Where pension debt is a looming danger to taxpayers, via Texas Public Policy Foundation
Both private and public pensions have been having major funding issues and struggling to get a good ROI for a number of years.
So it’s no surprise that any sort of economic relief package presented to Congress would include funds for pensions. Especially since a “bailout” culture seems to have taken root in America.
The recent $1.9 trillion COVID-19 stimulus bill approved by the House is no exception to this “bailout culture.”
The New York Times reported that it contains $86 billion for struggling pensions:
The $86 billion is a taxpayer bailout for about 185 union pension plans that are so close to collapse that without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.
The article continued: “The trend predated the pandemic and is a result of fading unions, serial bankruptcies and the misplaced hope that investment income would foot most of the bill so that employers and workers wouldn’t have to.”
Leaving aside the fact that “hope” is shaky ground to base any economic decision on, this appears as another signal that pensions are going the way of the dodo bird.
“Just to show you how bad this bill is, there’s more money in this to bail out union pension funds than all the money combined for vaccine distribution and testing,” Senator Bill Hagerty tweeted last week.
The idea to bail out pension funds isn’t exactly new, although it’s still quite recent. We reported on the state of Illinois and their request for a $44 billion handout from taxpayers in April 2020.
An article on KOMO News defended the taxpayer funded handouts: “The pension provision in the American Rescue Plan would fund full benefits for about 185 union pension plans for 30 years, affecting roughly 1.3 million retirees who could otherwise be left without income if their plans collapse.”
Jeff Miron, director of economic studies at the Cato Institute, disagreed: “This is just naked redistribution for the constituents of Democratic politicians.”
But no matter how you look at it, two things are clear. More and more pensions lack the funds needed to pay their obligations, and taxpayers are footing the bill.
Is This The End of American Pensions?
James Naughton, associate professor at the University of Virginia’s Darden School of Business said (referring to failing pensions): “This is a problem that’s been around for at least 15 years.”
A piece on CNBC put a spotlight on one example:
124 multi-employer pensions are in “critical and declining” status, according to the Pension Benefit Guaranty Corporation. They’re projected to have insufficient funds to pay full retirement benefits within the next 20 years.
PBGC, a government-sponsored entity that usually steps in to fill in the gaps, doesn’t seem like it’s up to the task any longer.
“Its likelihood of insolvency is ‘very high’ in 2026 and ‘near certainty’ by the end of 2027 due to additional pension failures,” according to its most recent projections.
So it appears that taxpayers will likely have to foot the bill for failing union pensions, thanks to a measure tucked carefully inside a pandemic relief package. Which begs the question…
What happens when the next group of pensions start to fail during these already challenging economic times?
Best to shore up your retirement affairs as best you can, so you can ride out the storm.
Make Sure Your Retirement Won’t Need a Bailout
Like the 1.3 million retirees above, most retirement savers don’t have a “Plan B” to cover their bases if Social Security or pension payments get cut.
If you don’t, you’re putting your retirement in the hands of politicians. We already know that plan may not work out so well.
So do your best right now to make sure your retirement won’t need a bailout. Examine your plan, ensure you’ve adequately diversified your savings, and consider adding physical precious metals like gold and silver to guard your nest egg against inflation.
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I think we all know that this is completely unsustainable either short or long-term.
Doesn’t matter how much money they throw at it, it isn’t going to go away.
If I had to guess, anyone 70+ still living off a pension will be shit out of luck very soon, as the TPTB decide you’re too old to keep getting money anyway, and now you can just be herded off to some shitty retirement “home” where you’ll be given sustenance rations and whatever measly health “care” they decide to give you.
Better start dialing the phone and making peace with your kids so you can go live with them rather than elderly gulags.
From 1973 to 1984 I was employed by a shipbuilding division of the largest steel company on the east coast . Under federal law I was vested in the pension plan now overseen by the federal pension guarantee trust fund . As of 2020 I was eligible to collect and what do you know they have no record of me being employed there . Social Security records verify that I was employed there but the fucking continues !
Fuck you I earned that money and I want it . The fact that a bunch of mahogany row players got gold parachutes and the rest of us had to survive the plane crash doesn’t let them off the hook ! If my tax money and debt piled on me nails out one government pensioner than I do not just deserve equal protection I earned it !
Buddy had to sue the pipefitters union pension to get all that was owed him-he had a work injury and they were supposed to take that into account with regards to hours towards the pension-don’t know what the lawyer fees were, but he got a quarter million from the fund.
Splendid, so the teachers I had in high school can continue to pull in their $140K (current amount) pension that will continue to go up 3% every year. I ran some simple calculations and figured they have made more in 20 years of their pension than they did teaching for 30+ years.
With the massive debts govt is piling on, it would be entirely foolish to think your ‘retirement fund’ will be there when you retire. If you are not going to retire for another 5 – 10 plus years then consider it a no show.
If you have debt. get out of it. Own a home, pay it off. Being free on any encumbrances or hooks that can be leveraged against you in a crash is probably the best you can do. Take what wealth you have and secure it with physical pm’s or buy more dirt. Bottom line is expect nothing coming your way, but if it does then count yourself fortunate.
The state in which I live and the state I am considering “running” to, are both in the lightest of the shades. Good to see. I guess that means that I will be among those most victimized by the feds to keep the others “pacified.” Its not bad enough that the salaries of these folks were acquired through the theft of taxation, now they need to steal billions more to prop up their retirements too. And they wonder why France in the late 1700s was so bloody.
Free money buys votes. The politicians will continue to create money out of thin air until it reaches its true value. Zero! Politicians give speeches about doing the hard things but always do the easy thing. When the currency reaches 0.I don’t know but itis coming.
Now, even more unofficial and unaccounted for cash has been revealed from the DOD. It’s an eye popping $94 trillion from the years 2017 to 2019. So, add in the $30 trillion in official debt, and that means there is at least $145 trillion in overt and covert money floating around in the federal government, not counting Social Security and Medicare commitments.
https://www.naturalnews.com/2021-03-15-covid-relief-bill-is-payout-to-democrats.html