Observations on life

Why don’t more taxpayers care about public pensions?

The average voter is as bad as politicians when it comes to ignoring major issues and kicking crisis down the road to the next generation. Here is one major example, Social Security and Medicare are others. 

We readily accept the rhetoric of promises for more while ignoring the state of things we already cannot deal with. 

American voters are as irresponsible as the people they elect. 

DeĀ­spite the reĀ­cent gains large pubĀ­lic penĀ­sion plans still face a fundĀ­ing shortĀ­fall of $4 trilĀ­lion beĀ­cause their liĀ­aĀ­bilĀ­iĀ­ties are so large, acĀ­cordĀ­ing to Moodyā€™s InĀ­vestors SerĀ­vice. They have just 70% of what they need to pay fuĀ­ture benĀ­eĀ­fits to poĀ­lice, fireĀ­fightĀ­ers, teachĀ­ers and other pubĀ­lic workers, acĀ­cordĀ­ing to 2016 figĀ­ures from Wilshire ConĀ­sultĀ­ing…

The penĀ­sionsā€™ predicament is the reĀ­sult of decades of low govĀ­ernĀ­ment conĀ­triĀ­butions, overly optiĀ­mistic inĀ­vestĀ­ment asĀ­sumpĀ­tions, benĀ­eĀ­fit over promises and two reĀ­cesĀ­sions that left many retireĀ­ment sysĀ­tems with deep fundĀ­ing holes. DeĀ­mographĀ­ics are also a facĀ­tor: liĀ­aĀ­bilĀ­iĀ­ties are risĀ­ing as waves of baby boomers reĀ­tire, 

Great Year for Pensions, but Many Remain in Crisis

https://www.wsj.com/article_email/why-a-good-year-for-pensions-wont-ease-their-troubles-1502201118-lMyQjAxMTA3NzA1ODUwNDg4Wj/

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3 replies »

  1. The unions get the politicians to ok the pension amounts when wages are low and everything looks ok. Then years later when wages rise the funds are not there to pay benefits. The workers who have pensions better have saved for retirement, because they are going to get 70% of what was promised or less. I just do not see state governments fixing the problem. Just like I do not think the federal government will fix social security, everyone will just get less benefits from all programs. If you are low income poor, you may qualify for other state and federal benefits, but good luck with that. Where did all those union dues go? But that is another problem with how the unions operate.

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  2. I think that the average taxpayer does care about the problem of public pensions. After reading an article about public pension under-funding or pension abuses the average Joe and Jane Sixpack probably feels indignation towards Government and pension beneficiaries alike. But alas, there are so many more immediate distractions to pay attention to like which Hollywood couple may be splitting up or what colors the next I phone will come in. There is a limit to how many things you can keep in your head.

    But even if the public was able to remain focused on the issue at hand, it wouldnā€™t matter much. The main problem is the Client/ Agent problem on steroids.

    Politicians are voted into office by the taxpayer and therefore should be their agent and act on their behalf. The incentive for politicians on the other hand is to be elected/re-elected. That calls for money and public union support. So therein lays the problem. It is a major conflict of interests. You might think that term limits will help, but will it? The conflict of interest problem doesnā€™t go away just because you have some new faces to vote for.

    I really donā€™t have an answer short of having a few pension systems blow up or municipalities go bankrupt and let the chips fall where they may. Pain is on the way, I just don’t know when it will get here.

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  3. The reason the public doesn’t care about public pensions is because they do not have a pension of their own. Apparently people do not save for their own retirement therefore they do not understand what it takes to fund a pension. I believe that the average person believes that social security and medicare is all they need to retire.

    Now add into the mix that economist, stock brokers and fund managers have about the same batting average for being correct as a weatherman. Who are the common folk to believe?

    People just do not get the correlation that cadillac pension plans, or any plan, require taxing your Cadillacs, Hondas, and even Yugos. In New Jersey the politicians know they have to promise cadillac pensions to get votes from the public employees and they know that property tax rates are driving people and business out of the state so they can’t raise taxes just to benefit the public employees.

    Most people to not want to believe that the future cure will be worse than the present pain to fix it now so that are happy if nothing is done. After all they are not going to get any state pension money and for now they do not have to give up any extra tax money or state services. A false win-win for now but it might be a technical knock out later.

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