Plots Against Pensions and Early Morning Viewing

Report: The Plot Against Pensions (2013).  Anyone that has been following the story of Detroit’s emergency manager and the ongoing bankruptcy will find this report interesting.  The author, David Sirota, evaluates the general state of theThe Plot Against Pensions national debate over public pensions and makes the case that the impending collapse of pension programs is largely a perception manufactured by those that have an interest in seeing their elimination.

Mr. Sirota notes that states and cities have been failing to fully fund their annual pension obligations for years. Instead, they have used funds that were supposed to go to pensions to finance expensive tax cuts and corporate subsidies.  A key finding of the report is that public pensions face a 30-year shortfall of $1.38 trillion, or $46 billion on an annual basis. However, this is dwarfed by the $80 billion a year states and cities spend on corporate subsidies.

The report highlights some of the states – Kentucky, Arizona, Rhode Island, and Kansas among others – where this debate is being played out.

It is critical that SavvyReaders understand what is happening with regards to public pensions and appreciate there is likely to be an impact to the way in which we need to prepare for retirement.

The Plot Against Pensions report is available in .pdf format.

Mobile Application: Bloomberg TV+.  As I am getting ready for work, attending to this blog (updating content, checking comments, deleting spam, etc.) and enjoying my morning cup of coffee, my preferred “background noise” source is Bloomberg Television.

Bloomberg TV

This 24-hour global business & financial news network app offers their live TV feed, featured stories, and important stories from the last 24 hours.  Moreover, users get exclusive interviews with influential people in business, finance and investment; and access to Bloomberg shows.  This source serves as a good way to stay abreast of what factors – the who, what, and when – are shaping the economy and are likely to impact your retirement portfolio.

Unfortunately, right now the app is limited to the Apple iPad and Apple TV, my preferred delivery method.

Find out more at http://www.bloomberg.com/mobile/tv/

 

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7 comments on “Plots Against Pensions and Early Morning Viewing
  1. Good post!
    I read recently a few states that are cutting their pension plans and think it’s awful!! Those workers (firefighters, police officers, etc.) earned their pensions and should receive what they earned and what was promised!

    • SavvyJames says:

      Thanks for stopping by, Leona. Yep, I really feel as though public sector employees are being made the scapegoats for poor management. How dare they work for a municipality, perform their job over 20 – 30 years, meet all the retirement/pension terms that were established before their employment, and then expect to be paid once they reach 60 – 70!

  2. Informative paper exploring the unfortunate relationship between Pew and the Arnold Foundation. Pew has been getting some backlash for this and I can only hope that they will reconsider this partnership going forward.

    The middle class is becoming the sacrificial lamb in not only the public pension debate, but in the greater discussion of income inequality. If you wonder what the motive is of conservative activists in the pension debate, just see how many of them have ties to the financial institutions and management funds that are drooling over the thought of an influx of individual participants in the market that are basically mandated to buy their product through their employers defined contribution (401K) plan. Imagine all those fees they will get!

    If this were truly about the greater good and helping workers and taxpayers, they would push for common sense reforms of public pensions, like simply mandating that states and municipalities make their required contributions. If you look at the financial or actuarial reports of the places with the biggest problems (NJ, Illinois) you will see that they went years without paying hardly anything into the plan. And then they wonder why there is nothing there?

    It’s a sad state of affairs and I can’t help feeling we are in a race to the bottom as a goal of anti-public plan organizations is to pit those who have a defined benefit plan against those who do not.

    • SavvyJames says:

      Absolutely could not agree more. I started paying more attention to the pension debate – particularly with regards to public pensions – as I learned more about what was going on in Detroit. While many forces (e.g. the great recession, incompetent management at the city/state levels, unions that may have overreached in some cases, etc.) have played a role to some degree, one thing is clear; there is a concerted effort by those with the power (e.g. elected officials, Wall Street, large corporations) to protect their own interests at the expense of those (e.g. the middle class, pensioners) that largely are powerless.

      I can’t stress enough that people need to be aware of this developing phenomenon as they develop and manage their retirement plan. Savvy investors – particularly those less than 40 – have to consider that it is more likely than not that negative changes will impact any pensions (e.g. Social Security and defined benefit plans) they are including in their planning. Thanks for stopping by, Kay and adding some thoughtful comments.

  3. Karen says:

    What they are doing to those people in Detroit is absolutely wrong. How can this even be happening to them? You work 25-30 years thinking that you will have a decent retirement and you were loyal to them and this is what happens? I have been following the story of Detroit a little and I did not realize that there were issues with other municipalities as well, although I probably should have seen it coming. This is definitely a topic that needs requires more attention.

    • SavvyJames says:

      No doubt there needs to be greater conversation about the topic and creative solutions developed. It is completely unacceptable to essentially renege (e.g. the Detroit Emergency Manager is offering $0.16 on the dollar) on the promise of a pension – after an individual has committed a significant number of years of service and is not really in a position to seek new employment. How many people really believe 60 – 70 year old citizens can simply return to the workforce…and more importantly, should be forced into that situation?

  4. SavvyJames says:

    Thanks for the recognition and sharing of this important information.

2 Pings/Trackbacks for "Plots Against Pensions and Early Morning Viewing"
  1. […] The Plot Against Pensions: This post at RetirementSavvy highlights a new report that analyzes the recent relationship between the Pew Charitable Trusts and the Laura and John Arnold Foundation. Pew has been a good source for non-partisan research on public policy, but this new partnership does call into question the motivation behind the recent Pew Charitable Trusts’ Public Sector Retirement System Project. The Arnold Foundation advocates cutting public employee benefits as a means of public pension reform. John Arnold is a hedge fund manager and former trader with the Enron Corporation which was responsible for the destruction of the retirement savings of its employees through its own greed and negligence. It’s difficult to see why he should be shaping the discussion of changes to the retirement plans of millions of Americans. […]

  2. […] defined benefit plans are undergoing significant fundamental changes as previously discussed here, here, and […]

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