We hear the same refrain across the nation: public sector pensions are destroying our economy. The modest pensions paid to teachers, police officers, firefighters, and social workers are a threat to our future.
Matt Taibbi examined these claims in this article in Rolling Stone. Read it and weep or rage or get active to stop the zillionaire’s from looting the hard-earned pensions of public sector employees.
Read David Sirota’s report “The Plot Against Pensions.”
Read David Sirota’s exposé of the PBS deal to take $3.5 million from Arnold for a series about the “pension crisis.”
Read about PBS’ decision to return Arnold’s money.
Read about David Sirota’s discovery that the Arnold Foundation underwrote a Brookings report on public pensions.
The puzzle: why would a multi-billionaire devote so much effort to stripping people of modest pensions that they earned for working 25-30 or more years? What is it that he finds so troubling about a man or woman receiving $40,000, 50,000, or 60,000 a year in retirement? Would he prefer penury for pensioners?
It’s wage theft plain and simple.
Yes,
Stealing from the poor, near poor, and lower middle class to fatten the wealthy.
Reverse Robin Hood
Appears to me that the zillionaires want control of defined contribution plans. In my state and a few others, public employees are not eligible to collect Social Security or their SS pension is offset by their government pensions. In Ohio teachers contribute 25% of their salary into the state pension fund – 11% from the teacher/14% from the employer – employer’s share is part of the overall negotiated financial package, so the employer’s contribution really belongs to the teacher..it ceases to belong to “taxpayers”. The fund is well managed and secure.
You might look and see who manages the money in the retirement fund. My sunspots ion is that you will find some “zillionaires” already there on one capacity or another.
This explains a lot about the mentality of the anti-pension multi-billionaires. They have enough money to live comfortably for 1000 lifetimes, yet they want more money at the expense of retired elderly who are barely getting by.
We should tax the rich at Ronald Reagan rates.
We should tax the rich at Eisenhower rates.
As if that would solve the unfunded pension problems at the state levels and the debt problem at the federal level.
No, what would solve the unfunded pension problems would be to, well, fund the pensions. After all, the people who earned them have already done so.
“No, what would solve the unfunded pension problems would be to, well, fund the pensions.”
This reminds me of the statement that “[t]he way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”
Which is to say, yes, the pensions would be funded if they had been funded. But we know by now that nobody with any real involvement in the budgeting process actually wants to fund them. The same goes for the rest of us — all the people who don’t have any real involvement in the budgeting process but who don’t want to pay higher taxes or accept reduced services to fund pensions. Presumably out of deference to our feelings, the people who make the budgeting decisions don’t ask us to make these sacrifices.
Some people will say things like “we should fund the pensions,” but
it’s just a general, aspirational sort of statement. It’s not meant to be taken literally, as in, “the state should enact legislation that requires it to pay an extra $5 billion per year into the pension funds until 2030, starting now.” There aren’t any public demonstrations to support laws like that, and nobody with any clout actually lobbies for laws like that. They’ll lobby for legislation that cuts benefits, and they’ll lobby for legislation that increases benefits, but no group with clout lobbies for legislation to increase contributions. At least none that I’m aware of.
Obviously. That’s the problem in Illinois. The state doesn’t have enough revenue under current tax legislation to fund up those public pensions. That’s even the problem in Detroit. Police and Fire and other municipal workers are being paid their pensions out of a fund that is not fully paid up to where it was supposed to be. Where to get the money? The emergency manager is proposing that those retirees forgo half of their cost of living allowance. We’ll see if they agree. It’s the best deal they are going to get.
It all goes to show that with a defined benefit pension, IF the governmental agency goes bankrupt, the pension risks being discontinued.
Roughly the same thing is happening federally. Because of the immense federal debt, if interest rates go up, so much of the tax revenue would be used paying the interest on those bonds that there wouldn’t be much left for the rest of the government’s activities.
That’s just short sighted. At leased with defined contribution plans, what you and your employer jointly contribute is yours. YOU own it, and can manage the payout in any way you want for your retirement. You don’t have to depend on the solvency of any particular town, or city to pay you what they agreed to. If the money ain’t there, it ain’t there, as in Detroit, which owes 18 billion overall. Why? It borrowed money against future revenue to pay pensions and then half the people in the city moved out and two of the three auto companies went bankrupt and were bailed out by the government, i.e. by your taxes. Of course, they’ve done better recently and claim to have paid off the federal funds, which I guess they have, but in effect GM was sold at a bargain basement price to the UAW, and I got left holding worthless stock in the unreorganized company. GM used to be a blue chip. Now it’s a poo chip.
Mr. Arnold sees the way to make more $$$$$$$ by stripping retirees of their pension and forcing them to invest in financial plans that provide more fees for his ilk and no guarantees. WIN for Mr. Arnold and Wall St.. The bugaboo of pensions ruining the economy also diverts attention from the real problem: Mr. Arnold and the Wall St. financiers who are clearly above the laws that apply to the rest of us. It’s perfect for them and they are very good at convincing the rest of the nation that the little guy is the villain. I keep hoping the average voter figures this out, otherwise, most of us are toast.
I don’t plan on being toast because of those avaricious, ego inflated bastards-they already got part of my hide in the housing deflation but they didn’t get all of me. F’em!
That Spanish monk was supposed to be 793 not 193.
“Would he prefer penury for pensioners?”
Probably not. I’m sure that the billionaires who want to do away with public pensions see this issue as more money for them but don’t think about what they would be doing to the economy and the boost in poverty.
Has anyone done a study that will show what will happen to the economy when more than four million teachers are out of jobs and the only teaching jobs available pay half or less what they are paying today?
What teachers are paid goes back into the economy and supports other jobs and the profits of companies that produce consumer products. But what billionaires earn usually goes into other investments and doesn’t purchase millions of houses, cars, clothing food, etc.
I predict that if the fake ed reformers are successful, the hit to the US economy will result in millions of jobs lost and an economic crises that the world will not recover from. And I also predict, the billionaires will see their wealth double, triple …
No doubt the oceans will rise and cover the California coasts too.
You may be jesting but that is a real risk. Most of the major earthquake faults in California are way overdue for a big one—so say the experts. The best place to live is at an elevation of one hundred feet or more above sea level at least twenty miles or more from the ocean and on bedrock. I wouldn’t recommend living close to the ocean or on flat ground away from bedrock because that strata may liquify in an earthquake. That has happened before both in Southern California and in San Francisco.
But I once read that New York City sits on top of one of the biggest inactive earthquake faults in the world. That doesn’t mean it will always be inactive.
The largest earthquake on record took place in the Mississippi river valley before Columbus arrived and studies show that one changed the course of the river and dropped the valley floor ten feet in a few seconds.
Lloyd, it’s actually an interesting analogy. Seems to me that pension funding and climate change involve similar kinds of behavioral economics. Not to mention the threshold question of whether one denies or accepts the premise of that the crisis actually exists in the first place.
Sometimes back, I researched this topic and wrote a post about it and it isn’t a crises anymore than the public schools are failing.
Even the states that were hit the worst still had enough money to pay full benefits for years and they would never go bankrupt—unless the fake Ed Reformers win and take all the tax dollars that fund public schools. And some states are fully funded, which means they have enough funds to pay for longer than thirty years.
Just like Social Security, if there isn’t enough money to pay full benefits, they pay out partial benefits.
Exactly. Similarly, Harlan probably researched it recently and found that climate change isn’t a crisis.
The good news is doesn’t matter what I say about climate change or pension funding. The laws of human behavior indicate that nothing will be done until there is an undeniable, immediate crisis. At which point everyone just grabs what they can and recriminates.
BTW, public employee pension funds are legally required to pay *full* benefits. Absent changes in the law, they don’t pay partial benefits unless the responsible government entity goes bankrupt. In between now and the moment of bankruptcy, absent changes in the law, pensions will be paid as long as it’s possible to do so, whether it requires new taxes or cuts in services. Whether you call that a “crisis” is largely a question of terminology. I’m in what seems to be a disturbingly small minority of people who both (1) think it is a “crisis” *and* (2) believe that the proper response is to take very difficult measures to fund pensions now, because the laws of compound interest tell us that it gets exponentially more difficult — i.e., effectively impossible — to do each year as the can gets kicked down the road.
If they do nothing, then years down the road it will become a crises. Don’t they call that “kicking the can”?
But you are not claiming the CO2 emissions will cause those earthquakes are you? I was alluding to climate change raising the ocean level. Maybe fracking.
Earthquakes? I don’t know where that came from, but from what I’m reading about fracking, that may already be an open Pandora’s box.
But of course, to the likes of the Koch brothers and their peers, profit trumps everything else. After all, as they lay waste to the land, they have the money to live anywhere they want away from the desolation left behind.
If your curious how much California spends on its public education system, here’s a link. Scroll down to page 15 for the breakdown by agency.
Click to access SummaryCharts.pdf
You may also want to see the racial/ethnic breakdown:
Click to access SummaryCharts.pdf
California has 1,043 school districts with 10,296 schools teaching 6.2 million students and more than 2 million live in poverty.
http://www.cde.ca.gov/ds/sd/cb/ceffingertipfacts.asp
In addition, child poverty in California is higher than the national average.
After reaching a two-decade low of about 16% in 2001, the child poverty rate in California has been trending upward. The Great Recession accelerated the increase: by 2011, nearly 1 in 4 children was living in poverty in California (24.3%). That’s slightly more than 2 million children, by official measures. Poverty among California’s children is much higher than it is among working-age adults (15.6%) and seniors (8.2%).
http://www.ppic.org/main/publication_show.asp?i=721
Hey Harlan, is that supposed to be a “joke”—either about how “silly” it is to worry about people who worked for years watching their pensions get looted?
Or is it a side-slapper about how “ridiculous” it is to think that the oceans are rising? (Even though every serious scientist knows that they are rising.)
Again, as with most of your postings, I’m surprised because every now and then you come up with something that has a modicum of good sense.
However, most of the time what you write is so bizarre and uninformed. It’s astonishing how age and bitterness set in for so many older guys—and soon their hated for “the other” gets so extreme that they end up like you; so angry and so full of bile that you end up saying and believing very, very dumb things.
The ocean is doing more than rising. All that extra CO2 is changing the acidification of the oceans and putting life in the ocean at risk, but I’m sure that won’t stop the Koch brothers and their followers (Harlan, are you one of them?) from believing nothing is wrong and global warning is not a problem to worry about.
http://ocean.nationalgeographic.com/ocean/critical-issues-ocean-acidification/
http://www.epa.gov/climatechange/science/indicators/oceans/acidity.html
http://www.theguardian.com/environment/2013/oct/03/ocean-acidification-carbon-dioxide-emissions-levels
“Rate of ocean acidification due to carbon emissions is at highest for 300m years
Overfishing and pollution are part of the problem, scientists say, warning that mass extinction of species may be inevitable.”
http://thinkprogress.org/climate/2014/02/26/3332141/ocean-acidification-kills-scallops/
http://apps.seattletimes.com/reports/sea-change/2014/jan/22/struggling-next-steps/
I could list a lot more evidence of what CO2 emissions are going to the earth besides just causing the oceans to rise.
The oceans are rising and Christ is rising. What’s the diff?
We know the oceans are rising but there is no indication that Christ is on his way back. For instance, in 500 AD, there were three predictions that Jesus would return that year. Then in 193, a Spanish monk prophesied the 2nd coming of Christ and the end of the world.
Next was January 1, 1000, the Millennium Apocalypse when various Christian clerics predicted the end of the world on this day.
The next judgement day was predicted for October 19, 1533 thanks to the calculations of Michael Stifel, a mathematician.
In 1694, Johann Jacob Zimmermann believed that Jesus would return and the world would end that year.
In 1700, Henry Archer predicted another end of days.
In 1757, it was Emanuel Swedenborgh.
Next, George Rapp. He predicted that one September 14, 1829, Christ would begin his reign on earth.
In 1840, it was Jakob Lorber who said he heard Christ’s voice telling him it would happen 2,000 years after Christ’s death on the cross.
In 1837, it was John Wesley, the founder of the Methodist Church.
In 1844, it was William Miller who said it would happen on October 22 of that year.
In August, 1847 it was George Rapp, the founder of the Harmony Society. Even as he lay dying he continued to claim that Christ would return in his lifetime.
In 1861, it was Joseph Morris.
In 1874, it was Charles Taze Russell, the first presdient of what is now the Watchtower Society of Jehovah’s Witnesses. When Christ didn’t appear, he taught his followers that Chris was invisibly and ruling.
In 1891, it was Joseph Smith who founded the Mormons. He made this prophecy in 1835.
There’s more.
For instance, Herbert W. Armstrong who predicted Christ’s return four times and then claimed it would happen before HWA died, which took place in January 1986—his death, not Christ’s return.
Love it Lloyd. Do we “all” know the oceans are rising? Do even you “know” the oceans are rising?
You “know” the oceans are rising in just the same way your generous history of false prophets “knew” of Christ’s return. Was it deception or self-deception?
It was illusion and delusion in any case.
Do you even “know” a definition of “knowledge”?
Even worse than the oceans rising is the fact that the CO2 is changing the Ph balance to be more acidic threatening life in the ocean.
I don’t think even the Koch brothers can find a way to lie that one away to fool all of their foolish followers.
And you’re one of those serious scientists, I suppose, or maybe just a true believer because if humans couldn’t affect the weather then they’d be . . . well meaningless in life, eh?
Perhaps you should consider that I ALWAYS know what I’m talking about, not just sometimes.
And is being old a crime?
What are you, young?
Even if so, does that excuse your responsibility for the errors you espouse?
Given that public employee pension benefits are “modest,” should they be increased?
In NY State, the state legislature can increase public employee pension benefits, including retroactive increases. It has done this many times, with two of the most significant instances happening in 2000 and 2007.
Should it do it again?
It depends. I’d have to hear more information and look at what they were promised initially,
However, in contrast to all of these other states and municipalities, no one apparently pilfered the New York State pension accounts. In other states, like neighboring New Jersey, a succession of Republican governors played games with those pension funds—which I always thought was a serious crime; didn’t Jimmy Hoffa go to prison for that same thing?
And then, in an effort to keep obtuse and wildly unrealistic promises to “give you a tax break if you elect me”, these creeps and shysters effectively stole from these pension funds, and now their successors, from the same Republican party are BLAMING the public servants for being “greedy” and “selfish”. (Notice how they never talk about cops or firefighters; like the cowards that they are, they instead go after the predominantly female teachers.)
A REAL progressive in the White House would have his Attorney General declare war on the Pension Embezzlers and get the entire nation “stirred up” about a REAL CRISIS.
But alas, yet another Privatizer is in the White House. Will we survive this onslaught against anyone who works for a living, and isn’t rich? Stay tuned. Meanwhile FIGHT BACK!
Who ran Detroit for forty years? Republicans? Uh . . . no.
There are a number of reasons for teachers to prefer a defined contribution plan, including no worries about vesting. Dr. Ravitch has a defined contribution plan at NYU, so perhaps she might discuss the advantages and disadvantages of that kind of retirement plan.
Why should teachers be worried about vesting? With the exception of those who leave fairly quickly because they realize it’s not for them, most teachers love teaching and want to do it for life. The only reason teachers are worried about vesting is that the rephormers are doing their best to drive teachers out of the profession (or what used to be a profession) before they can get vested. Why don’t we address that problem first?
Many teachers do leave fairly quickly and get no benefit from the defined benefit program. They would get a benefit from the defined contribution program (I believe the one at NYU begins paying in after a year of employment, for example). Many teachers do not want to move and teach in another district/state because they would lose retirement benefits and have to start over. No starting over with a defined contribution plan. Many teachers are concerned that they might be targeted for dismissal because they become more expensive once vested. There is no sudden increase in the cost of employing a teacher when they become vested. These are all concerns that teachers have voiced on this blog, so I would say that teachers are worried about this.
I’m not sure what you mean by vesting. In California, 8% of our gross pay is deducted monthly and that goes into CalSTRS along with a slightly higher matching amount from the school district where we teach.
CalSTRS has been taking that money and investing it in the stock market, real estate, etc for more than a hundred years.
I forgot to add that CalSTRS has more than $160 billion dollars, real money—not paper IOUs like Social Security—and CalSTRS pays benefits from that pool of money.
During the 2007 – 08 global financial crises caused by Wall Street and the US banks greed, CalSTRS lost more than $30 billion from its total investments and has been working hard, with caution, to replace what was lost. Meanwhile the fake Ed reforms use that shortfall, without explaining how it happened, to claim that the teacher retirement plan in California, like other states, is in trouble. It wasn’t in trouble before the 07-08 economic crash—something teachers had nothing to do with.
I have no idea how each state handles teacher retirement plans.
Lloyd. Vested means you qualify to receive benefits at age 60 (at various percentages, depending on how long you worked).
In NC it is now ten years (it was five until 2011). If you choose to roll your contributions over into a tax sheltered annuity when you leave, you forgo those benefits. If you leave it in, you qualify (if you are vested).
I don’t know what NC invests it into, but I know it is conservative (it has to be).
Thanks. I could have looked “vested” up and discovered the answer but I didn’t. No excuse.
That means a public school teacher in Califonria is vested and the minimum is five years to qualify but with less than thirty years in the classroom, you can’t retire until you are age 55.
I just checked the CalSTRS Retirement Benefits Calculator.
http://resources.calstrs.com/Calculators/RetBenCalc.aspx
I plugged in enough numbers to see what one would earn if they only worked five years and earned the average medium for beginning teachers in California which was $41,327.
I used my birth date, five years of teaching and a retirement date of June 2014, and it came up $413.27 a month.
Then I used the same dates with thirty years of service and the monthly benefit was $4,700 based on a monthly salary of $6,250.
The next link leads to the page that explains the CalSTRS Retirement Benefits:
As early as age 50 with at least 30 years of service credit.
At age 55 with at least five years of service credit.
The median age at retirement for CalSTRS members is 61.3.
http://ctainvest.org/home/CalSTRS-CalPERS/about-calstrs/calstrs-retirement-benefit.aspx
TE is twisting the truth through his usual method of asking “reasonable”, questions while providing unsubstantiated talking points (see below). Where did you say that you teach economics?
Perhaps you could elaborate on where you think I have twisted the truth. My retirement system is a defined contribution system. Dr. Ravitch’s retirement system is a defined contribution system. It is pretty standard in higher education.
Defined contribution plans have disadvantages and advantages for employees compared to a defined benefit system. Defined contribution plans have advantages and disadvantages for employers compared to a defined benefit system, especially in the public sector.
Oh, come ON, Betsy. Refute him rather than making personal attacks. My belief is that when anyone on this blog makes a personal attack, it is a result of being unable to meet the actual argument being offered.
Well, I’m “vested” in Social Security and I can’t get a penny of it even though I paid in from the time I was 16 to 38 years old.
No, Duane, you are not vested in SS in the legal sense because you don’t own the account. That’s why George Herbert Walker Bush wanted to revamp SS to private accounts so you WOULD be vested, i.e. own the assets in the account. But the dumb Democrats wouldn’t hear of it, so now here we are with trillions of debt walking backwards toward the cliff of insolvency with SS intake being used to run all the dumb stuff the government does and your benefits ‘secured’ only by treasury IOU’s and thus the ability of the government to pay.
Maybe there is a role for private property in life.
Harlan,
I am a bit surprised to see that you object to the Social Security Trust Fund owning US Treasury Bonds. I would think that you would find alternatives, like the Social Security Trust Fund owning significant amount of stocks in major corporations, even more objectionable.
Yep. The individual should own the stocks, not the government, ever.
In one place you have gathered the links that demonstrate the enormous funds being spent on the media’s messages. If we do not get active then it will be the end of our Constitutions promise to promote the common good.
At Oped I added this comment to the link to your blog: “In one place Ravitch has gathered the links that demonstrate the enormous funds being spent on the media’s messages. If we do not get active then it will be the end of our Constitutions promise to promote the common good.”
Begin by sending your contacts to the links in case they missed the reality, and find themselves listening to PUBLIC broadcasting as it sells the propaganda of the 1% who want it ALL for themselves, and nothing for everyone else.
http://www.opednews.com/Quicklink/Matt-Taibbi-and-David-Siro-in-Best_Web_OpEds-David-Sirota_Economy_Future_Pensions-140415-690.html#comment483685
Susan, you may be begging the question in assuming that STATE public education falls within the scope of the promise in the constitution to promote the common good. It isn’t obvious to me that universal public education is a federal guarantee under the common good criterion.
I tend to agree with your argument here HU, but at the same time the “federal guarantee” through the courts is such that if what a state does bucks/contradicts the US Constitution then the federal constitutional rights trump states rights, e.g., “separate but equal” educational opportunities.
Exactly so, but last I heard education was not a ‘civil right’ in the traditional sense of the term, although many people SAY it should be. The problem is that if education is a true ‘civil right’ then someone (we taxpayers) has a duty to supply that right by hiring teachers.
So to say either literally or metaphorically that education is a civil right obviously works in the financial interest of public school teachers whose jobs depend on society’s interest in guaranteeing all real civil rights to its citizens nationwide.
I deny, of course, that education is such a ‘civil right.’ I even deny that health care or health insurance is a ‘civil right’ under the constitution.
Teachingeconomist,
“More expensive, once vested?” Not to my knowledge. Beginning at the first day of employment, my employer pays the same amount, into either a state pension or a self directed tax deferred plan, at the discretion of the employee. The amount changes based on salary, not vesting.
You did what the biased academic researchers, did. You assumed all plans were the same. In my state, whichever choice the state employee makes, he/she saves into a plan that does not allow participation in S.S. (under attack, as well). David Sirota made the point that the anti-pension campaign creates the playbook for S.S.
In Ohio, 82% of pensioners, continue as state residents, paying taxes. The state governments can shoot themselves in the feet, at the urging of Gates, Arnold and the Koch’s, over an average, 3% pension budget item. Or, they can recognize that educated, permanent, tax-paying residents, and their in-state children, once working, are an economic God-send, for numerous economic reasons, not limited to the multiplier effect of their spending.
Secondly, they can recognize that children, schools, and neighborhoods, don’t thrive in transient societies, euphemistically labeled, mobile workforces. Interest in the long-term well-being of a community is imperative for the greatest success. Harvard, which was Gates’ college choice, would have no prestige without the continuity of the professoriate.
Whatever blinders, economists wear, that lead them to see only the economic benefits of the money of the 1% and, to ignore social costs, should be eliminated.
Several posters on the blog have been concerned that they would be let go before the qualify for their pensions. Several have worried that if they change states, change jobs, they are likely to get no benefit from the retirement plan they participate in. State employees in Illinois should be very concerned that the state will not pay the promised pension because of chronic underinvestment.
NYU has a defined contribution plan, so that is the retirement system that Dr. Ravitch works with. There is no more creditable person on this blog. Perhaps she will explain how terrible it is.
No one objects to good pensions for teachers. What is objected to is that states are on the hook for them. What can be wrong about defined contribution pensions?
Little unclear on the concept of a pension, are you?
In any case, what’s wrong with a defined contribution plan (as opposed to a pension, which is a defined benefit plan), is that it’s dependent on market forces, when retirees need stability. If the market tanks just when you’re getting ready to retire or have retired (2008, anyone?), you’re spending your retirement eating cat food. If you’re lucky.
The problem isn’t with public sector workers getting pensions, it’s with the rest of us *not* getting them.
Stability is indeed a desideratum, but every retirement plan depends on “the market,” that is economic health and activity.
Another argument AGAINST defined benefit pensions is that they isolate public workers against reality and allow them to continue to pontificate about what they deserves, while the rest of us in the private sector have to support their smug caterwauling while enduring the economic consequences of politicians whom they helped elect.
On defined benefit pensions, they continue to ally with the government worker elite who live at the expense of the private sector at the same time that they are screwing the private sector blue and tattooed.
Such immoral arrogance!
A defined benefit retirement system does transfer the risk from the retiree to the tax payer for public employees, assuming that the taxpayers accept it and don’t move out of reach.
You might note that according to poster Joanna Best, teachers in NC get no retirement benefits if they leave before ten years of service. If those teachers had a defined contribution system like Dr. Ravitch those teachers would not leave empty handed.
CalSTRS’ $56 Billion Unfunded Liability
In 2008, CalSTRS lost a quarter of its portfolio value when the economy tanked. And that, wrote John Fensterwald, “created too big a hole to count on the growth of investments to keep up with obligations to current teachers and administrators and those already retired. As a result, payments into the system must be raised.”
http://www.allgov.com/usa/ca/departments/government-operations-agency/california_state_teachers__retirement_system?agencyid=176#controversiescont
You can see the annual CalSTRS report and all the numbers starting on page 35:
Click to access cafr2013.pdf
California’s retirement system isn’t broke (it still has more than $166 Billion) and is capable of paying full benefits to retired teachers for thirty years before there will be a shortfall—sooner if the fake Ed reformers have their way and destroy the public education system ending contributions to CalSTRS.
Before the 2007-08 global financial crises caused by a greedy Wall Street and US Banks, CalSTRS was in much better shape. But they invested in the market and took a big hit.
Page 39 says, “There are sufficient assets to make benefit payments for at least 30 years, after which benefits will have to be paid on a “pay as-you-go basis”.
Regarding my case: I’m going on 69. If I’m still alive in thirty years, I’ll be 99. The odds are that I have nothing to worry about unless the fake Ed reformers and succcessful and suck all that tax money out of the public schools.
And to win, the fake Ed reformers from cherry picking the facts and making it sound as if teachers across American are going to bleed taxpayers dry as if they are vampires like the fake Ed reformers are.
The fake Ed reformers are crying wolf and they are doing it for a reason. They want to get their hands on the money that would be going into CalSTRS and other state teacher retirement programs. No matter how wealthy one is, greed is a disease that grabs hold and doesn’t let go. Enough is never enough.
Reblogged this on Learning and Labor and commented:
Can’t vouch for the accuracy of these reports, but they make for interesting reading in these times.
Pensions are, on average 3% of state budgets. Wasted corporate welfare and tax avoidance schemes for the wealthy, account for greater expenditures of tax payer money. In return for pensions, the public receives valuable services, The National Institute for Retirement Security and the National Council on Teacher Retirement have analyses that refute the self-serving blather of Gates, Arnold, and the Koch’s.
David Sirota and Matt Taibbi deserve Pulitzers, as the lone reporters in mainstream media to cover the false pension narrative, exposing it, as an attack by anti-American predators.
.
Stealing by anti-public workers, billionaires, and like-minded people. Funny many of these folks preach American patriotism while their actions peddle for anti-American political maneuver.
An Alternative to Capitalism (since we cannot legislate morality)
Several decades ago, Margaret Thatcher claimed: “There is no alternative”.
She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider.
Please click on the following link. It will take you to my essay titled: “Home of the Brave?”
which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
“We have met the enemy and he is us.”
Pogo quotation by Walt Kelly.
Your site is disabled because you didn’t pay your bill. So much for an alternative to Capitalism. The Alternatives to Capitalism can’t EVER pay their bills without loss of freedom.
The general public today doesn’t understand that until the 1980’s almost ALL jobs, in the public or private sector had defined benefit pension plans.
The 401K and IRA plans came along around that time and were promoted as additional, supplementary plans. They were specifically NOT there to replace defined benefit pensions.
Now that virtually all private sector workers have had their pensions removed from them, and replaced by the “Swiss Cheese Pension” of the 401K—it has a lot of HOLES where it should be solid—they don’t understand how pensions work.
Pensions are funded by deferred compensation. For those who have no idea, that means that a percentage of your monthly pay is taken out and put away so that you’ll have a pension waiting for you, to be distributed monthly, when you retire.
And by law pensions must be put in very low risk investments, with virtually guaranteed returns. So, as a result most pensioners know they aren’t going to “Strike Gold” with their retirement; they just want a modest, dependable defined payout every month.
Okay? Understood?
However vile miscreant billionaires and the shills they pay to troll for them intentionally manipulate public opinion to make it appear that this pension, that they paid into for decades, is somehow the equivalent of a Golden Parachute, a “FREE” Money Bonus paid for by the already stressed taxpayers, who are then encouraged to resent pensioners for their “GREEDY” actions!
A sickening game to play, but I hope I’m doing my bit by refusing to play it and by trying to educate others as to the facts.
Full Disclosure: NO pension here. And none for my wife either. I own my own company; never enough money to save for retirement. And my wife lost about 70% of her retirement in 2008-09 and has been forced to dip into it to save our home.
But I don’t resent people who worked hard and played by the rules, in whatever honest work they were doing.
Hedge fund managers, Vulture Capitalists, and others who add nothing to our economy…those people I DO resent; especially the ones who think that 13% tax rates are STILL too high and so they hide their money in banks in the Cayman Islands or Switzerland.
And then they pay for vile anti-teacher propaganda campaigns.
This won’t last forever. The pitchforks and torches won’t be kept out through your gated “communities” (fortresses?) forever if you continue to treat the other 99% like less than human.
I suppose you could think of a defined benefit retirement plan as a combination of differed compensation and an guaranteed rate of return (but you only actually get your compensation if you stay long enough with the organization to be vested. Otherwise you simply lose that compensation.)
The problem is the guaranteed rate of return, typically 7.5% for public pensions. As you correctly point out, pensions might be well advised to invest in low risk assets which, of course, result in low rates of return (currently ten year treasury bonds have a rate of return of around 2.65%) that is well below the guaranteed rate of return 7.5%. It is the taxpayers of the jurisdiction that must make up the difference.
The natural solution would be to guarantee a lower rate of return on invested funds. The political problem is that it would require higher payments into the system today or promising less to current employees, making it a problem for current politicians. If we continue to guarantee an absurdly high rate of return on investment, actually paying it off is the problem of some future politician. It is always tempting to hand a problem off to someone else.
You might as Dr. Ravitch about her “swiss cheese pension” and the holes that it contains.
Pugent Sound Parent,
The hedge fund owners don’t just fail to “add anything to the economy”.
“The financial sector’s share of GDP doubled since the 80’s. It grew faster than either the flow of savings it channels or the assets it manages. The estimated waste is 2% of GDP.”
A PR campaign to show their failure is overdue.
I think one of the commenters above
may be confusing free enterprise with
privatization.
The billionaire buys puppets.
He privatizes policy making.
He profitably leaves adversity in his wake.
He blames the victims and the vulnerable.
He blames the government, though his
sell out is the government.
He privatizes the sector.
Every little process detail will
serve his purpose first.
Everything will be tethered to his
interests.
If he privatizes the internet, and I
have a blog, he’ll do everything he
can so that any third party service
I use will disconnect if they don’t
like what I say, which would be advocating
pro-democracy and commerce and civil
processes democratically grounded,
particularly public education.
Glorified trolls.
He installs his puppets by telling
them to sell to weaknesses.
The blame game’s a big one.
In the Congo, as portrayed in
“Ruined,” soldiers rape each other’s
women and shoot each other’s neighbors
to sell out, blame each other, and
offensively force themselves or act to prove
something of themselves, hurting everything
that’s rightly important to themselves,
in a world that for them can never be
characterized by life, liberty and the
pursuit of happiness cause their
leaders have sold to the privatizers
of resources that should otherwise
fund public education and free commerce
democratically grounded.
The slumlord puppet governor will in
one state sell out his/her state’s
water resources to the high water
consuming factory owner in a
neighboring state.
If slumlording education, and for
most it wouldn’t be like a university
affiliated teaching school or Choate,
the privatizer gains every opportunity
to “tether” for his own purposes, to
use a word from internet issues.
So those things supporting inspiration,
valuation of birthright and infinite
possibilities, and innovation, and
democracy and cooperation, and understanding
how all life’s endeavors integrate,
and how people there just as here
also want democracy and cooperation,
can never be centric to the privatizer’s
purposes.
He’s a privatizer.
He uses pyramidal economics.
He makes you enslave yourself
by playing the blame game.
He makes you feel smart by selling out.
But the only reason why your
pension gets ripped off, in the
public sector, or in the private
sector, is the privatization or LBO
(with the latter something that can
be made to not inordinately and wrongly
shaft pensioners, even if I myself
support all/any democratically grounded
application of maximum return on
investment.)
Privatization’s immunity from anti-
trust combined with statutory profit
margins in health, including with
government fees passed to patients.
It’s the mortgage/housing bubble
seller getting nothing on the
proceeds of his equity so TBTF
banks get free reserves.
It’s privatization of the economics
of labor.
Minimal employment choice combined
with no meaningful collective
bargaining is supply side slavery.
This “tethers” the political
process to that.
http://www.commondreams.org/headline/2014/04/16-7
In Preemptive Strike, Oklahoma Bans Efforts to Increase Minimum Wage
Law signed by Gov. Mary Fallin thwarts local workers’ rights initiatives
teachingeconomist,
Re: A retirement plan described as Swiss cheese
Advisedly, spam, hot dogs, jello, French fries and goetta make poor analogies for financial instruments and concepts. If the subject is home economics, the confusion can be understood.
Employers select retirement plans and then millions of Americans enroll in them, just like Diane Ravitch did.
I agree about the analogy, I picked it up from the post I was commenting on.
No doubt people choose from the retirement plans available, but those with experience using a defined contribution plan like Dr. Ravitch may well have an opinion about how well they work.
My retirement money is with a Fortune 500 firm. I recently found out that the firm has been fined for poor performance relative to customer complaints. At least two major universities no longer permit the firm to be among those offering retirement plans on their campuses.
The firm recently issued a credit to me and other plan participants. My employer decided to take plan administrator fees from the credit. Neither the financial firm nor the university will disclose the amount of the fees. Who is representing the investors, like me?
Once I retire, a decision about annuity plans follows and I’m reminded of the statement. “Even with a master’s degree in insurance, you can’t understand it.” The same is true about annuity language. Read the Morningstar threads. Those people are insiders and they don’t agree.
In reading the online customer comments about the firm, people complain about delays in receipt of payments, lack of clarity about plan options, incorrect information, etc. Who should they complain to, the SEC?
When the 6th largest U.S. company, Arnold’s Enron, went bankrupt, I realized I could lose my retirement money.
My uncle’s pension is easily understood. He received it immediately when he retired and each check since then, came promptly. And, the state’s system is very responsive and accurate in answering his questions. To take his pension away, American laws will have to be broken. I don’t have pension envy. I think we all deserve to have financial security after working and saving for decades.
There is no way to eliminate risk from the future. At best you might transfer that risk to someone else. The primary advantage of a defined contribution plan is that of portability for the employee (note that this is a disadvantage to the employer). The primary disadvantage of a defined contribution plan is that it shifts the risk from the taxpayer to the employee. For the public sector, I think transparency is an additional advantage of the defined contribution plan. All the costs of employing a teacher in 2014 occur in 2014. With a defined benefit plan that guarantees an impossibly high rate of return, the costs of employing a teacher in 2014 are kicked well down the road to the point that it becomes painfully obvious that the 2014 contribution was not enough to keep the promises made in 2014. Promises are always easier to make if you know someone else will be responsible for keeping them.
You DO deserve to have secure pensions. We all do. However, a defined benefit pension plan is no more secure than a defined contribution plan. It may SEEM so, but cities, counties, and states can go bankrupt. E.g. Detroit.
I don’t think public sector employees should have the option of defined benefit plans when the rest of us can’t. It’s making themselves an elite, and necessarily warps their attitude toward business in this country.
The mal-behaviour of one insurance company is NOT an argument that public sector workers should be insulated from the effects of the economy. It warps the politics of public finance.
Shifting arguments, as each prior one, is refuted? Expect more of yourself.
-The pension systems were insolvent, proven false, except in isolated incidents.
-Discounting rates were unrealistic but, actuaries showed the assumptions were valid.
-“Unfunded liabilities” then, the state cost of pensions, less than 5% of budgets, was exposed.
-Defined contribution plans were better for investors, fallacy rejected.
-The “generational war” propaganda, funded by the usual suspects, already, history.
“Painful” is the end of contract law and people with no access to Social Security or pensions.