Yes, govt. pensions can be completely canceled

Empty WalletMay 15, 2013

By John Seiler

We’re constantly told that California governments have a “constitutional obligation” to pay for the pensions of public-sector employees.

Except when there’s no money left. If a city, county or even the state goes absolutely flat broke, then nothing will be paid. That’s happening in Detroit:

“DETROIT (AP) — The first report by Detroit’s emergency manager declares that the city is broke and at risk of running completely out of money — a financial meltdown that could mean employees don’t get paid, retirees lose their pensions and residents endure even deeper cuts in municipal services.”

I remember total bankruptcy actually happened to the Michigan city of Highland Park 30 years ago. All pensions were completely canceled. People who paid into the system for 30 years got nothing.

But the Highland Park employees had only themselves to blame. As in California, their union bosses, which the rank-and-file voted into office, manipulated the system to put in power union-friendly city officials. Those officials then went on wild spending sprees, including on generous pay, perks and pensions for the employees.

Which was great for them until everything went belly up and they got nothing.

It could happen again in Detroit — and California.


Write a comment
  1. Tough Love
    Tough Love 15 May, 2013, 08:16

    Getting nothing would be unfair. Getting pensions of EQUAL “value” (expressed as a % of pay AND properly adjusting for the incremental value of provisions such as full early retirement ages and COLA increases) to those of the typical Private Sector Taxpayer WOULD BE fair

    Do so would require a 50-75% cut in the (currently grossly excessive) promised Public Sector pensions.

    Greed DOES have consequences.

    Reply this comment
  2. Bad Karma
    Bad Karma 15 May, 2013, 08:35

    Life’s not fair. If you are a greedy government thief then you don’t deserve anything.

    Reply this comment
  3. CalWatchdog
    CalWatchdog Author 15 May, 2013, 08:36

    Tough Love: If there’s no money in the pension funds because of bankruptcy, then there’s no money to give the pensions. Fair or unfair.

    If that happens in California, at the state or local level, the unions will have only themselves to blame for their profligate demands, especially the pension spiking of 14 years ago, and their refusal ever since to work for sensible reforms.

    — John Seiler

    Reply this comment
  4. Tough Love
    Tough Love 15 May, 2013, 08:54

    John, Considering the positive financial and fairness impact and (that the Public Sector Unions would have a massive coronary) if CURRENT Public Sector worker pensions for future service were reduced to the level typically afforded Taxpayers, wouldn’t you be tickled pink with such a change … as I would be ?

    Reply this comment
  5. Guess Who
    Guess Who 15 May, 2013, 09:44

    Tough Love –

    By the looks of it, some of these posters are even a tad bit crazier than you. It is kind of making you look like you are a tree hugging hippie – not wanting to totally cut the pensions from those evil government employees. I say it is high time you step up the rhetoric to “not only should all those government employee losers not get a pension, but we should take their houses, cars, 401k – and kick the family dog on the way out”. I mean, you wouldn’t want to get behind the curve on this fascist movement of yours….got to stay out in front!!!

    Reply this comment
  6. us citizen
    us citizen 15 May, 2013, 10:31

    Who gets a pension now days in the private sector? The only one I know of is my dad who is a trillion years old.

    You know living off of the taxpayer was never meant to be. You have soc sec which you have paid into and SAVINGS. Everything else is sky money. You cant rely on sky money. It is NOT right that I, as a taxpayer, have to pay for your retirement and mine too. You can not tell me this picture is right.

    Reply this comment
  7. Antonio Ciseri
    Antonio Ciseri 15 May, 2013, 10:53

    The taxpayers voted into office those who approved these pensions – along with numerous other spending provisions.

    The taxpayers will now pay the bill, as they should. Choices have consequences.

    Be careful who you vote for – the spending items they enact will affect future generations.

    Reply this comment
  8. RSpringbok
    RSpringbok 15 May, 2013, 11:07

    Article is wrong about the state of California. Cities and counties within the state can go bankrupt, as we’ve seen, but not the state government. It can only default, and even in that case pensions are senior to many of the obligations the state gov’t has. The premise that revenue would get that low in Calif. is laughable.

    Reply this comment
  9. Tough Love
    Tough Love 15 May, 2013, 11:10

    Dear Guess WHO, If you look back at years of my comments, a common theme we be apparent. …. that (besides never calling Public Sector workers “evil”) I strongly advocate for EQUAL “Total Compensation” (cash pay plus pension plus benefits) in comparable Public and Private Sector jobs, and with “cash pay” in the 2 Sectors being very close, there is THEREFORE, no justification for ANY greater Public Sector pensions and benefits (let alone ones that are multiples greater as is the case today).

    Clearly you think otherwise, likely because you are a Public Sector worker, used to getting MORE than you fair share, want to keep it that way, and have a sever case of “entitlement mentality”.

    Well, that ship has sailed. You better get used to us Taxpayers demanding change …. AND, having no intention of topping up your seriously underfunded pensions.

    Reply this comment
  10. Bart
    Bart 15 May, 2013, 12:20

    THEY paid into the system. It’s theirs. If you’re retired you can’t go to plan B. Heck, if you’re over 55 you can’t go to plan B. It’s too late for Social Security or anything else. You can’t leave people high and dry like that. The pensions should be honored, or at least substantially honored.

    Reply this comment
  11. Tough Love
    Tough Love 15 May, 2013, 12:36

    Bart, How about Pension accruals for FUTURE service of CURRENT workers ?

    Surely you know that it is both legal and ROUTINE for Private Sector Pension Plans to reduce such accruals or even end them completely. So do you agree that the SAME prospective changes should be allowed for CURRENT workers in the Public Sector or are you saying that they are somehow “special” and deserving of a better deal than the Taxpayers who pay their way ?

    Reply this comment
  12. Charles
    Charles 15 May, 2013, 13:50


    Reply this comment
  13. Charles
    Charles 15 May, 2013, 13:58

    So we trade unwanted bullet trains for honoring our promises.

    Reply this comment
  14. Tough Love
    Tough Love 15 May, 2013, 14:07

    Charles, Dumping the unnecessary (and unaffordable) bullet trains is a great idea … as is significantly reducing the grossly excessive Public Sector pensions.

    Reply this comment
  15. Donkey
    Donkey 15 May, 2013, 14:28

    The RAGWUS built the dishonest pension system in use today, so when it goes broke they will have reaped what they sowed.

    For those that believe the fraud perpetrated on the taxpayers was a promise I strongly disagree. The RAGWUS ran a Quid Pro Quo Ponsi game with politicians they bought and paid for, and which for the most part were nothing but retired police, fire, or some other public sector crony.

    John is right, we are ending up like Detroit and no one in the RAGWUS can even see what’s coming. Not one of you will be able to say you were not warned. 🙂

    Reply this comment
  16. SkippingDog
    SkippingDog 15 May, 2013, 15:04

    Wow John. Talk about turning the crazy all the way past 10 and jerking the knob off! The earlier poster was correct about your comments making Tough Love seem like a union leader by comparison.

    It’s probably good for you to remember that California and Michigan are completely different states with completely different constitutions, legal precedent, and pension system organizations.

    Is CWD trolling for blog hits today?

    Reply this comment
  17. us citizen
    us citizen 15 May, 2013, 15:16

    I didnt vote these pensions in. If anything those who didnt are being forced into them, unfairly I might add. How about coughing up for my pension? I mean fair is fair.

    Reply this comment
  18. SkippingDog
    SkippingDog 15 May, 2013, 15:19

    All you have to do to qualify for a public pension is to work a lengthy period of time for a government organization that participates in a pension program, us citizen.

    Reply this comment
  19. Tough Love
    Tough Love 15 May, 2013, 16:00

    Hey Skippy, You know with all that talk of the lack of qualified candidates being justification for the very high police pay levels, I thought you’d like this article (link below). You’ll note that the average IQ of a policeman is 104, just slightly above the population average.

    So much for the Best & Brightest justification. Been tested lately?

    Reply this comment
  20. SkippingDog
    SkippingDog 15 May, 2013, 16:22

    I’d be the first to admit there are some dumb cops out there. All you need to do is watch an old program called “top cops” to see them. I think it also depends on where an officer works and how well they’re educated. There’s a reason some people who desire a law enforcement career have to take a police job in some remote town or county where they’ve never lived or had family. It’s not usually that they like a more rural and quiet life.

    Nonetheless, even those officers on the lower end of the curve provide an essential public service that requires courage, commitment, and all to often personal sacrifice on behalf of others. Only the churlish begrudge those officers their salaries and hard won benefits.

    Reply this comment
  21. Tough Love
    Tough Love 15 May, 2013, 16:29

    Quoting Skippy …”Only the churlish begrudge those officers their salaries and hard won benefits.”

    And only the boorish begrudge Taxpayers would rightfully protest these grossly excessive, and unnecessary Taxpayer-funded pensions.

    Reply this comment
  22. RedinaBlueState
    RedinaBlueState 15 May, 2013, 19:41

    Plenty of (private sector) auto workers lost pensions because the funds went belly up. They never should have relied on someone else’s promises over taking care of themselves. I save 12% of my income for retirement and the state takes another percentage to pay for those who won’t do for themselves.

    Reply this comment
  23. realitybites
    realitybites 15 May, 2013, 21:19

    people who think elections mean anything, have been watching too many old movies. in california many people (alien) & us citizens are bussed around to various voting stations & vote as many times as it takes to steal an election. many places just dump non democratic votes. there’s not much hope for any different situation.

    Reply this comment
  24. Tough Love
    Tough Love 15 May, 2013, 21:40

    Well Stated “RedinaBlueState says”.

    Via the Public Sector Unions bribing of our elected officials with campaign contributions and election support, in exchange for favorable votes on pay, pensions, and benefits, they have succeeded in obtaining retirement benefits of such great magnitude that career workers can retire in great comfort and need not save a dime outside of the gov’t-provied (COLA-adjusted) pensions.

    These extraordinarily generous PUBLIC Sector pensions come at great cost to Private Sector Taxpayers, Taxpayers who NEVER get such generous pensions from their employers and must save a substantive portion of their net pay over many decades in order to retire in reasonable comfort.

    WHY are Public Sector workers excused from having too do the same … on OUR Dime ?

    Reply this comment
  25. Anonymous
    Anonymous 16 May, 2013, 07:49

    US Citizen, you say, “You have soc sec which you have paid into and SAVINGS.”

    You do realize that Social Security is not fully funded by what you have paid. It is “living off the taxpayer” just as you claim government pensioners do. You pay 6.2% of your salary (up to a maximum). Many government employees pay this AND 8-15% toward their pension.

    Reply this comment
  26. Charles
    Charles 16 May, 2013, 07:56

    Theft is theft. Promises of benefits in lieu of wages are part of the entire compensation package. If the government lies where does it stop?

    Reply this comment
  27. Donkey
    Donkey 16 May, 2013, 20:00

    Charles, the RAGWUS pensions are the product of a mutual fraud put upon the taxpayers, it was never a promise, but always a dishonest scam. 🙂

    Reply this comment

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