4 ms·

While we're on the subject of misleading language, let's talk about why this is always labeled as "pension reform" and not what it actually is, "reducing paymen

While we're on the subject of misleading language, let's talk about why this is always labeled as "pension reform" and not what it actually is, "reducing payments", or even better, "reneging on a contract." I don't understand why it's controversial that California (or any other state) should be legally obligated to pay the pensions they promised to workers. People make long-term decisions based on those promised benefits, and pulling the rug out from under them is unconscionable. And, luckily, in California at least, illegal.

throwaway91111 10y ago
On the flip side, even the existence of pensions is amoral. Promising the funds of future generations, which may never materializes, condems citizens for decades of wasted spending. Just look at San Jose. Just look at Social Security. It is hard to identify these liabilities as working the way they were intended. And what do the people gain from them? Overpaid cops?
- deleted 10y ago
  [deleted]
- amluto 10y ago
  Pensions, done right, are nothing of the sort. You commit present funds to secure future payments. Social security, which is very much the opposite, has issues as a result. (I assume you meant immoral, not amoral.)
- michaelchisari 10y ago
  Are you unaware of what people gain from Social Security?
- kspaans 10y ago
  And yet the Canada Pension Plan is fully funded[0] and in no danger. California's problem is over-promising and mismanaging. 0 - http://www.osfi-bsif.gc.ca/Eng/oca-bac/as-ea/Pages/ascpp.aspx#toc-Ic http://www.osfi-bsif.gc.ca/Eng/oca-bac/as-ea/Pages/ascpp.asp...
  - throwaway91111 10y ago
    Agreed.
  - aboutthecpp 10y ago
    I get angry whenever people use the words "fully funded" to describe CPP. On one hand it's true--but it's also very misleading. After considering investment returns/time value of money/"net present value" of contributions: If you were a baby boomer, you'll get ~2x what you put in. If you were born in the 80's, you'll get half what you put in. So yes, they "fixed" CPP by changing it so that younger people are legally obligated to "invest" their money in a pension fund that returns half of what it should return based on the contributions younger people are making. I think CPP is in danger. The danger is that someone will create a clear enough explanation of how CPP was "fixed" and young people will decide that there is no reason for them to allow being screwed the way CPP does.
WalterSear 10y ago
Here's why: https://en.wikipedia.org/wiki/Odious_debt https://en.wikipedia.org/wiki/Odious_debt Private sector unions are essential and should get more protection from the government, but public sector unions don't make any sense to me.
- beatpanda 10y ago
  Why is there any category of worker that you feel doesn't deserve the right to collective bargaining? Why should any group of workers be prevented from organizing for rights and benefits as a group?
  - cabaalis 10y ago
    These workers are not required to work for the public. But public workers do have a duty to work in the most efficient method possible for the public. If that means no pension or less pension, that is the deal. I don't support pulling pensions that have already been promised, though. That's nothing but breaking a contract. Edit: To clarify first sentence, I mean that they do not have to take or hold these jobs.
  - arkis22 10y ago
    This is a really tough question. And I don't think people really want to argue that workers shouldn't have the ability to form groups and collectively bargain. To me, the current status isn't as simple as that. The current status that I see is that public pensions have outsized control over government spending, which means you can't just think of these unions in these simple happy terms. It also seems perverse to many private sector workers that public workers, who are unionized, pay dues to the unions, which lobby the government for more benefits. Essentially the government is paying people to lobby against itself. Private unions don't have this conflict of interest, their funding is based entirely on profits based on the market.
  - pingpongchef 10y ago
    The suggestion is not that workers don't deserve the right to collective bargaining. The suggestion is that management typically has insufficient incentive to negotiate aggressively for efficient, sustainable labor contracts. It can yield results such as BART's overtime rules [1]. [1]:http://www.mercurynews.com/2016/11/02/bart-janitors-whopping-ot-averaged-6-8-hours-every-day/ http://www.mercurynews.com/2016/11/02/bart-janitors-whopping...
adrr 10y ago
Pension issue isn't renegging on past promises. Its because SB 400(passed in 1999) did retroactive increases on pension payments and lowered retirement ages. Undo those changes.
- averagewall 10y ago
  Won't that hurt people who were trusting that promise to be kept? That could have caused people to stay in the same job and not make their own retirement savings or change to a higher paying job for the 2 decades between 1999 and today.
  - adrr 9y ago
    SB400 was passed under promise that it wouldn't need tax payer support. So a promise is being broken either way. We wouldn't be in the issue if Calpers wasn't terrible at investing. They did really stupid things like invest in the most risky tranche of CDOs during the subprime crisis. Thats not the fault of tax payers.
humanrebar 10y ago
That's true. But it's also true that contracts are subject to renegotiation in the case of bankruptcy. When we make financial deals we typically assume some of the risk of our financial partners.
- beatpanda 10y ago
  Did the state, or any city, declare bankruptcy?
  - paulddraper 10y ago
    No. States (currently) cannot declare bankruptcy. A city certainly can, and they have, e.g. San Bernardino, Stockton, Detroit.
- vkou 10y ago
  Why consider renegotiating pensions, instead of all the other agreements with creditors?
bpodgursky 10y ago
Ok, that's great, but at a point you simply run out of money. There's nothing ethical about pulling funds out of public schools to pay public pensioners 100k+ pensions. Politicians bribed unions with promises of payments which could not actually be sustained. That sucks, there need to be checks against that happening, but that doesn't need to be held sacrosanct at the cost of actual services. There's a reason that the US has a robust bankrupcy court for individuals -- it doesn't matter if you signed a contract for 15% credit card debt; at the point you are out of money and can't pay the bills, there's nothing ethical about keeping someone enslaved to uphold it. This is the exact same thing, except mostly it's their parents who elected corrupt politicians, so there's even less reason to hold people accountable for the decisions of irresponsible politicians two decades ago.
- PeterisP 10y ago
  If the state is unable to pay, then that's not a reason to renege on only these payments - just as in the "robust bankruptcy court for individuals" doesn't mean that you get to skip that one bill that you dislike while all your other assets and creditors are untouched, also if the state of California goes bankrupt, then all outstanding debts are in it together instead of removing pensions while paying other bills in full. The state has a budget surplus, it better start saving it up to pay its future bills. The fact that their obligations are unfunded is a major problem and borderline accounting fraud - they should start treating it as actual debt, even if suddenly noticing the elephant in the room would actually invoke talks of bankruptcy. Coincidentally, this would also mean that the voters can implement the required changes for future, no matter how scary the wording on the bill sounds.
- bazinga888 10y ago
  There's nothing ethical about letting a minority claim the majority of a societies wealth. You want to fund things? Get Trump to send a bill to Gates, Buffet, Koch's, etc. Why blame the public system for the mess private capitalism is truly responsible for creating?
  - bpodgursky 10y ago
shouldbworking 10y ago
The most recent proposal I find reasonable. Keeping currently funded benefits but no guarantee on ones that haven't been given yet. The government keeps raising my minimum social security retirement age, but since I'm far from it that doesn't change my plans much. I don't see how changing future pension benefits is any different. I understand your argument, and the real problem is that state never should have made those promises.
ThrustVectoring 10y ago
There's a difference between changing "if you work for us for another 20 years, here's what your pension would be" and "since you worked for us for another 20 years, here's what your pension is". As I understand it from the article, California's constitution prohibits changing how existing public-sectors accrue pension benefits going forward. This is much more acceptable, IMO. It's the difference between "we're paying you less than you thought we would for work you did" and "we're going to pay you less for work you'll do in the future". There's an unethical opening for convincing people to take a lower compensation now in exchange for the right to earn a higher compensation later and then reneging on it (see also: firing people immediately before a vesting cliff).
spikels 10y ago
> I don't understand why it's controversial that California (or any other state) should be legally obligated to pay the pensions they promised to workers. One reasonable objection is that public pensions are never fully funded at the time they were negotiated with the public sector unions. This is done on purpose to make the cost look lower to get a better total compensation package. They know they will almost certainly be bailed out later. This is fraud. Public workers should be forced into defined contributions plans like 401-Ks.
boona 10y ago
> I don't understand why it's controversial that California (or any other state) should be legally obligated to pay the pensions they promised to workers. Because the people of California can no longer afford it. It's unfortunate that baby boomers allowed politicians to kick the can down the road by negotiating pensions rather than salaries, but now fiscal reality is settling in. And you want to talk about unconscionable, what they have in effect done is a money transfer from their children to them, since now younger generations have to pay the pensions, while receiving none of the benefits. That's why you're seeing movements like Generation Screwed here in Canada (http://www.generationscrewed.ca/ http://www.generationscrewed.ca/).
- cmurf 10y ago
  Baby boomers didn't allow politicians to kick the can down the road, they demanded it. They got politicians of both parties to pander to them. The baby boom generation makes me think of the "Half a Life" Star Trek episode.

throwaway91111 10y ago

On the flip side, even the existence of pensions is amoral. Promising the funds of future generations, which may never materializes, condems citizens for decades of wasted spending. Just look at San Jose. Just look at Social Security. It is hard to identify these liabilities as working the way they were intended. And what do the people gain from them? Overpaid cops?

deleted 10y ago
[deleted]
amluto 10y ago
Pensions, done right, are nothing of the sort. You commit present funds to secure future payments. Social security, which is very much the opposite, has issues as a result. (I assume you meant immoral, not amoral.)
michaelchisari 10y ago
Are you unaware of what people gain from Social Security?
kspaans 10y ago
And yet the Canada Pension Plan is fully funded[0] and in no danger. California's problem is over-promising and mismanaging. 0 - http://www.osfi-bsif.gc.ca/Eng/oca-bac/as-ea/Pages/ascpp.aspx#toc-Ic http://www.osfi-bsif.gc.ca/Eng/oca-bac/as-ea/Pages/ascpp.asp...
- throwaway91111 10y ago
  Agreed.
- aboutthecpp 10y ago
  I get angry whenever people use the words "fully funded" to describe CPP. On one hand it's true--but it's also very misleading. After considering investment returns/time value of money/"net present value" of contributions: If you were a baby boomer, you'll get ~2x what you put in. If you were born in the 80's, you'll get half what you put in. So yes, they "fixed" CPP by changing it so that younger people are legally obligated to "invest" their money in a pension fund that returns half of what it should return based on the contributions younger people are making. I think CPP is in danger. The danger is that someone will create a clear enough explanation of how CPP was "fixed" and young people will decide that there is no reason for them to allow being screwed the way CPP does.

WalterSear 10y ago

Here's why: https://en.wikipedia.org/wiki/Odious_debt https://en.wikipedia.org/wiki/Odious_debt Private sector unions are essential and should get more protection from the government, but public sector unions don't make any sense to me.

beatpanda 10y ago
Why is there any category of worker that you feel doesn't deserve the right to collective bargaining? Why should any group of workers be prevented from organizing for rights and benefits as a group?
- cabaalis 10y ago
  These workers are not required to work for the public. But public workers do have a duty to work in the most efficient method possible for the public. If that means no pension or less pension, that is the deal. I don't support pulling pensions that have already been promised, though. That's nothing but breaking a contract. Edit: To clarify first sentence, I mean that they do not have to take or hold these jobs.
- arkis22 10y ago
  This is a really tough question. And I don't think people really want to argue that workers shouldn't have the ability to form groups and collectively bargain. To me, the current status isn't as simple as that. The current status that I see is that public pensions have outsized control over government spending, which means you can't just think of these unions in these simple happy terms. It also seems perverse to many private sector workers that public workers, who are unionized, pay dues to the unions, which lobby the government for more benefits. Essentially the government is paying people to lobby against itself. Private unions don't have this conflict of interest, their funding is based entirely on profits based on the market.
- pingpongchef 10y ago
  The suggestion is not that workers don't deserve the right to collective bargaining. The suggestion is that management typically has insufficient incentive to negotiate aggressively for efficient, sustainable labor contracts. It can yield results such as BART's overtime rules [1]. [1]:http://www.mercurynews.com/2016/11/02/bart-janitors-whopping-ot-averaged-6-8-hours-every-day/ http://www.mercurynews.com/2016/11/02/bart-janitors-whopping...

adrr 10y ago

Pension issue isn't renegging on past promises. Its because SB 400(passed in 1999) did retroactive increases on pension payments and lowered retirement ages. Undo those changes.

averagewall 10y ago
Won't that hurt people who were trusting that promise to be kept? That could have caused people to stay in the same job and not make their own retirement savings or change to a higher paying job for the 2 decades between 1999 and today.
- adrr 9y ago
  SB400 was passed under promise that it wouldn't need tax payer support. So a promise is being broken either way. We wouldn't be in the issue if Calpers wasn't terrible at investing. They did really stupid things like invest in the most risky tranche of CDOs during the subprime crisis. Thats not the fault of tax payers.

humanrebar 10y ago

That's true. But it's also true that contracts are subject to renegotiation in the case of bankruptcy. When we make financial deals we typically assume some of the risk of our financial partners.

beatpanda 10y ago
Did the state, or any city, declare bankruptcy?
- paulddraper 10y ago
  No. States (currently) cannot declare bankruptcy. A city certainly can, and they have, e.g. San Bernardino, Stockton, Detroit.
vkou 10y ago
Why consider renegotiating pensions, instead of all the other agreements with creditors?

bpodgursky 10y ago

Ok, that's great, but at a point you simply run out of money. There's nothing ethical about pulling funds out of public schools to pay public pensioners 100k+ pensions. Politicians bribed unions with promises of payments which could not actually be sustained. That sucks, there need to be checks against that happening, but that doesn't need to be held sacrosanct at the cost of actual services. There's a reason that the US has a robust bankrupcy court for individuals -- it doesn't matter if you signed a contract for 15% credit card debt; at the point you are out of money and can't pay the bills, there's nothing ethical about keeping someone enslaved to uphold it. This is the exact same thing, except mostly it's their parents who elected corrupt politicians, so there's even less reason to hold people accountable for the decisions of irresponsible politicians two decades ago.

PeterisP 10y ago
If the state is unable to pay, then that's not a reason to renege on only these payments - just as in the "robust bankruptcy court for individuals" doesn't mean that you get to skip that one bill that you dislike while all your other assets and creditors are untouched, also if the state of California goes bankrupt, then all outstanding debts are in it together instead of removing pensions while paying other bills in full. The state has a budget surplus, it better start saving it up to pay its future bills. The fact that their obligations are unfunded is a major problem and borderline accounting fraud - they should start treating it as actual debt, even if suddenly noticing the elephant in the room would actually invoke talks of bankruptcy. Coincidentally, this would also mean that the voters can implement the required changes for future, no matter how scary the wording on the bill sounds.
bazinga888 10y ago
There's nothing ethical about letting a minority claim the majority of a societies wealth. You want to fund things? Get Trump to send a bill to Gates, Buffet, Koch's, etc. Why blame the public system for the mess private capitalism is truly responsible for creating?
- bpodgursky 10y ago

shouldbworking 10y ago

The most recent proposal I find reasonable. Keeping currently funded benefits but no guarantee on ones that haven't been given yet. The government keeps raising my minimum social security retirement age, but since I'm far from it that doesn't change my plans much. I don't see how changing future pension benefits is any different. I understand your argument, and the real problem is that state never should have made those promises.

ThrustVectoring 10y ago

There's a difference between changing "if you work for us for another 20 years, here's what your pension would be" and "since you worked for us for another 20 years, here's what your pension is". As I understand it from the article, California's constitution prohibits changing how existing public-sectors accrue pension benefits going forward. This is much more acceptable, IMO. It's the difference between "we're paying you less than you thought we would for work you did" and "we're going to pay you less for work you'll do in the future". There's an unethical opening for convincing people to take a lower compensation now in exchange for the right to earn a higher compensation later and then reneging on it (see also: firing people immediately before a vesting cliff).

spikels 10y ago

> I don't understand why it's controversial that California (or any other state) should be legally obligated to pay the pensions they promised to workers. One reasonable objection is that public pensions are never fully funded at the time they were negotiated with the public sector unions. This is done on purpose to make the cost look lower to get a better total compensation package. They know they will almost certainly be bailed out later. This is fraud. Public workers should be forced into defined contributions plans like 401-Ks.

boona 10y ago

> I don't understand why it's controversial that California (or any other state) should be legally obligated to pay the pensions they promised to workers. Because the people of California can no longer afford it. It's unfortunate that baby boomers allowed politicians to kick the can down the road by negotiating pensions rather than salaries, but now fiscal reality is settling in. And you want to talk about unconscionable, what they have in effect done is a money transfer from their children to them, since now younger generations have to pay the pensions, while receiving none of the benefits. That's why you're seeing movements like Generation Screwed here in Canada (http://www.generationscrewed.ca/ http://www.generationscrewed.ca/).

cmurf 10y ago
Baby boomers didn't allow politicians to kick the can down the road, they demanded it. They got politicians of both parties to pander to them. The baby boom generation makes me think of the "Half a Life" Star Trek episode.