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Pensions (guaranteed payouts) are simply unsustainable - that’s why they’ve gone away in the US private sector. The public sector can’t afford it either. I live

Pensions (guaranteed payouts) are simply unsustainable - that’s why they’ve gone away in the US private sector. The public sector can’t afford it either. I lived in upstate NY, the property taxes were high because of strong public unions. I moved south 4 years ago, my taxes are less than half of what they were in NY for a 2500sq/fr home compared to our current 4000sq/ft home. The education system is no better in NY than it is down here in my town. The public workers/teachers down here are not unionized - it’s not great for them, but I’m not willing to pay for their gold-plated benefits and pensions. People continue to vote with their feet in situations where the local governments are unwilling/unable to change. In my subdivision, of 100 families 95% are transplants from up north. It doesn’t take a genius to figure out why - that old style of lush benefits for public workers is no longer competitive.

toomuchtodo 9y ago
There was an HN thread about this thirteen days ago, you should check it out: https://news.ycombinator.com/item?id=16524316 https://news.ycombinator.com/item?id=16524316 https://www.nytimes.com/2018/03/05/opinion/investor-class-pensions.html https://www.nytimes.com/2018/03/05/opinion/investor-class-pe... It turns out it's a political farce that pensions are unsustainable. Voting with your feet doesn't help (although I can understand the appeal of avoiding taxes that prior political representatives set you up for, that's just poor reserves planning), as the federal government will end up backstopping state finances (with those funds coming out of federal income taxes). Public workers will (and should) continue to find ways to increase their salary and benefits to more closely align them to their value (as we saw succeed in West Virginia, and shortly, Oklahoma).
- GiorgioG 9y ago
  It’s like anything else, if I can get the same service at a better price, why pay more? Voting with my feet worked for me. Pensions cost taxpayers a ton of money. Maybe SF can afford it today, but these are long term commitments for very real (fixed pension) costs. Someday SF will no longer be in this boom - then what?
  - toomuchtodo 9y ago
    We have different value systems, but that's okay. EDIT: > Our value systems aren’t really relevant here - I would love a pension and I’d love it if we all had them, but that ship sailed a long time ago. Yes, they are. I support pensions for those who have them because I support societal safety nets, which those are a part of. You say the ship has sailed, but it hasn't. If people advocated for these sorts of systems, they would exist. They still can exist. Workers just need to demand them. > Nope, I’m just not willing to pay for it since paying more for the same services does nothing to better my situation. I like taxes. With them, I buy civilization. Otherwise, it's going to be a race to the bottom, which you might be fine with, but I am not. Everybody has to be comfortable with their decisions.
    - GiorgioG 9y ago
      Our value systems aren’t really relevant here - I would love a pension and I’d love it if we all had them, but that ship sailed a long time ago. Am I mad that public sectors with strong unions fight to maintain their benefits? Nope, I’m just not willing to pay for it since paying more for the same services does nothing to better my situation. As a software developer, I’m unlikely to find a position with a pension and a decent salary. I could go work for a university that might provide a pension but the pay would be dismal. In a system with choice between pensioned and non-pensioned competitors, eventually the pension burdens will make them less competitive. Just to provide some background, my dad worked in a union (UAW) for nearly 40 years - so I benefited from that system. The issue to me boils down to economic competitiveness. Pension systems are expensive and pose immense risk. Most businesses can’t afford it today. Governments can just borrow money to make up for gaps - until they can’t (Detroit.)
      - eldavido 9y ago
        Pensions are ok as long as they're (a) fully funded and (b) managed well. Politics makes both hard. (a) because it's much easier to promise benefits without fully contributing the present value of future liabilities. Ask the average taxpayer how much a pension costs, they'd have no idea how to even start thinking about all the complex financial math this requires (life expectancy, discount rates, return expectations, etc) so it's too easy to play games. Especially when game playing=lower taxes and more benefits. (b) because pensions are huge pots of money and it's just too hard not to touch that. Though CalPERS seems to have resisted this temptation to some extent, which I find impressive. Believe me, I wish I was wrong, but we're talking about basic human nature here, which I don't think is something you can really change.
rileymat2 9y ago
Why are the pensions unsustainable? The actuaries should be able to estimate how much a cohort will need on average reasonably well. The wage share has been decreasing https://en.wikipedia.org/wiki/Wage_share https://en.wikipedia.org/wiki/Wage_share. I suppose it is not sustainable to increase earnings and maintain pensions forever.
- GiorgioG 9y ago
  Because most pension systems are not fully funded. http://www.governing.com/gov-institute/voices/col-public-pension-cuts-unsustainable-retirement-systems.html http://www.governing.com/gov-institute/voices/col-public-pen... https://www.cnbc.com/2017/10/18/state-pension-funds-continue-to-fall-behind-heres-how-much-you-owe.html https://www.cnbc.com/2017/10/18/state-pension-funds-continue...
  - 8note 9y ago
    that seems like a different problem than pentions being inherently unsustainable.

toomuchtodo 9y ago

There was an HN thread about this thirteen days ago, you should check it out: https://news.ycombinator.com/item?id=16524316 https://news.ycombinator.com/item?id=16524316 https://www.nytimes.com/2018/03/05/opinion/investor-class-pensions.html https://www.nytimes.com/2018/03/05/opinion/investor-class-pe... It turns out it's a political farce that pensions are unsustainable. Voting with your feet doesn't help (although I can understand the appeal of avoiding taxes that prior political representatives set you up for, that's just poor reserves planning), as the federal government will end up backstopping state finances (with those funds coming out of federal income taxes). Public workers will (and should) continue to find ways to increase their salary and benefits to more closely align them to their value (as we saw succeed in West Virginia, and shortly, Oklahoma).

GiorgioG 9y ago
It’s like anything else, if I can get the same service at a better price, why pay more? Voting with my feet worked for me. Pensions cost taxpayers a ton of money. Maybe SF can afford it today, but these are long term commitments for very real (fixed pension) costs. Someday SF will no longer be in this boom - then what?
- toomuchtodo 9y ago
  We have different value systems, but that's okay. EDIT: > Our value systems aren’t really relevant here - I would love a pension and I’d love it if we all had them, but that ship sailed a long time ago. Yes, they are. I support pensions for those who have them because I support societal safety nets, which those are a part of. You say the ship has sailed, but it hasn't. If people advocated for these sorts of systems, they would exist. They still can exist. Workers just need to demand them. > Nope, I’m just not willing to pay for it since paying more for the same services does nothing to better my situation. I like taxes. With them, I buy civilization. Otherwise, it's going to be a race to the bottom, which you might be fine with, but I am not. Everybody has to be comfortable with their decisions.
  - GiorgioG 9y ago
    Our value systems aren’t really relevant here - I would love a pension and I’d love it if we all had them, but that ship sailed a long time ago. Am I mad that public sectors with strong unions fight to maintain their benefits? Nope, I’m just not willing to pay for it since paying more for the same services does nothing to better my situation. As a software developer, I’m unlikely to find a position with a pension and a decent salary. I could go work for a university that might provide a pension but the pay would be dismal. In a system with choice between pensioned and non-pensioned competitors, eventually the pension burdens will make them less competitive. Just to provide some background, my dad worked in a union (UAW) for nearly 40 years - so I benefited from that system. The issue to me boils down to economic competitiveness. Pension systems are expensive and pose immense risk. Most businesses can’t afford it today. Governments can just borrow money to make up for gaps - until they can’t (Detroit.)
    - eldavido 9y ago
      Pensions are ok as long as they're (a) fully funded and (b) managed well. Politics makes both hard. (a) because it's much easier to promise benefits without fully contributing the present value of future liabilities. Ask the average taxpayer how much a pension costs, they'd have no idea how to even start thinking about all the complex financial math this requires (life expectancy, discount rates, return expectations, etc) so it's too easy to play games. Especially when game playing=lower taxes and more benefits. (b) because pensions are huge pots of money and it's just too hard not to touch that. Though CalPERS seems to have resisted this temptation to some extent, which I find impressive. Believe me, I wish I was wrong, but we're talking about basic human nature here, which I don't think is something you can really change.

rileymat2 9y ago

Why are the pensions unsustainable? The actuaries should be able to estimate how much a cohort will need on average reasonably well. The wage share has been decreasing https://en.wikipedia.org/wiki/Wage_share https://en.wikipedia.org/wiki/Wage_share. I suppose it is not sustainable to increase earnings and maintain pensions forever.

GiorgioG 9y ago
Because most pension systems are not fully funded. http://www.governing.com/gov-institute/voices/col-public-pension-cuts-unsustainable-retirement-systems.html http://www.governing.com/gov-institute/voices/col-public-pen... https://www.cnbc.com/2017/10/18/state-pension-funds-continue-to-fall-behind-heres-how-much-you-owe.html https://www.cnbc.com/2017/10/18/state-pension-funds-continue...
- 8note 9y ago
  that seems like a different problem than pentions being inherently unsustainable.