Via Investment Research Dynamics
The public pension fund system is approaching apocalypse. Earlier this week teachers who are part of the 
Colorado public pension system (PERA) staged a walk-out protest over proposed changes to the plan, including raising the percentage contribution to the fund by current payees and raising the retirement age. PERA backed off but ignoring the obvious problem will not make it go away.
Every public pension fund in the country is catastrophically underfunded, especially if strict mark-to-market of the illiquid assets were applied. Illinois has been playing funding games for a few years to keep its pension fund solvent. In Kentucky, where the public pension fund is on the verge of collapse, teachers are demanding a State bailout.
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If the stock market were sustain a extended decline of more than 10% – “extended” meaning several months in which the stock market falls more than 10% – every public pension in the U.S. would collapse. This is based on an in-depth study conducted by a good friend of mine who works at a public pension fund. He has access to better data than “outsiders” and I know his work to be meticulous. Please note that the three big market declines since August 2015 were stopped at a 10% draw-down followed by big moves higher. The current draw-down was stopped at 10% but subsequent outcome is to be determined. My friend and I are not the only ones who understand this:
The next phase of public pension reform will likely be touched off by a stock market decline that creates the real possibility of at least one state fund running out of cash within a couple of years. – Bloomberg
I know a teacher in Denver who left her job that was connected to PERA in order to take a lump-sum payout rather than risk waiting until she retired to bankrupt pension plan. She took a job in the Denver school system, which is not part of the PERA system. She’s actually thinking about teaching in Central America, where there’s high demand for English-speaking teachers and the pay relative to the cost-of-living is much higher:
“Teaching sucks right now. Teachers are underpaid for the work we’re doing. After all of these years, I’m making about $60,000. That’s BS! I have a masters. Truthfully, the classroom is burning me out right now. The f#cked up world is spilling into kids’ lives. They’re largely defiant and off-track. I don’t have the energy to try to streamline whole classrooms.” In reference to the pension system: “When the mother f#cking-f#ck is any of this going to be corrected?!?! I am beyond mad. Ecuador has become an option, because this country is beyond f#cked up.”
Unfortunately, I was compelled to answer with the truth – a truth she already knows: “It won’t be corrected. The system will have to collapse and then who knows what will happen. Criminals run everything now and the people who are supposed to enforce Rule of Law are well paid to look the other way. This has been building for at least 2 decades. It doesn’t help when the President is caught shoving a cigar up a staff interns vagina and then a joke is made of it in Congress. “Is oral sex, sex?” Answer: “it depends on what the meaning of the word ‘is,’ is.”
Now the corruption and fraud is out in the open and there’s nothing that can be done about it. The system will have collapse – its the final solution.
No sympathy from me. Take your public unions and shove them…..
Indeed…They bribed politicians to provide these ridiculous pensions (300k+ for some administrators in IL), now it’s their problem.
I lived in Ecuador for 8 years. It is a thousand times better than the cesspool. But Ec. does use the toilet paper usd. And they tend to follow the cesspool in many ways.ie; poison the people by adding flouride to the salt. But the water is poison free so far.
I now live in PV, Mex. and its even better.
I can recommend Thailand for those without deep roots, great lifestyle for $1,000 a month is possible if you avoid the foreigner traps.
“In Kentucky, where the public pension fund is on the verge of collapse, teachers are demanding a State bailout.”
Must be nice to demand and get a bailout. In fact, who do I call since I too am underfunded?
“If the stock market were sustain a extended decline of more than 10% – “extended” meaning several months in which the stock market falls more than 10% – every public pension in the U.S. would collapse.”
Must be why we have a PPT.
“Teaching sucks right now. Teachers are underpaid for the work we’re doing. After all of these years, I’m making about $60,000.”
What a crying bitch. Teachers are paid what the market (bwahahaha) will bear. Plus, she will get a pension for life (maybe) and health care for life. Does anyone know if the health care benefits she will receive in retirement will include you spouse?
There’s an old adage: “Those that can’t (cut it), teach”.
“Those who can, do. Those who can’t, teach”.
Yes WIP, but the whole quote is:”those who can, do; those who can’t do, teach; those who can’t teach, teach teachers”. And, in todays’ world those who pay the bills have next to no influence on how the system is run.
and those who can’t teach, teach gym.
my wife is a teacher–to cover my daughter & myself it is approximately $1200/month–
whether you agree with concept of public pensions or not,think of the govt as an employer–if a private company was fudging #s like this,would we tolerate it?
imo,what would fix public education & make it much less expensive would be to get the feds completely out of education & the states mostly out of it–
also,a constitutional right to a free public education,as it is in most states,should be modified-
if a kid does not perform & is disruptive,parents should have to pay or the kid may no longer attend public school–
finally,end compulsory education after the 5th grade–
For the record…
1) I do not disparage teachers. Well, not all of them anyway.
2) Unions in the public sector is a crime since those paying have no seat at the table.
3) Parents have no voice. If you say yes, I call bullshit. The system and the unions are the only voice.
4) Anyone trusting the government should learn a little more history.
5) your comments about health care are well taken. Everyone except who I do not know is being fucked.
6) compulsory education is a crime.
Defined benefits plans went by the wayside in the private sector. It’s high time it went away in the public sector, too. But, this is only treating the symptom. The cause is the Federal Reserve Act. Repeal and repudiate, then we can begin addressing $200T in unfunded federal obligations.
I don’t expect it to happen, but it’s what needs to happen if the US Constitution is going to be upheld.
60K plus pension and other benefits, and it’s probably three times what she’s worth.
Problem is, it is more than 5 times more than I am worth and I am not a low level shit. no matter. My pension is not nearly that high and I am just a goon that supports assholes like this that will get it.
60K a year for nine months of work ain’t that bad. Especially after you throw in a gold plated pension.
“It doesn’t help when the President is caught shoving a cigar up a staff interns vagina and then a joke is made of it in Congress.”
Please correct, …a staff intern’s vagina. It is her vagina, the vagina belonged to the intern. However, there likely were several interns’ vaginas involved. Including one that worked part-time at a Georgetown Starbucks, where everyone (including the WH intern) was mowed down in a “random shooting.”
I just wanted to write the word vagina several times. The most underrated word in the dictionary.
I’m particularly fond of the word “cunt”.
The Educators made Education what is is today; they ruined the public system; they made their bed. Given their performance, they are over paid. Private schools can do a better job; please support Vouchers for parents that want choices in their children’s education; it could also save the county some money.
No, just abolish public education and education taxes.
When I think of all the psychotic cat ladies that polluted my mind at a tender age, I hope they all lose their pensions.
“The f#cked up world is spilling into kids’ lives. They’re largely defiant and off-track. I don’t have the energy to try to streamline whole classrooms.” – Sounds like there’s hope. Good. We need a little defiance.
Had I known then, what I know now, I never would have gone to grad school. It was a complete waste of time. Grad school is the biggest con-job of all time. Had I spent 20 grand on a vacation to Hawaii I would have been better off. At least I did it early in my life, unlike these middle aged clowns who go back to the well thinking they need more intellectual ammo for their little hamster wheel jobs.
I’ve always considered public sector unions a contradiction in terms. You don’t collectively bargain off the taxpayer’s back. I’ve watched the teacher’s and police unions here in California dominate the state politicians into giving them more and more every year. About 15 years ago I realized these absurd pension/medical promises could never be met. Now that the chickens are coming home to roost I’m really enjoying the show. Fuck them. Fuck them Big time.
A fireman (sorry, fireperson) in my California city makes 150k per year, with most of that salary locked in for life under CALPERS. I can’t wait for that fucker to go down, and CALSTRS too, for the “educators.”
The whole thing is an unsustainable ponzi. The good thing about California is that there will be no Republicans to blame when this thing comes crashing down. Hell, they’ll probably blame Pete Wilson.
It’s very close…if things were mark to marketed ALL of the pensions and banks would be insolvent!
They will blame Trump and the Russians, Congress.
Question for those teaching during the GHWB and WJC administrations: what did you have to say when GHWB fast-tracked the NAFTA policy and then WJC imposed the Treaty? Your silence not only put those with blue collars out of work and losing the ability to help pay your salaries, it created a great increase in the need for unemployment support. Just a minor matter, did you not see that those in other countries hired for the low cost for their labor were going to pay for neither our military budget nor your salaries and benefits? Did you not also see that the job losses would not be limited to the blue collar sector, but that it would and will continue up the white collar ladder? To counter our resultant problems, I suggest that you use your energies to make America great again.
Well the endgame is pretty clear. When the Dems get back in power, they will nationalize the underfunded State pension funds. It’s the obvious play for them.
Meanwhile the phony accounting will continue.
When the Dems return to power: all teenagers, prisoners, ex-cons, and illegals get the vote and drive; all civilian weapons will be turned in; the universal minimum income will pass; free medical care and medical marijuana for the poor; no more standardized tests for public schools; free flights for anyone wanting to come to America; free housing, food, and education for life for the poor; all churches must provide shelter for anyone who wants it; and all companies must provide employment for whoever the government sends them. That will make all Americans strong and great.
As the liberal brain trusts coupled with the greedy investor class teamed up against the blue collar industrial working people with the cry of you union Steelworker ,Miner , Autoworker , Electrical etc etc are all overpaid funny how the tax base from that industrial overpayment was left out of the equation . The tax base that built and funded the school the fire department the roads the bridges the public sector employee wages and benefits and as the printing press runs out of ink and paper your investor class took their % and hauled ass leaving you public sector people looking at us gee to fucking bad now go talk to your benefits coordinator they are fucked too ! As for us old overpaid industry working people that you threw under the bus 40 years ago we are tapped out now !
I recall being told we should have saved the money from our high pay but gee at the time we were just like you , covered by a retirement contract that a government court system allowed to evaporate out from under us . Welcome to the club ! Don’t like it ? Think it’s unfair ? Too fucking bad … Wal Mart is hiring ! Good Luck !
I plumb run out of fingers(and shits) trying to plug all the leaks in the dike. Pull the freakn plug already.
If teachers can’t figure out what they’ve been paying in is unable to generate the payout they expect, what right do they have pretending to “educate” anybody???
Bunch of nonsense. As soon as the market declines a certain amount, you will see the mother of all money printing operations. They are going to print so much money it will send the DOW to 50000. Inflation will eventually rip its way through the economy. All this money printing and inflation will “save” the pensions. They just wont discuss, on the controlled media, the fact that these pensions are only worth 1/2 or 1/3 what they should have been due to the aformentioned inflation.
Or even nationalize all public and private pensions, including IRA’s. Then we’ll have a true two tiered system, social security and medicate for all, and gold plated pensions and health care for the washington elite. At the end of the day, that’s what will win in Congress by a simple uncounted vote.
Democracy is like two wolves and a sheep voting on what to have for dinner. Freedom is a well armed sheep contesting the vote.
Will it come to civil war? To quote Comey, “it’s possible” .