CA take note: Detroit pensions could take big hit in bankruptcy

Devil's Night DetroitJuly 13, 2013

By John Seiler

Although California’s current financial fortunes seemingly are improving, the next recession could cancel the bliss. So Californians, especially government workers, should take not of what’s happening in Detroit.

Emergency Manager Kevyn Orr is being forced to look at cutting not only future pensions, but already vested pensions.

Reuters reports that city workers filed a lawsuit that “claims Orr’s plan to significantly cut vested pensions would violate strong protections in the Michigan constitution for retirement benefits of public-sector workers.”

California has similar “strong protections.”

In a similar fashion to California, unfunded pension liabilities are a lot higher than the official numbers. Reuters:

“The plan, if enacted, would be expected to result in significant cuts in pension payments. Although the city currently lists $643.7 million in unfunded pension liabilities, Orr in his report said the number is closer to $3.5 billion if ‘more realistic assumptions’ are taken into account.”

That’s more than five times as much.

However, the key is that the city is totally broke and can’t possibly pay the $643.7 million in unfunded liabilities, let alone the $3.5 billion. The state isn’t going to come to the rescue. Nor is the federal government.

Fifty years of liberalism, including a special city income tax that drives Detroiters to the suburbs and absurd pay and benefits packages for city workers, have destroyed the city’s tax base. Things are so bad the population has dropped by more than half and most residents are on some sort of government assistance.

Said UAW attorney Michael Nicholson, who represents some of the workers, “It’s very, very rare for any entity to go after people’s pensions because it puts people in the poor house.”

They should have thought of that sometime in the past 50 years while the government employees were bankrupting their own city.

60 comments

Write a comment
  1. Donkey
    Donkey 13 July, 2013, 06:38

    The RAGWUS is killing itself and it doesn’t even understand why!! After a couple of commits by Queegy and Steals it is easy to see that the collective IQ of the feeders is at the begining of the Bell Curve. 🙂

    Reply this comment
  2. Rex the Wonderdog!
    Rex the Wonderdog! 13 July, 2013, 08:42

    Said UAW attorney Michael Nicholson, who represents some of the workers, “It’s very, very rare for any entity to go after people’s pensions because it puts people in the poor house.”
    ==
    GOOD. They put the poor and middle class in the “poor house”, karma baby.

    Reply this comment
  3. SkippingDog
    SkippingDog 13 July, 2013, 09:21

    I love karma.

    Reply this comment
  4. SkippingDog
    SkippingDog 13 July, 2013, 09:32

    “Could” is a long distance from “will” or even “may” John. Don’t get your hopes up too soon.

    Reply this comment
  5. Rex the Wonderdog!
    Rex the Wonderdog! 13 July, 2013, 10:36

    Hey Skippy is back…..how is Ms Apple….errrr…Ms Orange doing lil buddy????? You didn’t stay invisible for too long did ya!!!

    Reply this comment
  6. SkippingDog
    SkippingDog 13 July, 2013, 11:16

    How was your vacation? Did you pay Ms. Hawkins yet?

    Reply this comment
  7. us citizen
    us citizen 13 July, 2013, 12:42

    I love karma too. Let the games begin!

    Reply this comment
  8. Queeg
    Queeg 13 July, 2013, 14:40

    Donkey…poor thing….constipated? Forgot your meds? Your little white coat sweaty and soiled?

    Reply this comment
  9. Sean Morham SIlver
    Sean Morham SIlver 13 July, 2013, 17:14

    If big daddy gets his wish and dems control the house , of course he will try to bailout gov t pensions. But of course, me thinks financial ruin is a 2014 event for global economies.. This will make emp from sun spots a non event…praise The Lord and buy ammunition.

    Reply this comment
  10. Rex the Wonderdog!
    Rex the Wonderdog! 13 July, 2013, 19:29

    Hahahaha…JHey Skippy, the case aint over yet or didn’t ya hear about the 4DCA??????????????…Hahahaha….I think I have a new COA coming your way…..Is it true your gal Orange was all freaked out when my process server showed up at your front door?????? Get that pocket book out for the 4DCA!

    Reply this comment
  11. Rex the Wonderdog!
    Rex the Wonderdog! 13 July, 2013, 19:31

    I think I remember her from Duckor Spradling 😉

    Reply this comment
  12. skippingdog
    skippingdog 13 July, 2013, 23:46

    LOL

    Reply this comment
  13. stolson
    stolson 14 July, 2013, 07:51

    L.A. county is on financial loss watch…..wonder how new mayor will handle the finances. A BIG percentage don’t pay taxes, receive big EIC money from IRS, on benefits, and records show middle class types leaving. There is the property tax income, high sales tax revenue, all kinds of fees and cops sure write a lot of tickets — will see if offsets losses.

    Reply this comment
  14. ECK
    ECK 14 July, 2013, 19:54

    Skippy never has anything intelligent to say, so we should just ignore him. His comments are usually ad hominem attacks and are usually not relevant to the subject at hand. He’d probably just go back into his hole if he was ignored.

    Reply this comment
  15. Ulysses Uhaul
    Ulysses Uhaul 14 July, 2013, 20:02

    Eck….every poster on CWD is important…without diverse posts this site would quickly degrade to the whips and chains level….

    Reply this comment
  16. skippingdog
    skippingdog 14 July, 2013, 23:12

    @ ECK – You just don’t like what I have to say, but that doesn’t make it either unintelligent or inaccurate. Perhaps your outlook would change if your actually bothered to find out the facts about the matters upon which you opine.

    OTOH, perhaps you’re just an idiot and no facts would ever change your mind.

    Reply this comment
  17. Tough Love
    Tough Love 15 July, 2013, 07:28

    And Skippy, You don’t like what I have to say ….. that with Public Sector workers earning no less in cash pay than their Private Sector counterparts, there is ZERO justification for ANY greater pensions or benefits, let alone ones that are MULTIPLES greater in value at retirement … as is the case today.

    It’s not just the MUCH richer “formulas”. It’s ALSO the MUCH younger full (unreduced) retirement ages, the inclusion of COLA-increase provisions (almost never found in Private Sector Plans), the ridiculously low early-retirement adjustment factors, the very liberal definition of “pensionable compensation”, the ludicrous requirements necessary or a Disability retirement, etc., etc., etc. All of theses are VERY costly provisions.

    And you won’t answer my question …. Why are Public Sector workers deserving of a MUCH MUCH (multiples greater) better deal than the Taxpayers that pay their way …. and 80-90% on the Taxpayers’ dime ?

    Reply this comment
  18. Charles
    Charles 15 July, 2013, 07:41

    California can not go bankrupt.

    Reply this comment
  19. SkippingDog
    SkippingDog 15 July, 2013, 09:11

    TL – I don’t care one way or another about what you continually claim. Some of your criticisms may even have a minimal level of accuracy from time to time. Nevertheless, the primary reason public sector workers deserve their salaries, benefits, and pensions is because the elected representatives of the Taxpayers you keep citing made those contract agreements with them.

    If you can make a compelling case for changing the provisions of those long-standing agreements going forward, or if you can rally sufficient political support to change the laws that make those agreements prospectively binding, then you should do so. The fact remains that there is insufficient political will to make the draconian changes you desire, so you will be perpetually unhappy with the circumstances of public employment and keep attempting to blame the workers, managers, and elected officials for your unhappiness.

    Reply this comment
  20. SeeSaw
    SeeSaw 15 July, 2013, 09:21

    When medical insurance premiums increase, yearly, at a rate eclipsing the rate of COLA’s, something is certainly out of kilter, TL, but its not the public sector COLA’s. My retired carpenter spouse gets a DB pension of $723/mo–he gets no COLA’s, ever! So how does he manage to cover the current $1,008/mo, ABC medical insurance premium, which is secondary to Medicare? With the help of my public-sector DB pension, of course–the same pension that received the 2% COLA this year, which, in part, also goes to help cover the monthly, nine percent increase in my medical insurance premium. Its time for the private sector to step up and begin providing livable pensions for its workers.

    Reply this comment
  21. Rex the Wonderdog!
    Rex the Wonderdog! 15 July, 2013, 10:46

    Skippy never has anything intelligent to say, so we should just ignore him. -==

    LOL! He is a little man trying to hide, but is eventually found…….. 😉

    Reply this comment
  22. Tough Love
    Tough Love 15 July, 2013, 13:33

    Skippy, Refereeing to your above response to my earlier comment …..

    I agree with you that … The fact remains that there is insufficient political will to make the (necessary and just) pension & benefit changes.

    That’s what happens when the Public Sector Unions bribe the elected officials with campaign contributions and election support …. the elected officials betray their obligation to the Taxpayers, and do the Union’s bidding.

    Reply this comment
  23. Tough Love
    Tough Love 15 July, 2013, 13:38

    SeeSaw, YOUR family has one COLA-adjusted pension (yours) and one non-COLA-adjusted pension (your husbands).

    So how about the effect on the much large number of families with NO COLA-adjusted pensions (all PRIVATE Sector pensions) … many of whom have no pensions at all.

    There is a great deal of self interest in your comments …. with those with lesser (or no) pensions paying taxes, a portion of which pays for YOUR pension.

    Reply this comment
  24. SeeSaw
    SeeSaw 15 July, 2013, 13:58

    I’m a taxpayer, TL. I am supporting my own pension, as well as supporting folks like you, whose products and services I purchase. Of course, you are so altruistic, yourself, aren’t you! You bragged once about all the money you have–remember? Maybe you should start your own fund to help those who have no pensions at all. I have nothing left after I take care of my obligations, which include my own designated, charities. You should probably start on your own self-improvement plan, and stop being obsessed about pensioners in CA, who are not nearly as well off as you.

    Reply this comment
  25. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 16:01

    “no less in cash pay than their Private Sector counterparts,” 

    As I recall, even TL once reluctantly conceded that was incorrect. 
    ……………….

    Public sector pensions: ” 80-90% on the Taxpayers’ dime ?”

    Still trying to count that compensation twice. It still won’t fly. 
    Interest follows principal, but it’s MY principal, therefor it is MY interest. 

    The glass is at least half full.

    Reply this comment
  26. Tough Love
    Tough Love 15 July, 2013, 16:30

    SeeSaw, Yes, you’re a Taxpayer too, but Public Sector workers get about $4-$6 back in support of their excessive pensions & benefits for EACH $1 they pay in taxes. Not a bad deal gig… to the detriment of all OTHER taxpayers

    And I’m sure the readers would love to hear how you are …”supporting my own pension”.

    And if the excessive part of YOUR pension had remained in the Taxpayers’ pockets for THEM to spend instead of you, would the net effect on the economy not be the same ?

    But keep trying SeeSaw, perhaps one day you’ll eventually find one very minor justification for your excessive pension.

    And where did THIS nonsense come from …” You bragged once about all the money you have–remember? Having a grey-matter problem ?

    Reply this comment
  27. Karma Is a B
    Karma Is a B 15 July, 2013, 16:50

    There were recent sightings of cows flying over the moon in the Sacramento area. CALPERS believes that this sighting is a precursor to the private sector swimming in profits at 3X the pre-2008 rate, providing guaranteed life long pensions after 1 day of employment in the private sector and funding an immediate 10% increase in all public sector pensions. Word around Sacramento is that the next gusher of profits will be so large that pensions will be fully funded through 2100.

    Reply this comment
  28. Tough Love
    Tough Love 15 July, 2013, 16:57

    S Moderation, Why would I “concede” to something that is false ?

    And as to the Principal Follows Interest issue, either your status as a Public Sector worker (riding this gravy train, and not wanting it derailed) has closed your mind to think rationally, or your intellectual capacity is insufficiency to do so.

    Reply this comment
  29. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 17:21

    Economic Cost of Employee Compensation:

    Even The Heritage Foundation does not refute the raw numbers.  

    The TOTAL COMPENSATION of public and private sector workers is “nearly equal”, not cash pay. And pension costs are part of the total compensation.  You can’t count it twice. 

    On another front, CalPERS and CalSTRS both posted double digit returns for the year..

    The glass is at least half full.

    Reply this comment
  30. Tough Love
    Tough Love 15 July, 2013, 17:34

    S Moderation,

    Please supply link to the above …. I don’t believe it.

    Reply this comment
  31. eatingdogfood
    eatingdogfood 15 July, 2013, 18:58

    BANKRUPTCY; Just Do It !!!

    Reply this comment
  32. eatingdogfood
    eatingdogfood 15 July, 2013, 19:00

    If The Democrats Didn’t Give ” Sweetheart Deals ” To Your Public Service Union.
    Goon Employees To Get Reelected; You Would Have Plenty Of Money and The.
    Taxpayer would have Some Spare Change in His Pockets! Democratic Hustler
    Politicians + Corrupt Union Goons = BANKRUPTCY BABY! Time To Bring.
    RICO Conspiracy Charges Against The Hustler Corrupt Democrats and the.
    Criminal Unions!

    Reply this comment
  33. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 19:49

    http://www.calwatchdog.com/2012/12/07/pri-study-california-public-sector-compensation-soaring/

    Briggs and Richwine (2011):

    “In the case of California public employees, wages are slightly lower in the public sector. Initially, benefits appear only slightly higher, implying rough parity in compensation between the public and private sectors. ”

    (This is based on raw compensation numbers. Of course, they go on to “qualify” this data)

    ”However, properly accounting for retiree health benefits and defined benefit pension plans generates a public compensation premium of around 15 percent. The additional job security granted to public-sector employees is equivalent to an approximately 15 percent increase in public compensation, meaning that the total public-sector pay premium in California may be as high as 30 percent.” – 
    ………………
    http://74.217.243.137/docLib/20121105_NewTexasF.pdf

    Page 26,

    “Compared to private workers, state-local workers tend to earn less in wages but more in benefits. The net impact on overall pay is controversial.

    The Center on State and Local Government Excellence, the Center for Economic and Policy Research, the Eco- nomic Policy Institute, and the Center on Wage and Employment Dynamics (CWED) have all released similar studies arguing that the wage penalty and benefit premium for state-local workers either cancel out or tilt in favor of private workers.

    While these studies more or less properly measure wage differences, none of them considers the full benefit premium enjoyed by state-local workers.”

    Reply this comment
  34. SkippingDog
    SkippingDog 15 July, 2013, 19:51

    I had a nice lunch with Mack Jenkins today. He’s the Chief Probation Officer for San Diego County and a professional friend. It was amazing how much we agreed on the need to vigorously prosecute stalkers, cyber stalkers, and kooks who can’t seem to comply with restraining orders, other court orders, or the terms of their probation. He’s interested in some specific cases, so the next few weeks will be very interesting.

    Reply this comment
  35. SkippingDog
    SkippingDog 15 July, 2013, 19:53

    12.5% is a pretty nice return for a pension fund that all of the nuts keep claiming can’t possibly earn more than 4-5% each year.

    http://www.bloomberg.com/news/2013-07-15/calpers-earns-12-5-for-year-as-stocks-buoy-pension-s-returns.html

    Reply this comment
  36. SeeSaw
    SeeSaw 15 July, 2013, 19:59

    Nonsense? Grey matter, TL? It is apparent that it is your, “grey matter”, that went south. I had written on another forum, about a year ago, to the affect that my former CM receives over six times more than I in pension. To which you replied, in so many words, “If you think that is a lot, you should see what I make”. Remember, TL? Get that “grey matter” conjured up and recall how you bragged about your high income.

    Reply this comment
  37. SeeSaw
    SeeSaw 15 July, 2013, 20:03

    Its time for you to turn off that robo-call-making machine, EDF!

    Reply this comment
  38. SeeSaw
    SeeSaw 15 July, 2013, 20:05

    Robo-comment-making machine! Its been running for six months now, EDF.

    Reply this comment
  39. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 20:12

    Briggs and Richwine have long agreed about the rough parity in public and private pay. Their argument is that “properly accounting” for pension VALUE (not properly accounting for “cost”.  They argue that EVEN IF CalPERS hits all it’s ROI projections, and “normal cost” of pension holds, the VALUE is a comparably higher value to the employee.) 

    PLUS, allowing a fifteen percent “value” for employment security accounts for the “thirty percent advantage” for public sector workers. 
    …………
    Michael Genest coincidently came up with the same result: near equality in actual dollar costs to the employer for pay AND benefits, but a thirty percent higher “value” for the public.  I’m sure he didn’t plagiarize the work, he apparently charged a hefty fee for his “study”. 

    Oh, and in a previous interview, asking about his hefty state salary (and $100k + pension), he said “I could have made more in the private sector.”

    Reply this comment
  40. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 20:22

    I am sure Jason Ridgewine was with The Heritage Foundation when he did these studies with Briggs. 

    No longer, apparently, for what it’s worth. 

    http://www.huffingtonpost.com/2013/05/10/jason-richwine-resigns-heritage-foundation_n_3254927.html

    His “2013 report was widely mocked, even by Republicans the foundation hoped would support it.”

    Damn Republicans don’t seem to have much faith in Heritage.  Or Ridgewine. 

    Reply this comment
  41. Tough Love
    Tough Love 15 July, 2013, 20:57

    S. Moderation, I wasn’t asking for your summary or critique, but a LINK to the source of your earlier comment … so I could review it myself. AsI said earlier, I don’t believe it.

    Reply this comment
  42. Tough Love
    Tough Love 15 July, 2013, 21:00

    SeeSaw, I can’t imagine saying that …. and if I did, I probably was tipsy at the time.

    Reply this comment
  43. SeeSaw
    SeeSaw 15 July, 2013, 21:26

    Well then, you were tipsy. You said the same thing when I reminded you, another time, that you had referred to me as, “The epitome of avarice and greed.”

    Reply this comment
  44. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 21:51

    The links are apparently “awaiting moderation”. I’m on my phone now,I’ll recheck in the morning.

    Reply this comment
  45. S Moderation Douglas
    S Moderation Douglas 15 July, 2013, 21:57

    Good things come to those who wait, and, the glass is at least half full.

    http://74.217.243.137/docLib/20121105_NewTexasF.pdf

    Page 26,

    “Compared to private workers, state-local workers tend to earn less in wages but more in benefits. The net impact on overall pay is controversial.

    The Center on State and Local Government Excellence, the Center for Economic and Policy Research, the Eco- nomic Policy Institute, and the Center on Wage and Employment Dynamics (CWED) have all released similar studies arguing that the wage penalty and benefit premium for state-local workers either cancel out or tilt in favor of private workers.

    While these studies more or less properly measure wage differences, none of them considers the full benefit premium enjoyed by state-local workers.”

    Reply this comment
  46. Tough Love
    Tough Love 15 July, 2013, 22:25

    S. Moderation, Did you read the last sentence in what you said above …. particularly the word “premium”?

    Reply this comment
  47. Tough Love
    Tough Love 15 July, 2013, 23:09

    S Moderation, I just took a look at the link you supplied just above.

    Interestingly it support MY position (that Public Sector Compensation is excessive), not yours.

    A few quotes from the Executive summary:

    (a) California’s state and local governments continue to face historic budget crises, as exemplified by the persistent state deficit as well as the bankruptcy of the cities of Stockton, San Bernadino, Mammoth Lakes and,
    Compton. These crises have many causes; however a key driver of the budget crises is overly generous government compensation packages. Consequently, California’s budget crises will never be sustainably resolved without
    addressing the problem of overly generous state and local government compensation.

    (b) Biggs and Richwine (2011) illustrate that state and local government employees in California, even after adjusting for education and other relevant skills, earn a significant premium compared to their private sector
    counterparts.

    (c) The large compensation premium earned by government workers compared to workers in the private sector is an economic inefficiency whose costs are borne by California’s current and future taxpayers.

    (d) The benefit premium of state and local government workers is not a new phenomenon; but while time series data do not incorporate any of the skill adjustment factors included in Biggs and Richwine (2011), over the
    past 40-plus years California’s government compensation premium relative to California’s private sector compensation levels has been growing and is currently near historic highs.

    Reply this comment
  48. S Moderation Douglas
    S Moderation Douglas 16 July, 2013, 00:42

    On page 27 of the same link:

    “In the case of California public employees, wages are slightly lower in the public sector. Initially, benefits appear only slightly higher, implying rough parity in compensation between the public and private sectors. ”

    …………
    “However, properly accounting for retiree health benefits and defined benefit pension plans generates a public compensation premium of around 15%. The additional job security granted to public sector employees is equivalent to an approximately 15 percent increase in public compensation, meaning that the total public sector pay premium in California may be as high as 30 percent.”
    ………….
    Your statement: ” with Public Sector workers earning no less in cash pay than their Private Sector counterparts,” is what I was referring to.

    “NO LESS IN CASH PAY”

    Biggs and Richwine DO concede here, and in other sources, that California public sector wages are “slightly lower”.

    The “premium” of which you speak is their CLAIM that “properly evaluated” health and pension benefits is “worth” an extra 15 percent, and public job security is “worth” another 15 percent, so the public sector pay premium “may be” as high as 30 percent.

    We may debate their claim of a “premium” another day. My point is according to BLS and other data, public “cash pay” IS less than private sector counterparts, and The Heritage Foundation, Michael Genest, Cato Institute, and others do not deny that fact.

    Reply this comment
  49. S Moderation Douglas
    S Moderation Douglas 16 July, 2013, 00:49

    AND

    “80-90% on the Taxpayers’ dime ?”

    I see NO indication that Briggs, Richwine, Heritage, or ANYONE seriously believes that.

    And the glass is still at least half full.

    Reply this comment
  50. Donkey
    Donkey 16 July, 2013, 05:43

    Teddy Steals has no shame TL, and the use of logic and reason to enlighten him is a waste of time.

    The fact is that the RAGWUS feeders are over compensated at every turn by at least 50%, let the cutting begin. 🙂

    Reply this comment
  51. Tough Love
    Tough Love 16 July, 2013, 07:54

    S. Moderation, Since I have no desire to teach you finance, (re Interest Follows Principle), suffice it to say that there are only 2 sources of contributions (the workers and the Taxpayers). Investment earnings is not a “source” and while it lowers what both source would pay if the expenses were paid on a pay-as-you-go basis, that’s simply a time-value-of-money issue and does NOT change the cost.

    With that as the backdrop, for the VERY TYPICAL Public Sector worker, if you accumulated all of their pension contributions and accumulated them with investment earnings (at an annual rate consistent with a balanced portfolio in the year of contribution), rarely would the accumulated sum on the date of retirement be sufficient to buy more than 10%-20% of the VERY generous promised pensions. Go ahead, try it. Create a spreadsheet with your own contributions and see what the accumulated sum at retirement would buy.

    The 80%-90% remainder is the responsibility * of the Taxpayers (their contributions and the investment earnings thereon …. just like in your case). The BIG chunk of earnings, arises ONLY from those big taxpayer contributions and only because your promised pensions are excessive (by any and all reasonable metrics). And in the absence of those excessive pensions, not only would the Taxpayer contributions be much lower, but the earnings on those contributions would have stayed in the Taxpayers’ pockets, to perhaps to fund their much smaller pensions.

    * Above I said that Taxpayers are “responsible” for. I didn’t say they are paying that full 80%-90% share. They haven’t been (because it’s unaffordable without unacceptably high taxes or unacceptably low services), and they won’t be for the same reasons. Not sure when, but there is a very high probability that these Plans will not pay out anywhere near what has been promised. Detroit is now entering that door. Many will follow,

    Greed DOES have consequences.

    Reply this comment
  52. S Moderation Douglas
    S Moderation Douglas 16 July, 2013, 10:23

    Thank you for not teaching me.

    If I may correct you, there is ONE source of contributions. Ultimately, it all comes from the taxpayer.

    The workers wages come from the taxpayer. A portion of those wages (10% in my case) is contributed to CalPERS. An additional amount ( about 19% presently, in my case) is contributed as per contractual agreement.

    The 10% and the 19% are BOTH part of my “total compensation”. ( both from the taxpayer)

    My “total compensation” which Briggs and Richwine concede are “roughly equal” to private sector total compensation.

    My wages, my compensation, ergo MY principal, MY interest.

    My glass is at least half full.

    Yours is probably more full than you realize.

    Reply this comment
  53. Tough Love
    Tough Love 16 July, 2013, 11:22

    S. Moderation, If you understand how a final average pay Defined Benefit Plan works, the percentage of pay that the Employer (meaning Taxpayers) puts in is not fixed (at 19% or anything else). It is “whatever it takes above the EE contribution to fund the agreed-upon benefit”. Having an agreement with your Union to put in 19% is irrelevant …. unless of course that agreement includes terms that if the 19% is insufficient, then the promised benefits will be reduced accordingly.

    Of course no such terminology is included.

    And for the range of pension formulas in CA, TOTAL (EE + ER) level annual contributions of 30-60% of pay are necessary to fully fund the promised pensions over the working career of the employee. Obviously Safety workers are at the higher end, requiring about 60% of pay.

    And those percentages are just to fund the Normal Cost. ADDITIONAL contributions are necessary to amortize unfunded liabilities.

    Compare these %s to what Private Sector workers typically get … the employer’s 6.4% contribution toward Social Security and another 3-5% into a 401K Plan.

    It’s not very hard to see that Public Sector Pension Plans are GROSSLY EXCESSIVE, just by looking at the true cost.

    Reply this comment
  54. S Moderation Douglas
    S Moderation Douglas 16 July, 2013, 12:09

    Apparently GROSSLY EXCESSIVE is in the eye of the beholder:
    ……………………..
    A public employee group says it is encouraged by a new Field Poll that indicates California voters have mixed views on whether government pensions are too generous.

    While 37% of voters thing benefits for local and state government workers are excessive, 36% say they are about right. Some 17% think the benefits are not generous enough.

    The poll found that 67% of voters support establishing an upper limit or salary cap when calculating pension benefits.

    But a plurality of 50% of voters oppose linking deficit reduction efforts to taking away collective bargaining rights for public workers, the Field Poll found.

    Dave Low, chairman of Californians for Retirement Security, said the poll indicates to him that there is strong support for common-sense improvements to end abuses “but not for a dramatic overhaul that will undermine collective bargaining.”

    (LA Times July 10, 2012)
    ……………………………

    Sigh!

    Obviously I understand that the percentage the taxpayer contributes is not fixed. Why else would I say the percentage is about 19% PRESENTLY ? The employers percentage was zero, or near zero, at the beginning of this century. It is due to be REDUCED in the next year, Ironically, the reduction is due to:

    ” The lower dollar cost of pensions is a result of a drop in payroll, lower than expected salary increases and additional member contributions required by AB 340.”
    …………..
    Let’s hear it for “common-sense improvements to end abuses “but not for a dramatic overhaul”

    And for the glass that is still at least half full.

    Reply this comment
  55. Tough Love
    Tough Love 16 July, 2013, 12:24

    S, Moderation, I agree that “common sense” improvements are necessary, and with an unbiased evaluation of where we are, and where we are headed, those COMMON SENSE changes should be the material reductions that I have been calling for.

    Reply this comment
  56. S Moderate Douglas
    S Moderate Douglas 16 July, 2013, 16:53

    By “common sense” changes, are you proposing eliminating all DB pensions going forward, or do you have something more drastic in mind?

    Reply this comment
  57. Tough Love
    Tough Love 16 July, 2013, 18:50

    S. Moderation, The moral hazard of our elected official (addicted to Public Sector Union money) is impossible to overcome. DB Plans for ALL current workers should be frozen and replaced with DC plans with Taxpayer contributions comparable to those typically granted Private Sector workers by their employers …… with universal Public Sector worker participation in Social Security.

    And yes, I know this stops digging the financial hole we are in from getting deeper but doesn’t address the unfunded liability for PAST service accruals.

    And that can be split into 2 groups ….. those already retired, and the Past service of current actives. Cities and towns in the most desperate situation may need to reduce some of these promises. Obviously it’s better to be more careful with the treatment of those already retired as their choices are more limited (e.g., working a few more years). As to those still active, if past service accruals must be reduced, I’d look to reverse past retroactive enhancements first, and then (if legal) look the introduce a sliding scale of reductions with the greatest reductions associated with the largest pensions.

    Reply this comment
  58. S Moderate Douglas
    S Moderate Douglas 16 July, 2013, 19:32

    I suppose you can never have enough unbiased evaluations.

    Reply this comment
  59. Tough Love
    Tough Love 16 July, 2013, 20:29

    S. Moderation, Always look for who funds the study.

    Reminds me of a study many years ago which concluded that chocolate was good fore your teeth. If I recall correctly, it was funded by a chocolate candy company (Mars, I seem to recall).

    Reply this comment

Write a Comment

Leave a Reply


Tags assigned to this article:
DetroitJohn Seilerpensionsunions

Related Articles

U.S., CA Attack Manufacturing

JAN. 25, 2012 By JOHN SEILER New reports show how both the U.S. and California governments have imposed severe anti-manufacturing

Bills Report 1: Stadium/CEQA, other bills pass…

Here is a quick rundown of some of the bills to pass the California Legislature this week: Fracking regulations bill,

State, local taxes at record highs

Governments everywhere, especially in California, say they need more money. Budgets have been cut. But here’s the truth: Revenues from