Looting the Pension Funds

[Conga3]

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.

 

Well...kinda. I'm no lawyer, but I think these fall into a grey area of contract law and it's not really as black and white as you suggest.

 

I dunno I'd like to learn more though. Where is AR when you need him?

[AR Husker Fan]

Cases that have examined whether pensions constitute contracts have come down both ways - they are contracts and they are not contracts. The vast majority of cases have held that they are contracts. However, some states have had cases in which the Courts have held that pensions are not contracts since finding that they are contracts would interfere with the legislatures ability to alter or amend the provisions of the pensions, and thus intrude on the legislative branch rights to appropriate money and make laws. It's an interesting question.

[Conga3]

Cases that have examined whether pensions constitute contracts have come down both ways - they are contracts and they are not contracts. The vast majority of cases have held that they are contracts. However, some states have had cases in which the Courts have held that pensions are not contracts since finding that they are contracts would interfere with the legislatures ability to alter or amend the provisions of the pensions, and thus intrude on the legislative branch rights to appropriate money and make laws. It's an interesting question.

There he is! The omnipresent resident legal beagle.

[BigRedBuster]

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.

 

 

Why in the hell do you want to have your retirement future in the hands of other people.

 

I don't give a flying rip if it's a contract or not. The old saying of "contracts are only as good as the people behind them" holds very true here.

 

You can sue every single person involved with looting pension funds for breaking a contract and that's not going to bring back the money these retired people need to live off of.

 

Creating a system where future workers pay for past workers in a system that can go south fast if the economy tanks or the company comes under bad management is a pathetic excuse of a good system.

[carlfense]

Why in the hell do you want to have your retirement future in the hands of other people.

If a customer promised (or formed a contract with you) that he was going to send you a $500 check in 6 months for a product/service that you have already delivered would you expect that the customer pay you for the product/service that you have already provided?

 

You're trying to talk about this in an abstract sense when the reality is that people accepted jobs, performed services, etc. partially based on a promise that they will be paid X in the future. It's no different than an employer simply witholding paychecks even though the employee is still fulfilling his or her obligations.

 

I don't give a flying rip if it's a contract or not.

Are you serious? Aren't you involved in a business?

 

The old saying of "contracts are only as good as the people behind them" holds very true here.

How do you think this applies?

 

Creating a system where future workers pay for past workers in a system that can go south fast if the economy tanks or the company comes under bad management is a pathetic excuse of a good system.

You keep trying to shift the conversation to prospective systems. What about existing pensions? Do you think that it's OK for politicians and Wall Street to steal from their employees? Why don't you seem as agitated about that theft as you do about the idea of a pension?

[BigRedBuster]

Current pensions are a real problem and quite honest, I don't have an answer for you. Fine...go sue everyone involved. I'm sure it's justified in many cases. However, anyone who is all excited about their pension that is offered by their current employer is living a very risky life.

[carlfense]

Fine...go sue everyone involved. I'm sure it's justified in many cases.

I think that you're missing the point. It's not about lawsuits . . . it's about whether we should tolerate this sort of behavior.

[BigRedBuster]

You SHOULDN"T. But, you are putting yourself on a firing range with a big bullseye on your back if you are relying on a employer managed pension fund as your retirement.

 

There are crooks, bad managers and unrelyable people everywhere. Why do you want to rely on them to fund your retirement for the rest of your life.

 

AND, part of my point is that sometimes it's not the fault of the managers. Many large companies have had hard times funding pensions due to companies falling on hard times or simply their industry shrinking. When you have a huge number of retired people living off of a shrinking work force trying to fund the pension, you are looking at a disaster.

 

WHY do employees and business managers want to put themselves in that type of relationship?

[carlfense]

You SHOULDN"T. But, you are putting yourself on a firing range with a big bullseye on your back if you are relying on a employer managed pension fund as your retirement.

 

There are crooks, bad managers and unrelyable people everywhere. Why do you want to rely on them to fund your retirement for the rest of your life.

 

AND, part of my point is that sometimes it's not the fault of the managers. Many large companies have had hard times funding pensions due to companies falling on hard times or simply their industry shrinking. When you have a huge number of retired people living off of a shrinking work force trying to fund the pension, you are looking at a disaster.

 

WHY do employees and business managers want to put themselves in that type of relationship?

You're blaming (or at least partially blaming) employees for expecting that their employer uphold the employer's end of the bargain? Why?

[BigRedBuster]

Sometimes you choose to absolutely ignore what people say....don't you?

 

I'm not blaming the employee. I'm blaming the entire system of pensions. It is set up to fail. Heck, even if everyone in the entire system has great intentions....it's doomed to fail if and when the company shrinks/goes out of business or is short of funds to fund the account. THEN, put on top of that, the chance of getting someone in who you can't trust.

 

Earlier, you thought it as odd that I made the comment about contracts as I did since I was in business. Some of the biggest screw jobs I have ever had done to me were with people who I thought I had a very good contract with. Flat out screw jobs that when taken to court, they were able to weasel out of the contract.

 

Just because you have a contract with someone doesn't mean you can trust them. You have to be able to trust someone BEFORE you get into a contract with them. One major problem with pensions is that you make a contract with someone and down the road that person isn't there anymore.

[carlfense]

Earlier, you thought it as odd that I made the comment about contracts as I did since I was in business. Some of the biggest screw jobs I have ever had done to me were with people who I thought I had a very good contract with. Flat out screw jobs that when taken to court, they were able to weasel out of the contract.

 

Just because you have a contract with someone doesn't mean you can trust them. You have to be able to trust someone BEFORE you get into a contract with them.

Sounds like your attorney needs to draft better contracts . . .

[BigRedBuster]

So, do you have the attitude that the employees should have just had a better lawyer to draft the contract for their pensions?

[BigRedBuster]

And...for the record, the biggest idiots in this are the business managers who actually think it's a good business decision to lock themselves into HUGE employment expenses for employees that are no longer working for the company and benefiting the company.

 

They need their friggen head examined.

[carlfense]

So, do you have the attitude that the employees should have just had a better lawyer to draft the contract for their pensions?

If their promised pension disappears because of a loophole, sure. That's what I took away from your comment about weaseling out of contracts.

[HuskerLuke]

This would be why Rolling Stone shouldn't do serious issues. Ever. It's an immature, partisan hit piece, written in the prose of a high school girl on her facebook timeline.

 

First point that needs to be addressed is that the author constantly refers to "right-wing" financiers and politicians as the bad guys. It's probably worth noting that the featured Rhode Island politician is a liberal Democrat. It's also worth noting that all of the states mentioned as worst offenders when it comes to busted public pension funds (Kentucky, Massachusetts, Illinois, New Jersey, and the city of Detroit for good measure) have been largely dominated by Democratic rule since World War II.

 

Second, he complained about the expense of hedge funds. I agree, the government is typically a terrible custodian of taxpayer dollars and doing a poor job of finding reasonably priced management funds is unacceptable, but predictable. That said, paying a couple percentage points too much in management fees is window dressing compared to the massive unfunded liabilities of our federal, state and municipal governments and is therefore a red herring.

 

Finally, he got off on some weird conspiracy thing with the 2008 crash. You don't need to convince me that our government and Wall Street bungled things badly to set the stage for the 2008 crash, but to suggest these firms deliberately caused the collapse and risked bankruptcy so they could profit off the carnage is just ridiculous. Everyone lost a bunch of money in 2008----and had it all back if they held their positions through 2011.

 

The Economist published a much more serious write up on this issue in July:

 

Governors and mayors have long offered fat pensions to public servants, thus buying votes today and sending the bill to future taxpayers. They have also allowed some startling abuses. Some bureaucrats are promoted just before retirement or allowed to rack up lots of overtime, raising their final-salary pension for the rest of their lives. Or their unions win annual cost-of-living adjustments far above inflation. A watchdog in Rhode Island calculated that a retired local fire chief would be pulling in $800,000 a year if he lived to 100, for example. More than 20,000 retired public servants in California receive pensions of over $100,000.......Public employees should retire later. States should accelerate the shift to defined-contribution pension schemes, where what you get out depends on what you put in. (These are the norm in the private sector.) Benefits already accrued should be honoured, but future accruals should be curtailed, where legally possible. The earlier you grapple with the problem, the easier it will be to fix. Nebraska, which stopped offering final-salary pensions to new hires in 1967, is sitting pretty.

 

Basically the main problem was and is that pension benefits for public servants are far too generous, usually far exceeding those in the private sector. Current pensioners should be bailed out to the extent necessary to prevent hardship (but trimming six figure pension incomes is a good place to start cutting), and retirement plans for current and future workers need to be converted to defined contribution 401ks now.