Tag: state unfunded pensions

Ticking retirement timebomb? Unfunded state pension liabilities grow to $8.28 trillion

Via Just the News

State pensions are sitting on a global time bomb - Expat Money Help

Unfunded state pension liabilities have climbed to $8.28 trillion, or nearly $25,000 for every person in the United States, according to a new report from the American Legislative Exchange Council.

The American Legislative Exchange Council released the latest edition of its report on pensions in all 50 states Thursday. The report, “Unaccountable and Unaffordable 2021,” shows just a handful of states with outsize pension liabilities account for a large share of overall pension debt in the U.S.

The report looked at 290 state-administered government pension plans and their assets and liabilities from fiscal year 2012 to fiscal year 2020. An example of state-administered government pension plans in Illinois would cover state employees, teachers, university workers, judges and lawmakers.

The states with the most unfunded liabilities were California ($1.53 trillion), Illinois ($533.72 billion), Texas ($529.70 billion), New York ($508.70 billion) and Ohio ($429.53 billion). These five states alone account for more than $3.5 trillion in unfunded liabilities, or about 43% of all unfunded liabilities in the U.S.

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185 Pensions Got Their $86 Billion Piece of the COVID-19 Rescue “Pie”

Via Birch Gold

185 Pensions Got Their $86 Billion Piece of the COVID-19 Rescue Pie

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.”

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ARE YOU LOVING YOUR SERVITUDE? (PART TWO)

In Part One of this article I laid out the argument Huxley’s dystopian vision of the future had played out over many decades, but now I observe Orwell’s darker vision in motion since the start of this century.

70 years after 1984: How today compares with Orwell's prophetic ...

All the “solutions” being imposed by those in power don’t solve anything, because they aren’t designed to solve anything. These are nothing but short-term emergency sustaining maneuvers to keep the dying patient alive, while the criminals ransack his house, extracting whatever wealth he has saved. Throwing $1,200 bones and $600 a week bribes to what they consider the Main Street riff raff, while funneling trillions into the pockets of Too Big To Trust Wall Street banks, billionaire oligarchs, connected mega-corporations, and pliable corrupt politicians, is just what the doctor ordered for the ruling class.

Their weak-kneed toadies at the Federal Reserve have dutifully fulfilled their mandate of no banker or hedge fund left behind. While Main Street is beset with potholes, boarded up small business storefronts (if they haven’t been looted and burned), homeless drug addicts, and the unemployed lining up at local food banks, Wall Street is being paved in gold, with its inhabitants eating caviar, drinking champagne, and celebrating their brilliance in owning a central bank, guaranteed to enrich them.

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FOURTH TURNING ECONOMICS (PART TWO)

In Part One of this article I laid out the unsustainable economic conditions which will drive the next phase of this Fourth Turnings and detailed the economic factors which drove the previous three American Fourth Turnings.

Image result for fourth turning crisis

Strauss and Howe, when writing The Fourth Turning in 1997, did not know the exact circumstances and events which would propel the next Turning. But their study of economic and demographic trends along with the attitudes of generations and historical precedents in prior Fourth Turnings, led them to conclude the driving factors of this Crisis would be debt, global disorder and civic decay.

As I watch what is currently happening in this country and around the world, it is evident to me they nailed it. The volcanic eruption in 2008 unleashed a torrent of molten lava, which continues to flow along channels of distress, but is currently threatening to burst free of these channels and wreak worldwide financial and physical devastation. A multitude of possibilities described by Strauss and Howe below are already happening or will happen in the next few years.

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FOURTH TURNING ECONOMICS

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

Image result for total global debt 2019

The quote above captures the current Fourth Turning perfectly, even though it was written more than a decade before the 2008 financial tsunami struck. With global debt now exceeding $250 trillion, up 60% since the Crisis began, and $13 trillion of sovereign debt with negative yields, it is clear to all rational thinking individuals the next financial crisis will make 2008 look like a walk in the park. We are approaching the eleventh anniversary of this crisis period, with possibly a decade to go before a resolution.

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Politicians’ Deceitful Promise

Guest Post by John Stossel

Politicians' Deceitful Promise

Will you be able to retire? Maybe not.

Will your state pay what its politicians promised? Almost certainly not.

Politicians in Connecticut, New Jersey and Illinois are especially irresponsible when it comes to not funding pension plans, but most every municipality has promised more than it will have.

“The money hasn’t been set aside for years and years,” says City Journal editor Daniel DiSalvo in my new internet video. “Nobody was paying attention.”

His colleague Steve Malanga complains that the media rarely report on the coming crisis.

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Fed Accounting Change Boosts Unfunded Pension Obligations

Via Bloomberg

In case you missed it, the Federal Reserve’s quarterly Financial Accounts report last week included a change to accounting for state and local pension-fund programs. The central bank revised its data for unfunded liabilities, applying a “projected benefit obligation” method instead of the prior “accumulated benefit obligation” approach. With the change increasing unfunded obligations by $2.3 trillion — more than double the previous total — “the Fed dropped a bomb,” according to Stephanie Pomboy of researcher MacroMavens LLC, who says states will eventually need to cut spending or raise taxes to compensate.

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Blatant Union Greed:Chicago Teachers Set Strike Date Oct 11

Submitted by Michael Shedlock via MishTalk.com,

Chicago teachers have a 13% raise (over four years) offer on the table, but that is not enough. They set a strike date of October 11 because the city wants the union to contribute more than 2% for their underfunded pensions, among the worst funded pensions in the nation.

The Chicago public school system is bankrupt. Its bonds are deep in junk status.

If mayor Rahm Emanuel had any brains, he would be begging Governor Bruce Rauner and House Speaker Michael Madigan for legislation that would allow municipalities and taxing bodies the right to declare bankruptcy.

There are two words that describe the current state of affairs: Greed and Corruption.

What follows is a guest post courtesy of Union Watch.

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An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion

Maff is hard. It’s harder when you’re stupid. It’s even harder when you ignore facts. So anyone depending upon a government pension is going to get it good and hard. 
Tyler Durden's picture
by Tyler Durden
Aug 9, 2016 7:10 PM

Defined Benefit Pension Plans are, in many cases, a ponzi scheme.  Current assets are used to pay current claims in full in spite of insufficient funding to pay future liabilities… classic Ponzi.  But unlike wall street and corporate ponzi schemes no one goes to jail here because the establishment is complicit.  Everyone from government officials to union bosses are incentivized to maintain the status quo…public employees get to sleep better at night thinking they have a “retirement plan,” public legislators get to be re-elected by union membership while pretending their states are solvent and union bosses get to keep their jobs while hiding the truth from employees.

We even published a note several days ago entitled “Establishment Tries To Suppress “Dissident Actuaries” Explosive Report On Public Pensions,” which pointed out that the American Academy of Actuaries and the Society of Actuaries killed a report that would have warned about the implications of lowering long-term expected returns on pension assets.  Apparently the truth was just too scary.

Bill Gross has been warning of the unintended consequences of low interest rates for years, and reiterated his concerns to Bloomberg recently:

Fund managers that have been counting on returns of 7 percent to 8 percent may need to adjust that to around 4 percent, Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund, said during an Aug. 5 interview on Bloomberg TV. Public pensions, including the California Public Employees’ Retirement System, the largest in the U.S., are reporting gains of less than 1 percent for the fiscal year ended June 30.

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THE ROCKETSHIP TO RUIN

The really bad news is that most of these pension funds are assuming an 8% annual return. Bwaaaahhhhaaaaa!!!!

Insert a realistic 4% into those little models and the unfunded liability shoots through the top of this little chart like a rocket ship.

Math is hard. Check out your state. Are you willing to have your state tax rates tripled in order to pay the pensions and healthcare benefits of state government workers? It’s really that simple.