My sister has worked for the state of KY for more than 20 years and has to worry if she will ever see a dime of her pension. Teachers and state workers are treated badly in this state as it is, now this. Of course the Gov is using this as an opportunity to screw people over even more.

ACT 10 started it all here..Walker demonized teachers...

Unless they're sitting on a sea of frackable oil like Texas, they run their state's finances into the ground, and then demonize those with pensions for continuing to breathe after retirement.

those who voted Republican will still have their guns

Mitch McConnell's pension and benefits are still intact. He lined his pockets for years, became a millionaire, and STILL will claim his pension from taxpayers. Time to re-examine the benefits of the politicians.

employee pension funds and use them for investment schemes including into their own companies, but who decided that states could invest their employee funds into higher risk investments just for "higher yield" when the pension funds were extremely stable and in no danger of being underfunded to begin with? This was not the state's money - it belonged to middle class workers who put it up directly and also took lower wages to build their future.

My personal opinion is that it's the pension formula that's the culprit. In PA they switched most new employees to a 401k without any pay increases. Cash flow for the retirement system doesn't seem to be a problem but when you plug in the "formulas" in for future retirees the system goes kablooey. That means more and more money has to go into the retirement system and less goes to actually running the school systems in PA, which leaves a lot of districts cash strapped and teachers paying out of pocket for basic supplies or begging parents to send their kids in with tissues, toilet paper and pencils. The bottom line is NO ONE KNOWS exactly how much any pension system has to pay out in 10, 20, 30 or more years into the future; you don't know how many pensioners are going to be withdrawing, paying in or how well the pension's investments will be doing. During the 1990's PA's Pension System was flush with money. The state, in all it's wisdom, decided to stop paying their share into the system. That decision left PA's pension fund in bad shape because of decisions to boost some pensions and consolidate all state workers, including the teacher pension system, which was not as well funded as the state worker pension. The end result was a system that swallowed more and more money and finally was nixed in the end (with no significant pay increases to offset the loss of a fixed pension or the state's savings in their pension obligations).

If it's any consolation, any state with a "bankrupt" pension system will not totally cut off it's pensioners, they will just get a reduced payment from what they were promised. There are still assets in the system, just not enough to pay the full amount promised. It's the same with Social Security. Bankrupt doesn't mean completely gone, just can't payout the promised payment (don't let them tell you otherwise).

It's a failed experiment. 401k was designed as a way for rich people to have access to yet another tax cut. It became the go to retirement funding mechanism by mistake. So, it is not surprising that it has been a failure.

401k assumes that everybody involved knows how to invest their money, when in fact few really do. People get laid off or reduce their contributions to pay bills or their kids tuition. It just doesn't work unless a person is making at least 80k per year or has no kids.

Also, when the 401k money is gone, it's gone. It can't be a good feeling to be 76 years old and have a zero balance in your 401k. What do you do then?

There is no reason for these pension systems to be failing outside of catastrophic mismanagement or politicians who can't give enough to breaks to their wealthy donors.

For anyone making under $50k a 401k is a poor replacement for a pension. But even a modest pension is not enough. Most people, even the rich, seem to have a poor understanding of financials in general. That probably starts with our education system, which if you're lucky will go over basic finances of a monthly budget. Any financial person will tell you the three stool legs of retirement are social security, your tax deferred IRA/401k and personal savings. The fact that most Americans have less than $50k in a retirement plan when they reach their 40s and 50s is scary in my book. As a gen Xer, I almost have a morbid curiosity about what will happen in the next couple of decades as my generation reaches ages where they can no longer work and don't have the resources to meet basic living costs.

Back to pensions, it's my opinion that most states have created a "crisis" by poor planning but also for allowing the "standard" rules of pensions to get them into situations where they are chasing 10%+ returns (high risk) and pushing ungodly amounts of money into the pension systems that starve basic operations and piss off the electorate thus making it easier to kill state pensions without returning the savings to the workers who will now be responsible for paying for their own retirement with their meager salaries. My state's pension system never seamed to have a cash flow problem until one used the pension formula to estimate future solvency. As I said before, NO ONE can predict with any accuracy what any pension fund's solvency will be 10 or more years out; is the "crisis" manufactured or real? The same goes for anyone else. Try and predict how much money you will actually be spending any given month in your 75th year. Go ahead and write it down (now) and see how close you are, I dare you. I'll guarantee that your prediction will be wrong. Hell I'll give you 100 chances and I bet none of them would be right. This is a fools errand and we've let the financial people and the politicians abandon a system that at least gives people a chance to live in dignity in their later years.

Very few people these days work 35 years for the same company. As they get more skills, many move to improve themselves for better pay and promotions.

In that circumstance, they would not work long enough with any one company to get a pension worth anything.

Last edited Mon Oct 29, 2018, 07:55 AM - Edit history (1)

Then, add states using the fund as a piggy bank and not paying it back.

Oh, and as stated above, the retired employees are fucking up everything by staying alive. Staying alive and collecting for a year or two, we can all accept that. But when they choose to stay alive for 15 or twenty years, slopping at the public trough, that's too much. It makes the politicians look bad.