Looting the Pension Funds

[carlfense]

Later, a Pew report claimed that the national "gap" between pension assets and future liabilities added up to some $757 billion and dryly insisted the shortfall was unbridgeable, minus some combination of "higher contributions from taxpayers and employees, deep benefit cuts and, in some cases, changes in how retirement plans are structured and benefits are distributed."

 

What the study didn't say was that this supposedly massive gap could all be chalked up to the financial crisis, which, of course, had been caused almost entirely by the greed and wide-scale fraud of the financial-services industry – particularly with regard to state pension funds.

 

A study by noted economist Dean Baker at the Center for Economic Policy and Research bore this out. In February 2011, Baker reported that, had public pension funds not been invested in the stock market and exposed to mortgage-backed securities, there would be no shortfall at all. He said state pension managers were of course somewhat to blame, but only "insofar as they exercised poor judgment in buying the [finance] industry's services."

 

In fact, Baker said, had public funds during the crash years simply earned modest returns equal to 30-year Treasury bonds, then public-pension assets would be $850 billion richer than they were two years after the crash. Baker reported that states were short an additional $80 billion over the same period thanks to the fact that post-crash, cash-strapped states had been paying out that much less of their mandatory ARC payments.

 

So even if Pew's numbers were right, the "unfunded liability" crisis had nothing to do with the systemic unsustainability of public pensions. Thanks to a deadly combination of unscrupulous states illegally borrowing from their pensioners, and unscrupulous banks whose mass sales of fraudulent toxic subprime products crashed the market, these funds were out some $930 billion. Yet the public was being told that the problem was state workers' benefits were simply too expensive.

http://www.rollingstone.com/politics/news/looting-the-pension-funds-20130926page=3#ixzz2g1hHrldE

[sd'sker]

it is so fun to blame the victims.

[BigRedBuster]

Pensions are the absolutely dumbest retirement plan ever invented.

[carlfense]

Pensions are the absolutely dumbest retirement plan ever invented.

Did you read the article? Or are you just adding this to the discussion?

[carlfense]

it is so fun to blame the victims.

Blame the victims and transfer more money to the "job creators." You could almost craft a party platform out of that.

[Conga3]

Pensions would be illegal in Conga World. Both public and private.

 

Collective differed compensation is fundamentally a flawed concept.

 

*** reading article ***

[BigRedBuster]

Pensions are the absolutely dumbest retirement plan ever invented.

Did you read the article? Or are you just adding this to the discussion?

 

 

I didn't because discussions about pensions just simply make my head explode due to the pure stupidity around them from every direction.

[carlfense]

I didn't because discussions about pensions just simply make my head explode due to the pure stupidity around them from every direction.

Would you elaborate?

[Conga3]

Meh. The author tried, but got too distracted by "right-wing" conspiracies to come to a proper conclusion.

 

It'd be nice to see someone like him - who did some research - just ask the question, 'should we be compensating state workers with pensions'?

 

​That might be considered blasphemy in his circles, though.

[sd'sker]

Meh. The author tried, but got too distracted by "right-wing" conspiracies to come to a proper conclusion.

 

It'd be nice to see someone like him - who did some research - just ask the question, 'should we be compensating state workers with pensions'?

 

​That might be considered blasphemy in his circles, though.

seems like the author did not want to entertain a philosophical debate on the value or purpose of pensions, but rather convey how a contractual obligation was completely ignored and abused.

[BigRedBuster]

I have before but I guess I will do it again.

 

As an employee.....do you REALLY want to have a retirement fund that is reliant on your employer funding the fund and ultimately having control over that? Do you really want someone else in control of that when you are old enough that you no longer have the ability to earn money if something goes wrong?

 

As an employer....do you REALLY want the responsibility of funding a retirement fund even AFTER that employee doesn't work for you anymore?

 

All this works just hunky dorry if the company is chugging along and there is cash flowing in every direction and you can trust the company who is doing it (NOT). BUT, what happens when the company starts to struggle, sales are lower, the company isn't anywhere close to as big as they used to be and you end up with a relatively small number of employees working trying to fund, not only their own future retirement, but support all these past retirees.

 

This all was a huge part of the problem with the auto industry in the US. Not only did they have a huge amount of regular retired people but they also had people the had offered EARLY retirement to and they had relatively small number of employees trying to support all them in a company that was going broke.

 

It is absolute pure 100% stupidity.

 

Good article on this subject as it pertains to Detroit city workers:

 

LINK

 

(after reading that, the sound you just hear was my head exploding)

 

Making or allowing an individual or organization responsible for paying for your retirement after you no longer are there just plain doesn't work.

 

When you quit working, you need to have the funds you need for retirement (plus SS if it is still there and a part time job if needed).

[Conga3]

Meh. The author tried, but got too distracted by "right-wing" conspiracies to come to a proper conclusion.

 

It'd be nice to see someone like him - who did some research - just ask the question, 'should we be compensating state workers with pensions'?

 

​That might be considered blasphemy in his circles, though.

seems like the author did not want to entertain a philosophical debate on the value or purpose of pensions, but rather convey how a contractual obligation was completely ignored and abused.

If ONLY those words could encompass the complex promise that is public pensions. Unfortunately, it's lacking.

[carlfense]

It'd be nice to see someone like him - who did some research - just ask the question, 'should we be compensating state workers with pensions'?

That's a good question regarding future employees . . . but what about existing obligations? Existing pensions seemed to be the focus, right?

[carlfense]

Making or allowing an individual or organization responsible for paying for your retirement after you no longer are there just plain doesn't work.

If you accept the figures in the article in the OP it looks like it was working just fine until it was abused by politicians and Wall Street.

[carlfense]

If ONLY those words could encompass the complex promise that is public pensions. Unfortunately, it's lacking.

You can argue that it does not convey the complexities but it's also a pretty accurate summary. In general, these are contractual obligations.