notadocParticipantStatus: Other ProfessionalPosts: 243Joined: 07/15/2016
“Maine’s public pension fund earned double-digit returns in six of the past nine years. Yet the Maine Public Employees Retirement System is still $2.9 billion short of what it needs to afford all future benefits to all retirees.
There is a simple reason why pensions are in such rough shape: The amount owed to retirees is accelerating faster than assets on hand to pay those future obligations. Liabilities of major U.S. public pensions are up 64% since 2007 while assets are up 30%, according to the most recent data from Boston College’s Center for Retirement Research.”CordMcNallyParticipantStatus: PhysicianPosts: 1874Joined: 01/03/2017
Pensions are treated exactly like Social Security. Everyone just kind of ignores all the issues and that they aren’t sustainable while they just keep kicking the can down the road.
“But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
― Benjamin Graham, The Intelligent InvestorITEngineerParticipantStatus: Other ProfessionalPosts: 297Joined: 05/09/2017
I’m generally very negative on pensions, but this article doesn’t have enough information to know how much trouble MainePERS is in. Is it a $2.9B shortfall with $50B in assets or $5B in assets? The former is in excellent shape, the latter is in deep trouble. I’m guessing it’s somewhere in the middle.
Liabilities are up 64% because of Federal Law changes over the past decade (Highway Transportation and Funding Act of 2014) that forced them to have realistic investment returns and discount rates. It’s unclear what discount rate MPERS is using. My employer last year changed theirs from 3.625% to 4.250% and magically their liability fell $5.5B!
Public pensions, private pensions…..it doesn’t matter what someone promises you….is the money there to back up those promises?ITEngineerParticipantStatus: Other ProfessionalPosts: 297Joined: 05/09/2017
According to this article assets were $14.3B so MainePERS is 83% funded. There are plenty of Pensions in much worse shape. Illinois is short $134B, only covering ~40% of it’s liabilities. That means if they promised you $30k pension, they can only pay you $12k.TimParticipantStatus: AccountantPosts: 1822Joined: 09/18/2018
The vast majority of pensions now involve union representation. The amount of the pension is priority number one. Never heard of disputes or for proposals of security or funding.
That’s government’s job. City, state, federal, PBGC. Someone owes me. It’s in the contract. By the way, we vote for the ones that support our pensions.
There was an article where one point of view the union stance was 90% of 100 is better than 75. We will negotiate that later.PanscanParticipantStatus: ResidentPosts: 670Joined: 03/18/2017
All these things are falling short in the face of one of the greatest bull markets in the countries history. What happens when the market tanks? They should be over funded now if anything.
If you’re not controlling the money then it’s not real IMO. I don’t think I will ever receive social security.TimParticipantStatus: AccountantPosts: 1822Joined: 09/18/2018
Pension funds are intentionally invested with only a portion in the market. By no way do I say it’s better, but the market is not an appropriate measure. Meeting the actuarial growth rate over a long time frame is the measure.
Given that, they are coming up short.April 10, 2019 at 7:03 am MST #205442The White Coat InvestorKeymasterStatus: PhysicianPosts: 4211Joined: 05/13/2011
It’s the same issue households face. It doesn’t matter what your returns are if you’re not putting enough money in in the first place. The market isn’t usually going to bail out your undersaving tendencies.
Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011ZaphodParticipantStatus: Physician, Small Business OwnerPosts: 5552Joined: 01/12/2016
In addition to lots of other issues, namely underfunding, many pensions are run like mafias with massive handouts to “consultants, etc…” and overpaying for services and funds. They also have a penchant for being in the wrong assets often. Pensions are perpetual in duration theoretically, yet it isnt rare to find them with a bunch of bonds.FunkDoc83ParticipantStatus: PhysicianPosts: 165Joined: 04/12/2018
In addition to lots of other issues, namely underfunding, many pensions are run like mafias with massive handouts to “consultants, etc…” and overpaying for services and funds. They also have a penchant for being in the wrong assets often. Pensions are perpetual in duration theoretically, yet it isnt rare to find them with a bunch of bonds.Click to expand…
No offense Zaphod, but how do you know this about pensions? Do you have one? Is there a difference between public pensions you hear about in the news and others that some docs may have access to?April 10, 2019 at 1:09 pm MST #205527ZaphodParticipantStatus: Physician, Small Business OwnerPosts: 5552Joined: 01/12/2016
I’ve just read a lot of stories on them. Lots of misappropriation, much of it legal mind you, but some not. Just Google quick and read about Kentuckys pension, what a disaster.portlandiaParticipantStatus: PhysicianPosts: 365Joined: 07/07/2017
From the article: “The Maine pension fund, which back in the early 1980s assumed a long-term investment return of 10%, now assumes a rate of 6.75%.”
This assumed return is still too high and everyone knows it but nobody wants to deal with it, so the can will be kicked down the road and off the cliff at the end of the road.
From 2001-2016, “On average, the annualized return for public plans during this period was 5.5 percent – well below the typical actuarially assumed return. However, the returns for plans in the top and bottom quartiles were 6.3 and 4.6 percent respectively.”IntensiveCareBearParticipantStatus: PhysicianPosts: 97Joined: 12/22/2018
Pensions were never designed for ppl to live this long. It is that simple… too many mouths to feed. The article says it.
WCI is kinda right about companies/states/ppl not saving enough, but any island trip goes to hell when the campers are stuck on the island weeks longer than originally projected and supplied for. Even if they can find some food (market gains) or packed a bit heavy (extra savings), they are still in huge danger once time gets extended past originally planned length of stay on the island.
I’m sure most pensions were fair projections when they were initiated, but not any longer. They will virtually all be insolvent due to human life expectancy +20%, 25% or even more since many of their inception dates. That means the pension’s payout periods to those workers were doubled, tripled, etc (depending on age of payouts starting) from what was anticipated. That is impossible to fix (and why no sane company has pension anymore). Governments are the only ones really trying, but they are also the ones who can literally print money… and will need to.
Maine is the nations oldest state in terms of avg age. Maine even tried a bill last year to hugely increase taxes on all 6 figure earners to pay for more home health care (didn’t pass, but will surely retry). Don’t look now, but the whole US will be Maine or Japan soon based on age demographics. Japan has the world’s longest life expectancy and has been an economy stuck for decades due to such high % of population being seniors. They even have the majority of those Japanese old folks living with family due to culture (good luck on that ever happening in US).
We all know the reality is that once people hit 50 or 60 (definitely 70 even with best best genetics and lifestyle and luck), they are reproductively useless, largely useless in the work force due to slower cognition and mobility, and they are of little utility to the species. That is sad but true, and it means they just consume resources and produce nothing. When you have non-producers who become increasing costly of resources, that will strain the tribe. The useless ones used to just die since they couldn’t survive hunting, migrations, predators, cold winter, etc. Now, we like to do 5 caths, tons of meds, etc and often help (force?) them to live demented or half-crippled in an ECF for a decade or more. It is often up to guys like me to talk the family into DNR or d/c vent, but the hospital frown$ on that and so do the doc$ making rounds at the nursing home$… go figure.
The question is simple: how much money and resources do we really want to spend prolonging death? I don’t know. Some would say “however much the patient and their fam has and wants to use,” but others say “even if they’re broke, they deserve everything, it is inhumane not to do everything.” I think that firm cutoff ages for govt monies for dialysis, power wheelchair, home health, surgery, and other costly heroic measures, etc would be a good start… but that’s just me. We are eventually going to end up with bare-bones nursing homes that are understaffed with exhausted workers. You already see it in many places. For what? It serves no purpose. They are no longer contributing to society and QOL is generally very low… scary low QOL in understaffed ECFs. In the animal kingdom, it takes care of itself. We are fighting for no good reason.
The political parties have been trying to poke and tap on those flash points for a long time. It is usually primarily rich vs poor issues that decide elections (and entitlement funding is somewhat rich/poor), but the next civil war may actually be young vs old. It will come to a head at some point, so I really wouldn’t doubt that. Good times.
…and yes, I agree with above about being unable to depend on any entitlement (govt or employer). They will mostly go insolvent, and the ones that persist will be mostly printed money that will have very questionable buying power by that time. It is best to just count on yourself… anything beyond is gravy.MnSaverParticipantStatus: Other ProfessionalPosts: 55Joined: 01/04/2018
Sadly, the pension funds are afraid to ask current employees for increased contributions. In our case, they increased the employee contribution only in the future and by a miniscule amount. They should have increased employee contributions by at least 1% https://minnesotatra.org/wp-content/uploads/2018/10/accessible-contribution-rate-table.pdf
It’s really difficult to beat a public employee benefit package.PanscanParticipantStatus: ResidentPosts: 670Joined: 03/18/2017
I totally agree with icubear. The amount of money we spend on people with 0 quality of living is insane and absolutely pointless. If half of grandma’s brain is infarcted and she falls again, do we really need to do a scan? Are you going to do anything with that info? It’s pointless.
Rationing of care for elderly is something we will have to have eventually to reduce costs unless our system magically figures something out which seems unlikely. It’s just not worth the money for us to do a full workup on 95 yr old grandma with 4 cts, multiple day stay, 5 people consulted from Ed, etc. It’s stupid.