pension plans, compared with 44 percent of nonunion workers.

And 70 percent of union workers have defined-benefit retirement coverage, compared with 16 percent of nonunion workers.

Your employer and in some cases your union can provide details about your own pension plan, but many online resources can help you keep an eye on your future retirement security.

UNION WORKERS ARE MORE LIKELY TO HAVE
HEALTH AND PENSION BENEFITS, 2005



Source: http://www.aflcio.org/issues/retirem...nefitpensions/

Correct and they are the folks that negotiated weekends, holidays, and overtime pay and I am thankful every two weeks. BUT, they are also the folks that protect the trouble makers and can be completely obstructive to operations and profitability while staying just within the boundaries of being legal. It is funny that line between what is legal, ethical, and just right.

It is a double edged sword.

Originally Posted by James48843

Unions are the reason that Pensions even exist.

Without Unions- there would be no pensions. Period.

The lobbiest and lawmakers figured a way around the pension a long time ago and instead of legislating that a company set up a pension fund and full fund it, they created yet another government entity called the Pension Benefit Guaranty Corporation (PBGC).

Ask the folk at the old United Airline how much their pensions got wacked.

PBGC is like the FDIC, used and abused to the point of broke.

http://online.barrons.com/article/SB...el_article%3D1

THE PROSPECTS ARE BLEAK for many state and local governments as a result of all this. According to a survey last month by the Pew Center on the States, a nonpartisan research group, eight states -- Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia -- lack funding for more than a third of their pension liabilities. Thirteen others are less than 80% funded.

Governments could fill that gap by raising property, sales and income taxes, but most are wrestling with huge revenue shortfalls in trying to balance their budgets.

The more likely outcome is dramatic cuts in essential services, such as police and fire protection, health spending, education and infrastructure improvements, in order to cover ballooning pension payments. State and municipalities, after all, must do something: Most have a legal obligation to pay out earned pension benefits. And some don't even have the courage to switch new teachers, bureaucrats and police to a defined-contribution system, to prevent the funding problem from worsening as time rolls on.

You think Illiniois has budget problems, HA, look who tops the list.

James,

The same old tired union cheerleading which totally sidestepped the point I made in my original post...The point I was making was that many local and state pensions are straining under unmanageable pension obligations that they promised to police and firefighters (thanks to their unions). No matter how you do the math, when a cop makes a salary of $60K per year, but brings in $80K per year in pension retirement, it spells trouble. Somebody has to pay for that, and that somebody is Joe Taxpayer.

Folks,

The politicians (Local, State, and Federal) will end up jiggering the pension payouts...
It will be 'for the children'!!!

They will kick the can till the can bangs off a wall. Then the electorate will force a crack down. And, when you force change on a retirement system in a short timeframe very bad things happen. And, folks, we ain't a majority. My guess is that the can is flying to a wall about 4 - 6 months out.

This 'Great Recession' will force the gubmint to trim. The FED tried to inflate the market and get the party going again (in a sustained rate). The Federal Government tried to buy more booze off the credit card and now all the boozers are broke and the hangover is here. And, the populace are going through 'enablers class' They will not pay for the party supplies. Laws can be changed!!!


Now, something nice. Our TSP accounts cannot be jiggered. It is in our little grubby lock box. However, our pensions can be 'adjusted'. Expect them to be.