6 ms·

Being from Chicago I say it's a good thing to pay down the pension obligations. Pension obligations can cause a lot of problems in the future. Although I don'

by TDL 10y ago

Being from Chicago I say it's a good thing to pay down the pension obligations. Pension obligations can cause a lot of problems in the future. Although I don't believe governments should be growing their budgets aggressively, squaring gov obligations is a good thing.

WalterSear 10y ago
They aren't paying them down. They are just paying them.
shiftpgdn 10y ago
Why do government pensions even exist anymore? There is absolutely no reason for them and they need to go. The government can pay a reasonable salary if they wanted skilled workers.
- TDL 10y ago
  I agree with you. I think pensions are a mistake in general, however, many municipalities, counties, and states are locked in to existing pensions schemes. I am for doing away with pensions in the future, but the existing obligations need to be funded appropriately.
  - sphinx65 10y ago
    Pensions aren't the mistake, low interest rates are the mistake.
  - chrisseaton 10y ago
    Doing away with pensions? Huh? How would that work? What would everyone do when they got too old to work? Do you think people should just build up a savings account? Without an annuity what would they do if they live longer than they planned and run out of savings?
    - TDL 10y ago
      There are other accounts/instruments that can replace public pensions. The reality is that politicians over promise on pensions and create unsustainable obligations for future generations.
      - chrisseaton 10y ago
        They could just use defined contribution then there's no future liability.
        TDL 10y ago
        Agreed
        HillaryBriss 10y ago
        Yes. But try getting that enacted into law in California. Public sector unions are strongly against that sort of arrangement. They prefer that the taxpayer guarantee them a defined level of pension benefit (no matter what the investment markets do). In other words, it seems that public sector unions want the taxpayer to insulate them from the real world shocks which the other 80% of people have to endure. It's a very valuable benefit and it's understandable that they fight for it. But it is super expensive for the cities and states. In LA there was an attempt about 5 years ago to gather signatures just to put a measure on the ballot to transition city workers from defined benefit to a 401K style defined contribution pension plan. But certain public sector unions made it known that they planned to send their people out to sign those petitions with unverifiable, fake names and addresses. This would increase the likelihood of a failed signature verification process, meaning that the petition would probably not succeed at getting the measure on the ballot. So they dropped the whole effort.
    - eweise 10y ago
      You mean what would all the government workers do when they get too old to work? I don't know but I don't get a pension so why should I pay for theirs?
- sphinx65 10y ago
  Because they were promises made a long, long time ago, when interest rates were high enough to support the idea of pensions and retirement?
  - huherto 10y ago
    Excuse my ignorance. How are interest rates and pensions connected?
    - khuey 10y ago
      The higher investment returns are, the less money I need to set aside now to pay future obligations. The lower they are, the more I need to set aside.
    - sphinx65 10y ago
      Pensions don't make any money with interest rates as low as they are. They need to be around 8% or so for pensions to be viable. Currently pension funds are doing the same unwise speculative investments everyone else is making because nothing else pays enough. As go pensions so goes retirement in general. Pensions were perfectly viable until the reign of Greenspan.
- yequalsx 10y ago
  For me the question is why don't all workers have pensions? As I understand it most 401(k) plans have high expense ratios, rely on people actively participating and generally leave workers with an underfunded retirement. I prefer a system much like the French. Leaving it up to an individual to plan 40 years into the future does not seem like a sensible social policy.
  - jonathankoren 10y ago
    Pensions used to be common until the 1980s. I found this report from the St Louis Fed talking about the transition. https://www.stlouisfed.org/publications/central-banker/summer-2002/a-pension-for-change https://www.stlouisfed.org/publications/central-banker/summe...
    - sjg007 10y ago
      Wall Street wanted in on the action which is why we got the 401k.
  - brooklyndavs 10y ago
    Agree, especially with all of the choices that employees have and the risks & fees associated with those choices. Mostly, it seems to be another way to funnel middle class money into the financial industry. The history of the 401k is interesting and was never intended to replace a work's pension. "It was intended to allow taxpayers a break on taxes on deferred income. In 1980, a benefits consultant named Ted Benna took note of the previously obscure provision and figured out that it could be used to create a simple, tax-advantaged way to save for retirement. The client for whom he was working at the time chose not to create a 401(k) plan." https://en.wikipedia.org/wiki/401(k) https://en.wikipedia.org/wiki/401(k)
- dragonwriter 10y ago
  > The government can pay a reasonable salary if they wanted skilled workers. Government doesn't even pay a reasonable salary + benefits for many positions including pensions, in overall monetary value, and the public and politicians aren't generally interested in fixing that.
- brooklyndavs 10y ago
  Also, keep in mind, because of pensions most government workers don't get social security when they retire. My mother, a public school teacher for 20 years, only lives on her pension. Now, if we think government employees should pay into and get social security when they retired thats a debate that might be worthwhile to have. However, in the meantime the trade off has been lower salary and no social security in the public sector vs private sector but you do get a pension in the end.
- toast0 10y ago
  It's much harder for a government employer to remove a pension than for a private employer, so it's going to take a lot longer for the public sector to eliminate pensions than it has taken the private sector. Governments tend not to go out of business, or get acquired. Governments rarely have the finances to buy out a pension (if they did, they would fund their pension obligations). Governments have a much harder time implementing a dual class workforce where newer employees don't get a pension, because they will often see public pressure when terms of employment are unequal -- a private employer may get pressured too, it can ignore it.

by TDL 10y ago

WalterSear 10y ago

They aren't paying them down. They are just paying them.

shiftpgdn 10y ago

Why do government pensions even exist anymore? There is absolutely no reason for them and they need to go. The government can pay a reasonable salary if they wanted skilled workers.

TDL 10y ago
I agree with you. I think pensions are a mistake in general, however, many municipalities, counties, and states are locked in to existing pensions schemes. I am for doing away with pensions in the future, but the existing obligations need to be funded appropriately.
- sphinx65 10y ago
  Pensions aren't the mistake, low interest rates are the mistake.
- chrisseaton 10y ago
  Doing away with pensions? Huh? How would that work? What would everyone do when they got too old to work? Do you think people should just build up a savings account? Without an annuity what would they do if they live longer than they planned and run out of savings?
  - TDL 10y ago
    There are other accounts/instruments that can replace public pensions. The reality is that politicians over promise on pensions and create unsustainable obligations for future generations.
    - chrisseaton 10y ago
      They could just use defined contribution then there's no future liability.
      - TDL 10y ago
        Agreed
      - HillaryBriss 10y ago
        Yes. But try getting that enacted into law in California. Public sector unions are strongly against that sort of arrangement. They prefer that the taxpayer guarantee them a defined level of pension benefit (no matter what the investment markets do). In other words, it seems that public sector unions want the taxpayer to insulate them from the real world shocks which the other 80% of people have to endure. It's a very valuable benefit and it's understandable that they fight for it. But it is super expensive for the cities and states. In LA there was an attempt about 5 years ago to gather signatures just to put a measure on the ballot to transition city workers from defined benefit to a 401K style defined contribution pension plan. But certain public sector unions made it known that they planned to send their people out to sign those petitions with unverifiable, fake names and addresses. This would increase the likelihood of a failed signature verification process, meaning that the petition would probably not succeed at getting the measure on the ballot. So they dropped the whole effort.
  - eweise 10y ago
    You mean what would all the government workers do when they get too old to work? I don't know but I don't get a pension so why should I pay for theirs?
sphinx65 10y ago
Because they were promises made a long, long time ago, when interest rates were high enough to support the idea of pensions and retirement?
- huherto 10y ago
  Excuse my ignorance. How are interest rates and pensions connected?
  - khuey 10y ago
    The higher investment returns are, the less money I need to set aside now to pay future obligations. The lower they are, the more I need to set aside.
  - sphinx65 10y ago
    Pensions don't make any money with interest rates as low as they are. They need to be around 8% or so for pensions to be viable. Currently pension funds are doing the same unwise speculative investments everyone else is making because nothing else pays enough. As go pensions so goes retirement in general. Pensions were perfectly viable until the reign of Greenspan.
yequalsx 10y ago
For me the question is why don't all workers have pensions? As I understand it most 401(k) plans have high expense ratios, rely on people actively participating and generally leave workers with an underfunded retirement. I prefer a system much like the French. Leaving it up to an individual to plan 40 years into the future does not seem like a sensible social policy.
- jonathankoren 10y ago
  Pensions used to be common until the 1980s. I found this report from the St Louis Fed talking about the transition. https://www.stlouisfed.org/publications/central-banker/summer-2002/a-pension-for-change https://www.stlouisfed.org/publications/central-banker/summe...
  - sjg007 10y ago
    Wall Street wanted in on the action which is why we got the 401k.
- brooklyndavs 10y ago
  Agree, especially with all of the choices that employees have and the risks & fees associated with those choices. Mostly, it seems to be another way to funnel middle class money into the financial industry. The history of the 401k is interesting and was never intended to replace a work's pension. "It was intended to allow taxpayers a break on taxes on deferred income. In 1980, a benefits consultant named Ted Benna took note of the previously obscure provision and figured out that it could be used to create a simple, tax-advantaged way to save for retirement. The client for whom he was working at the time chose not to create a 401(k) plan." https://en.wikipedia.org/wiki/401(k) https://en.wikipedia.org/wiki/401(k)
dragonwriter 10y ago
> The government can pay a reasonable salary if they wanted skilled workers. Government doesn't even pay a reasonable salary + benefits for many positions including pensions, in overall monetary value, and the public and politicians aren't generally interested in fixing that.
brooklyndavs 10y ago
Also, keep in mind, because of pensions most government workers don't get social security when they retire. My mother, a public school teacher for 20 years, only lives on her pension. Now, if we think government employees should pay into and get social security when they retired thats a debate that might be worthwhile to have. However, in the meantime the trade off has been lower salary and no social security in the public sector vs private sector but you do get a pension in the end.
toast0 10y ago
It's much harder for a government employer to remove a pension than for a private employer, so it's going to take a lot longer for the public sector to eliminate pensions than it has taken the private sector. Governments tend not to go out of business, or get acquired. Governments rarely have the finances to buy out a pension (if they did, they would fund their pension obligations). Governments have a much harder time implementing a dual class workforce where newer employees don't get a pension, because they will often see public pressure when terms of employment are unequal -- a private employer may get pressured too, it can ignore it.