6 ms·

> It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts. Boohoo. Public service union members should have

by gok 8y ago

> It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts. Boohoo. Public service union members should have thought about that before pursuing a pyramid scheme retirement plan instead of a defined contribution pension like the rest of us.

chris_mc 8y ago
Why in the ever loving fuck are you blaming the _workers_ for this shortsightedness instead of the government organizations who are about to fuck those people over when they're 70? Maybe the administrators of the pension accounts and financial planners for these organizations should have done better by the people who are busting their (collective) asses to provide services for you, the taxpayer?
- deleted 8y ago
  [deleted]
- dunpeal 8y ago
  Read sykhic's comments below. These unsustainable sweetheart deals were negotiated by the government employees and their unions.
  - dv_dt 8y ago
    Isn't there equal responsibility for politicians & gov'ts who agreed to the negotiated contracts? Were they not agreeing in good faith?
    - hn_throwaway_99 8y ago
      Corporate management and worker unions have what I'd call a "healthy" adversarial relationship. Corporations want to pay workers as little as possible, unions want workers to make as much as possible, so hopefully you get a decent compromise. With public sector unions, especially in smaller cities and states, the relationship is more incestuous and oftentimes the settlements aren't really made in good faith. The politicians desire the political support of the unions they are negotiating with, and figure by the time the pension bomb explodes it will be some other poor sucker's problem. Taxpayers are the ones that get screwed.
      - dunpeal 8y ago
        Exactly. Not to mention that by the time it gets to the elected official's desk for signature, it's been negotiated between government employees and their senior managers, who are also government employees... It's basically a deal negotiated by government employees among themselves, and approved by a politician who often needs to maintain favor among these employees. Add to that the fact that these agreements only lead to a crisis long after the politician is retired (or dead), and it's no wonder these unsustainable deals get approved as a matter of course.
- gok 8y ago
  The flip-side of collective bargaining is collective responsibility, I'm afraid. The federal government saw this coming 30 years ago, moved to a hybrid, mostly-defined-contribution system and (surprise!) is doing fine. Most state and municipal unions fought to keep their defined-benefit plans and now are going to suffer for it.
  - wahern 8y ago
    Huh? As of 2012 "[t]he vast majority of full-time civilian federal workers receive roughly half of their retirement compensation through their defined-benefit pension plans (the rest comes from Social Security)." (https://www.nationalreview.com/corner/private-vs-public-defined-benefit-pensions-veronique-de-rugy/ https://www.nationalreview.com/corner/private-vs-public-defi...) That National Review hit piece notwithstanding, in truth defined benefit plans are, technically speaking, the most efficient form of deferred compensation. Lowest overhead with maximum value received by the [average] retiree, which theoretically permits employers to minimize total amount of compensation. The rub is that the employer needs to fully fund the liabilities as they accrue. Government and unions, however, have been content for state employers to "pay as you go"--use today's contributions to pay yesterday's liabilities. That's a recipe for disaster. It sucks that we've thrown the baby out with the bath water--swapped pensions for 401(k)s. Defined benefit plans are annuities, and most economists agree that the most efficient retirement savings plan is an annuity. How we pay for that annuity is a different matter altogether. We know that people aren't rational enough to choose to put their retirement savings into an annuity, so it's obvious the employer should do this for them. The only real question is how to structure the premium payments so employers can't cheat (and employees can't be complicit in the cheating).
    - lotsofpulp 8y ago
      Reality shows annuities aren’t the most efficient retirement savings plans, otherwise this conversation about underfunded pensions wouldn’t be happening. No insurance company would sell an annuity for as little as what governments claim they cost. And anytime you get a big pot of money, there will be corruption and cheating. The most efficient retirement plan is having multiple successful children who are raised to take care of their parents.
- landryraccoon 8y ago
  > Why in the ever loving fuck are you blaming the _workers_ for this shortsightedness instead of the government organizations who are about to fuck those people over when they're 70? Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? I am personally not going to get 50-100% of my maximum salary as guaranteed compensation for the rest of my life until I retire - are you? I'm not super enthusiastic about paying taxes for someone else to get a better retirement deal than me, either. I'm fine with paying government employees what they're worth while they're working - hell, I think most of them deserve a raise. But they also should have defined contribution retirement plans, not defined benefit, like everyone else working in private industry.
  - candiodari 8y ago
    > Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? Furthermore, if you refuse to pay for their pensions ... do future kids get to refuse to pay for yours ? (either directly, or through devaluing the currency, just in case your answer is that private sector pensions are safe) But we all know that there's no answer here, so it'll be devaluation. At least that means private and public pensions are equally screwed (I'm leaning socialist, so I like fairness in the sense that people get treated the same).
    - landryraccoon 8y ago
      > And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United States, a future congress can revoke, alter or amend any law passed by a previous congress. So if you want your pensions to be secured, the benefits cannot be guaranteed by faith in future governments! In this sense, a defined contribution plan is more secure than a defined benefit plan. This is because a defined contribution plan belongs to the recipient as soon as the funds are allocated - even if a future government changes the rules, the money that's already in your 401K is yours! Consider the alternative - are you saying that future generations are always bound to the decisions of past generations, even though they may not even have been alive or of voting age? If a law is fair and benefits society, that future generation will respect it because it benefits society. If that law is unfair to them they can and absolutely should change that law! How could it be otherwise? As a socialist this should utterly appall you. Do you believe that laws put into place by capitalists and large corporations constitute binding pacts between governments and their citizens, and that any future government that seeks to amend them towards a more equitable balance is now acting unfairly? If the median income in a nation is $40K, but the median pension given by the state exceeds that income, then who is suffering unfairly if the pension is reduced to be more in line with what the average worker earns? How as a socialist could you justify a pensioner earning more than a productive active worker?
- ericmcer 8y ago
  No one busts their ass like government workers! Government jobs are well known for high job security and very few performance based incentives. Not exactly a recipe for hard work.
betterunix2 8y ago
Like it or not these pensions are already legal obligations of state and local governments. Yell about or at the unions all you want, but if these obligations are not met, get ready for lawsuits and negative consequences for municipal credit ratings. Would you rather pay somewhat higher taxes now to cover pension obligations, or significantly higher taxes later because of the higher muni bond rates your state will have to deal with when the problem worsens (or your state is forced into bankruptcy)? This is not just a problem of public employees or their unions. You are on the hook for these payments and will remain on the hook even if starting today everyone had a defined-contribution plan. Yes, this is your problem too.
- randysavage 8y ago
  Good luck keeping the highest end of you tax base around to cover the shortfalls.
  - betterunix2 8y ago
    Maybe so, but wealthy people seem to like living in high-tax areas like NYC and SF, and I am pretty sure they also like having paved roads, functioning transit systems, and all the other things they would lose if the state had to find a way to meet its obligations without raising taxes. Things are not yet hopeless and if we had politicians who did their jobs and demonstrated competent leadership we could sort out this mess.
    - randysavage 8y ago
      > if we had politicians who did their jobs and demonstrated competent leadership we could sort out this mess. This feels like the crux of the problem, but we've got the politicians we voted for. I'm starting to wonder if its even possible for the average person to vote in the long-term interests of their community against their own short-term interest. Some will... but the majority?
      - felix_nagaand 8y ago
nerbert 8y ago
As opposed to the people who are responsible for managing it, who must be the victims I assume?
rdlecler1 8y ago
And all that money they saved increased demand for real estate, so not only does the younger generation get stuck with the bill for everyone who found a free lunch, but the younger generation now has to pay more for real estate because there’s less supply.

by gok 8y ago

chris_mc 8y ago

Why in the ever loving fuck are you blaming the _workers_ for this shortsightedness instead of the government organizations who are about to fuck those people over when they're 70? Maybe the administrators of the pension accounts and financial planners for these organizations should have done better by the people who are busting their (collective) asses to provide services for you, the taxpayer?

deleted 8y ago
[deleted]
dunpeal 8y ago
Read sykhic's comments below. These unsustainable sweetheart deals were negotiated by the government employees and their unions.
- dv_dt 8y ago
  Isn't there equal responsibility for politicians & gov'ts who agreed to the negotiated contracts? Were they not agreeing in good faith?
  - hn_throwaway_99 8y ago
    Corporate management and worker unions have what I'd call a "healthy" adversarial relationship. Corporations want to pay workers as little as possible, unions want workers to make as much as possible, so hopefully you get a decent compromise. With public sector unions, especially in smaller cities and states, the relationship is more incestuous and oftentimes the settlements aren't really made in good faith. The politicians desire the political support of the unions they are negotiating with, and figure by the time the pension bomb explodes it will be some other poor sucker's problem. Taxpayers are the ones that get screwed.
    - dunpeal 8y ago
      Exactly. Not to mention that by the time it gets to the elected official's desk for signature, it's been negotiated between government employees and their senior managers, who are also government employees... It's basically a deal negotiated by government employees among themselves, and approved by a politician who often needs to maintain favor among these employees. Add to that the fact that these agreements only lead to a crisis long after the politician is retired (or dead), and it's no wonder these unsustainable deals get approved as a matter of course.
gok 8y ago
The flip-side of collective bargaining is collective responsibility, I'm afraid. The federal government saw this coming 30 years ago, moved to a hybrid, mostly-defined-contribution system and (surprise!) is doing fine. Most state and municipal unions fought to keep their defined-benefit plans and now are going to suffer for it.
- wahern 8y ago
  Huh? As of 2012 "[t]he vast majority of full-time civilian federal workers receive roughly half of their retirement compensation through their defined-benefit pension plans (the rest comes from Social Security)." (https://www.nationalreview.com/corner/private-vs-public-defined-benefit-pensions-veronique-de-rugy/ https://www.nationalreview.com/corner/private-vs-public-defi...) That National Review hit piece notwithstanding, in truth defined benefit plans are, technically speaking, the most efficient form of deferred compensation. Lowest overhead with maximum value received by the [average] retiree, which theoretically permits employers to minimize total amount of compensation. The rub is that the employer needs to fully fund the liabilities as they accrue. Government and unions, however, have been content for state employers to "pay as you go"--use today's contributions to pay yesterday's liabilities. That's a recipe for disaster. It sucks that we've thrown the baby out with the bath water--swapped pensions for 401(k)s. Defined benefit plans are annuities, and most economists agree that the most efficient retirement savings plan is an annuity. How we pay for that annuity is a different matter altogether. We know that people aren't rational enough to choose to put their retirement savings into an annuity, so it's obvious the employer should do this for them. The only real question is how to structure the premium payments so employers can't cheat (and employees can't be complicit in the cheating).
  - lotsofpulp 8y ago
    Reality shows annuities aren’t the most efficient retirement savings plans, otherwise this conversation about underfunded pensions wouldn’t be happening. No insurance company would sell an annuity for as little as what governments claim they cost. And anytime you get a big pot of money, there will be corruption and cheating. The most efficient retirement plan is having multiple successful children who are raised to take care of their parents.
landryraccoon 8y ago
> Why in the ever loving fuck are you blaming the _workers_ for this shortsightedness instead of the government organizations who are about to fuck those people over when they're 70? Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? I am personally not going to get 50-100% of my maximum salary as guaranteed compensation for the rest of my life until I retire - are you? I'm not super enthusiastic about paying taxes for someone else to get a better retirement deal than me, either. I'm fine with paying government employees what they're worth while they're working - hell, I think most of them deserve a raise. But they also should have defined contribution retirement plans, not defined benefit, like everyone else working in private industry.
- candiodari 8y ago
  > Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? Furthermore, if you refuse to pay for their pensions ... do future kids get to refuse to pay for yours ? (either directly, or through devaluing the currency, just in case your answer is that private sector pensions are safe) But we all know that there's no answer here, so it'll be devaluation. At least that means private and public pensions are equally screwed (I'm leaning socialist, so I like fairness in the sense that people get treated the same).
  - landryraccoon 8y ago
    > And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United States, a future congress can revoke, alter or amend any law passed by a previous congress. So if you want your pensions to be secured, the benefits cannot be guaranteed by faith in future governments! In this sense, a defined contribution plan is more secure than a defined benefit plan. This is because a defined contribution plan belongs to the recipient as soon as the funds are allocated - even if a future government changes the rules, the money that's already in your 401K is yours! Consider the alternative - are you saying that future generations are always bound to the decisions of past generations, even though they may not even have been alive or of voting age? If a law is fair and benefits society, that future generation will respect it because it benefits society. If that law is unfair to them they can and absolutely should change that law! How could it be otherwise? As a socialist this should utterly appall you. Do you believe that laws put into place by capitalists and large corporations constitute binding pacts between governments and their citizens, and that any future government that seeks to amend them towards a more equitable balance is now acting unfairly? If the median income in a nation is $40K, but the median pension given by the state exceeds that income, then who is suffering unfairly if the pension is reduced to be more in line with what the average worker earns? How as a socialist could you justify a pensioner earning more than a productive active worker?
ericmcer 8y ago
No one busts their ass like government workers! Government jobs are well known for high job security and very few performance based incentives. Not exactly a recipe for hard work.

betterunix2 8y ago

Like it or not these pensions are already legal obligations of state and local governments. Yell about or at the unions all you want, but if these obligations are not met, get ready for lawsuits and negative consequences for municipal credit ratings. Would you rather pay somewhat higher taxes now to cover pension obligations, or significantly higher taxes later because of the higher muni bond rates your state will have to deal with when the problem worsens (or your state is forced into bankruptcy)? This is not just a problem of public employees or their unions. You are on the hook for these payments and will remain on the hook even if starting today everyone had a defined-contribution plan. Yes, this is your problem too.

randysavage 8y ago
Good luck keeping the highest end of you tax base around to cover the shortfalls.
- betterunix2 8y ago
  Maybe so, but wealthy people seem to like living in high-tax areas like NYC and SF, and I am pretty sure they also like having paved roads, functioning transit systems, and all the other things they would lose if the state had to find a way to meet its obligations without raising taxes. Things are not yet hopeless and if we had politicians who did their jobs and demonstrated competent leadership we could sort out this mess.
  - randysavage 8y ago
    > if we had politicians who did their jobs and demonstrated competent leadership we could sort out this mess. This feels like the crux of the problem, but we've got the politicians we voted for. I'm starting to wonder if its even possible for the average person to vote in the long-term interests of their community against their own short-term interest. Some will... but the majority?
    - felix_nagaand 8y ago

nerbert 8y ago

As opposed to the people who are responsible for managing it, who must be the victims I assume?

rdlecler1 8y ago

And all that money they saved increased demand for real estate, so not only does the younger generation get stuck with the bill for everyone who found a free lunch, but the younger generation now has to pay more for real estate because there’s less supply.