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The Retirement “Reform” Continues

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  • MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

     

    Also, I am sympathetic to the pensioners who now find themselves short of money and are unable to fund their retirement with the needed cuts. For those in that situation, there is welfare. For the retiree that needs to take a cut in his standard of living, but will be fine financially, I am less sympathetic. It’s called moral hazard. If we bail out pension funds, we set the stage for more future mismanagement as funds will know they can act irresponsibly and be bailed out by Joe taxpayer.

     

    Click to expand…

    I’m sorry, to which programs exactly are you referring?

    Not weighing in on the pension issue at all, just genuinely curious which gov’t programs you think kick in if a pension were to suddenly fail. There is medicare and SS, am I missing something else? Maybe EBT?

    Click to expand…

    Medicaid, SNAP, public housing, etc.

    https://www.seniorliving.org/research/government-aid/

    Click to expand…

    Ha. Dude people who worked hard at blue collar jobs for their entire career and then are told to go try to find public housing and get food stamps when their pensions fail are not just going to shrug and take it with an understanding grin.

     

     

    Click to expand…

    No one is suggesting that solving the pension problem will be painless. The question is who should bear that pain. Should it be the innocent taxpayer? You talk about the hard working blue collar pensioner, and that is fine, but what about the currently employed, hard working and barely-making-ends-meet, blue collar employee? Is it fair that he should have to pay for this pension short fall through a tax payer bailout? If you are not suggesting pensioners take cuts, what is your solution to the crisis?

     

    Click to expand…

    You wouldn’t like it.

    #234737 Reply
    portlandia portlandia 
    Participant
    Status: Physician
    Posts: 401
    Joined: 07/07/2017

     

    Also, I am sympathetic to the pensioners who now find themselves short of money and are unable to fund their retirement with the needed cuts. For those in that situation, there is welfare. For the retiree that needs to take a cut in his standard of living, but will be fine financially, I am less sympathetic. It’s called moral hazard. If we bail out pension funds, we set the stage for more future mismanagement as funds will know they can act irresponsibly and be bailed out by Joe taxpayer.

     

    Click to expand…

    I’m sorry, to which programs exactly are you referring?

    Not weighing in on the pension issue at all, just genuinely curious which gov’t programs you think kick in if a pension were to suddenly fail. There is medicare and SS, am I missing something else? Maybe EBT?

    Click to expand…

    Medicaid, SNAP, public housing, etc.

    https://www.seniorliving.org/research/government-aid/

    Click to expand…

    Ha. Dude people who worked hard at blue collar jobs for their entire career and then are told to go try to find public housing and get food stamps when their pensions fail are not just going to shrug and take it with an understanding grin.

     

     

    Click to expand…

    No one is suggesting that solving the pension problem will be painless. The question is who should bear that pain. Should it be the innocent taxpayer? You talk about the hard working blue collar pensioner, and that is fine, but what about the currently employed, hard working and barely-making-ends-meet, blue collar employee? Is it fair that he should have to pay for this pension short fall through a tax payer bailout? If you are not suggesting pensioners take cuts, what is your solution to the crisis?

     

    Click to expand…

    You wouldn’t like it.

    Click to expand…

    You’re probably right. 🙂

    #234752 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

     

    Also, I am sympathetic to the pensioners who now find themselves short of money and are unable to fund their retirement with the needed cuts. For those in that situation, there is welfare. For the retiree that needs to take a cut in his standard of living, but will be fine financially, I am less sympathetic. It’s called moral hazard. If we bail out pension funds, we set the stage for more future mismanagement as funds will know they can act irresponsibly and be bailed out by Joe taxpayer.

     

    Click to expand…

    I’m sorry, to which programs exactly are you referring?

    Not weighing in on the pension issue at all, just genuinely curious which gov’t programs you think kick in if a pension were to suddenly fail. There is medicare and SS, am I missing something else? Maybe EBT?

    Click to expand…

    Medicaid, SNAP, public housing, etc.

    https://www.seniorliving.org/research/government-aid/

    Click to expand…

    Ha. Dude people who worked hard at blue collar jobs for their entire career and then are told to go try to find public housing and get food stamps when their pensions fail are not just going to shrug and take it with an understanding grin.

     

     

    Click to expand…

    No one is suggesting that solving the pension problem will be painless. The question is who should bear that pain. Should it be the innocent taxpayer? You talk about the hard working blue collar pensioner, and that is fine, but what about the currently employed, hard working and barely-making-ends-meet, blue collar employee? Is it fair that he should have to pay for this pension short fall through a tax payer bailout? If you are not suggesting pensioners take cuts, what is your solution to the crisis?

     

    Click to expand…

    You wouldn’t like it.

    Click to expand…

    You’re probably right. 🙂

    Click to expand…

    I think the genius move by rent-seeking elites is convincing people that “the innocent taxpayer” and the retired blue-collar pensioner are on opposing teams.

    But that move has been completed successfully and fully at this point.

    #234809 Reply
    portlandia portlandia 
    Participant
    Status: Physician
    Posts: 401
    Joined: 07/07/2017

     

    Also, I am sympathetic to the pensioners who now find themselves short of money and are unable to fund their retirement with the needed cuts. For those in that situation, there is welfare. For the retiree that needs to take a cut in his standard of living, but will be fine financially, I am less sympathetic. It’s called moral hazard. If we bail out pension funds, we set the stage for more future mismanagement as funds will know they can act irresponsibly and be bailed out by Joe taxpayer.

     

    Click to expand…

    I’m sorry, to which programs exactly are you referring?

    Not weighing in on the pension issue at all, just genuinely curious which gov’t programs you think kick in if a pension were to suddenly fail. There is medicare and SS, am I missing something else? Maybe EBT?

    Click to expand…

    Medicaid, SNAP, public housing, etc.

    https://www.seniorliving.org/research/government-aid/

    Click to expand…

    Ha. Dude people who worked hard at blue collar jobs for their entire career and then are told to go try to find public housing and get food stamps when their pensions fail are not just going to shrug and take it with an understanding grin.

     

     

    Click to expand…

    No one is suggesting that solving the pension problem will be painless. The question is who should bear that pain. Should it be the innocent taxpayer? You talk about the hard working blue collar pensioner, and that is fine, but what about the currently employed, hard working and barely-making-ends-meet, blue collar employee? Is it fair that he should have to pay for this pension short fall through a tax payer bailout? If you are not suggesting pensioners take cuts, what is your solution to the crisis?

     

    Click to expand…

    You wouldn’t like it.

    Click to expand…

    You’re probably right. 🙂

    Click to expand…

    I think the genius move by rent-seeking elites is convincing people that “the innocent taxpayer” and the retired blue-collar pensioner are on opposing teams.

    But that move has been completed successfully and fully at this point.

    Click to expand…

    I agree that those that are going to get hit hardest due to the pension shortfall, whether pensioners, taxpayers or both, were not the perpetrators of this scam. Unfortunately, there is no way we’re going to extract the money from the real villans in this story, i.e. the politicians, pension boards, unions, companies, but I would love to see it happen.

    BTW, I would like to hear your thoughts on reforming the pension system, even if I might disagree with some of the particulars.

     

    #234821 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

     

    Also, I am sympathetic to the pensioners who now find themselves short of money and are unable to fund their retirement with the needed cuts. For those in that situation, there is welfare. For the retiree that needs to take a cut in his standard of living, but will be fine financially, I am less sympathetic. It’s called moral hazard. If we bail out pension funds, we set the stage for more future mismanagement as funds will know they can act irresponsibly and be bailed out by Joe taxpayer.

     

    Click to expand…

    I’m sorry, to which programs exactly are you referring?

    Not weighing in on the pension issue at all, just genuinely curious which gov’t programs you think kick in if a pension were to suddenly fail. There is medicare and SS, am I missing something else? Maybe EBT?

    Click to expand…

    Medicaid, SNAP, public housing, etc.

    https://www.seniorliving.org/research/government-aid/

    Click to expand…

    Ha. Dude people who worked hard at blue collar jobs for their entire career and then are told to go try to find public housing and get food stamps when their pensions fail are not just going to shrug and take it with an understanding grin.

     

     

    Click to expand…

    No one is suggesting that solving the pension problem will be painless. The question is who should bear that pain. Should it be the innocent taxpayer? You talk about the hard working blue collar pensioner, and that is fine, but what about the currently employed, hard working and barely-making-ends-meet, blue collar employee? Is it fair that he should have to pay for this pension short fall through a tax payer bailout? If you are not suggesting pensioners take cuts, what is your solution to the crisis?

     

    Click to expand…

    You wouldn’t like it.

    Click to expand…

    You’re probably right. 🙂

    Click to expand…

    I think the genius move by rent-seeking elites is convincing people that “the innocent taxpayer” and the retired blue-collar pensioner are on opposing teams.

    But that move has been completed successfully and fully at this point.

    Click to expand…

    I agree that those that are going to get hit hardest due to the pension shortfall, whether pensioners, taxpayers or both, were not the perpetrators of this scam. Unfortunately, there is no way we’re going to extract the money from the real villans in this story, i.e. the politicians, pension boards, unions, companies, but I would love to see it happen.

    BTW, I would like to hear your thoughts on reforming the pension system, even if I might disagree with some of the particulars.

     

    Click to expand…

    I don’t really believe in pensions and I think they should be slowly phased out.

    If pensions exist they need to work like life for normal people — you don’t retire after 20 years at 80% of your income or whatever craziness happens with the worst cases, you retire after 40 years at 50% of your income.

    Frankly I think the best way to handle this is mandatory contributions to individual retirement accounts — every working person has a 401k and auto-contribution of 5-7%, can opt out but then heavily taxed on that money.

    Layered around and on top of these would be the things you wouldn’t like 😀

    #234841 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 1091
    Joined: 03/18/2017

    5-7% is pretty miniscule though. Like for someone who makes 50k they’re going to contribute 2500 a year? So after 30 years they have what like 300k with decent returns? I mean it is something but they can’t support themselves with it.

    I think people just need to realize they can’t work forever and there are a plethora of tax advantaged ways to save. You can’t force people to do things they don’t want to do, just like losing weight.

    We also can’t prevent companies from offering ridiculous pensions as enticement. But we shouldn’t bail them out. It’s not appropriate for companies to make huge guarantees and then depend on taxpayer when they hire a crappy manager

    #234847 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2855
    Joined: 01/03/2017
    5-7% is pretty miniscule though. Like for someone who makes 50k they’re going to contribute 2500 a year? So after 30 years they have what like 300k with decent returns? I mean it is something but they can’t support themselves with it.

    Click to expand…

    It’s still much better than the 0% that most people contribute.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #234848 Reply
    Avatar mjohnson 
    Participant
    Status: Physician
    Posts: 54
    Joined: 05/05/2019

    Bailouts are the American way.  Look at the US car companies, banks, etc.  Another reason I feel taxes are only going up on the folks that have saved enough to have a retirement that they want.  See my Roth 401K thread.

    #234854 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3084
    Joined: 09/18/2018

    When ERISA was passed, union employees were making higher compensation and pensions than the majority of MBA’s starting salaries. (anecdotal since some classmates were debating industry, consulting and public accounting, or taking a hometown job). Quite honestly, strikes were brutal on both employees and companies. BOTH parties basically didn’t care about the long lasting repercussions. Thus, PBGC and funding levels were mandated. That is the recourse. A lot of these companies were pushed towards a cliff. Don’t for a minute think great wages were paid and knowledge that the benefits might not materialize. Benefits based on inflated wages? Obviously not in all cases. The only obligation is PBGC.

    #234859 Reply
    portlandia portlandia 
    Participant
    Status: Physician
    Posts: 401
    Joined: 07/07/2017
    I don’t really believe in pensions and I think they should be slowly phased out.

    Click to expand…

    Agreed!

    If pensions exist they need to work like life for normal people — you don’t retire after 20 years at 80% of your income or whatever craziness happens with the worst cases, you retire after 40 years at 50% of your income.

    Click to expand…

    Yep.

    Frankly I think the best way to handle this is mandatory contributions to individual retirement accounts — every working person has a 401k and auto-contribution of 5-7%, can opt out but then heavily taxed on that money.

    Click to expand…

    Also yes, though I would eliminate the ability to take a disbursement prior to retirement.

     

    So even two folks from different ends of the political spectrum, both agree on the obvious math problems of pensions as well as some of the solutions moving forward. This is progress. Now if we could get the politicians of both parties to stop demagoguing, we would really be cooking with gas.

    #234875 Reply
    Liked by Roentgen, hatton1
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

    Now if we could get the politicians of both parties to stop demagoguing, we would really be cooking with gas.

    Click to expand…

    Blame the voters not the politicians.

    #234880 Reply
    Liked by Antares, Roentgen
    Avatar MnSaver 
    Participant
    Status: Other Professional
    Posts: 62
    Joined: 01/04/2018

    Observation/generalization: Those that have pensions, love them. Those that don’t have pensions, hate them.

    i haven’t met people with generous pensions (let’s say more than 60%) who save a lot for retirement. Therefore, they typically don’t have a savings backstop.

    #234907 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 1091
    Joined: 03/18/2017

    Well of course you’d love one if you worked for a company for 30 years and they’d paid you 80% of your salary for the rest of your life. But the point is it’s not soluble long term, clearly as basically large majorities are underfunded.

    #234942 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3084
    Joined: 09/18/2018

    “2. score bailouts for the politically connected.”
    Follow the trail. Multi-employer plans (primarily the small to mid-size private businesses) that unions fought so hard to unionize and are the targets for the Secure Act that is sponsored by the insurance industry and funded by taxing Inherited IRA’s. Multi-employers have either gone bankrupt or ceased retirement plans (401ks) because funding deficits put them out of business. Unions one could say lost interest in the “eat what you kill” economy. The “public entity “ pensions survive for now, since the government collects taxes for those (pending bankruptcy) of or government entities.
    Loans for the private pensions (shift liability to government). The voting block of Labor is dependent upon members “votes”. This is a blatant attempt by Labor unions shift “negotiated” pensions that cannot be funded to the federal level.

    Unions negotiate (and make money) and they claim their members are “safe”.
    Look at all the “retired hardworking” plus “all the public service workers”! Come on taxpayers, cough up your retirement savings. Another step in wealth redistribution. Eat what you kill. Unions have a purpose, but economically it’s lethal.

    #234964 Reply
    Avatar ajm184 
    Participant
    Status: Other Professional
    Posts: 637
    Joined: 07/14/2017
    There is medicare and SS

    Click to expand…

    In the State of Illinois, teachers don’t contribute to SS, therefore benefits that can be attained= zero dollars.  So from the perspective of a teacher in IL, there choices are a. increase taxes/funding or b. cut benefits and/or c. outside of pension savings.  The irony is that the State Supreme Court banned cuts to benefits and the elected representatives refuse to to increase taxes for funding.

    In general Union leadership understands the moral hazard position it places it members, yet continued to ‘negotiate’ for these benefit type increases.  My sympathy is low/non-existent for union leadership/politicians whom only sought/took the easy path (underfunding/issue bonds [kick the can down the road]).  A pension only works when it contains actuarially conservative estimates and is fully funded.

    #234976 Reply

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