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  #161  
Old 03-11-2012, 02:18 PM
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Some non-U.S. stories.

UK:
http://www.bbc.co.uk/news/business-17311041

Quote:
The government has pushed ahead with a final plan for public sector pensions as talks with unions come to an end.

Discussions on changes to health, education and civil service pensions were "constructive", according to a Treasury minister.

These have led to a final set of proposals which will now be considered by union executives.

But union leaders have said that "serious matters" in the pensions debate remain outstanding.

Strike action
The government wants to save billions of pounds from its pension bill.

It is planning to make substantial increases in employee contributions in three stages between April this year and April 2015.

Then it plans to bring in new, and less generous, career average pension schemes for most public sector employees, with the pension age rising in line with the increasing state pension age, eventually to 68.

The plans led to a huge nationwide strike at the end of November.

At the end of December, some unions signed up to a set of points for further discussions, although others have threatened further strike action.
NIGERIA
http://www.vanguardngr.com/2012/03/p...of-all-curses/

Quote:
Barely a week after Senate President David Mark got annoyed on the level of corruption in the country by describing the Nigerian Football Federation, NFF, as a centre of corruption, another agency of government came under serious attack last week by him.

This time, it was at the opening ceremony of the Senate probe of pension funds where he went spiritual by putting a curse on those who have mismanaged the nation’s pensions fund, swearing that for doing that, they will never rest. They have murdered sleep, so the corrupt officers will find no sleep.

Senate President Mark was represented at the public hearing by Senate Leader Victor Ndoma-Egba. Nigerians were told at the venue of the theatre of the absurd of how officers in the pension office mortgaged the future of Nigeria and Nigerians – referring to the money they swallowed because of greed and what was meant for the people who worked and suffered for the country that ordinarily should get the money with ease.

The Senate leader who described pension fund as blood money, however, warned that the evil effect of embezzling such money will live with pension administrators from generation to generations, adding, “Administrators of pensions, we hear, are perhaps among the richest Nigerians. If their wealth is from people’s pensions, then, that is blood money. It is blood money.

“You cannot take away the sweat, the entitlement of an old man or an old woman who is living on that little appreciation from his country and believe that you will be in peace, you cannot because the prayers of those old men and women will not only follow you, it will also follow your children and your children’s children.”

GREECE
Did you know the Greek pension funds (both public and private) held quite a bit in Greek sovereign debt?

Oh wait. Many U.S. pension plans hold Treasuries.

I guess this wouldn't be a surprise.

http://www.spiegel.de/international/...820078,00.html

Quote:
On Tuesday, five other public pension funds demonstratively voted against participating in the debt haircut. Greece's pension funds hold domestic government bonds worth a total of €20.4 billion (€26.9 billion) -- about 5 percent of Greece's entire debt mountain. About two-thirds of that amount will be affected in any case by the debt haircut. For the rest, the funds have to give their consent -- and a number of them are opposing the move.
Well, if you go to the Eurozone watch thread, you'll see they lost the fight. The debt swap occurred on Friday.

Quote:
But with other creditors, the participation is much more problematic. The Greek pension funds are a case in point. They now face a crucial test. They suddenly find themselves exposed to drastic losses totaling around €11 billion. Although there are vague plans for the funds to receive state-owned real estate assets in return, nobody currently knows what this will mean in concrete terms, or whether these properties are actually usable.

The pension funds are already suffering from dramatic drops in income as a result of wage cuts of up to 50 percent within the space of two years, skyrocketing unemployment and lower capital injections from the state budget. As a consequence, pensions have been reduced significantly. "We want to prevent a new crime at the expense of the insured," said union leader Costas Tsikrikas on Tuesday, justifying demonstrators' tough approach. University professor Theodore Paraskevopoulos spoke of a scandal. "The debt haircut is relieving the state of its obligation to pay pensions," he said.

As corporations under public law, the pension funds were forced to make a risky investment. They were obliged to carry out the informal instructions of the incumbent governments, namely that reserves could only be invested in Greek bonds. Now the funds fear the wrath of their members. And they are not alone in that fear. According to KfW CEO Schröder, many fund managers and asset managers outside Greece have also decided not to participate in the debt swap, out of concerns they could be sued by their clients.
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  #162  
Old 03-11-2012, 10:55 PM
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That I should pay higher taxes to pay for any agreement that took place before I was even born is insanity. Pensioners are owed what was/is actually funded, not what was promised. They don't have any moral right to my money.
I am simply pointing out the issue is not so cut and dried as the limabean paints it. Why should current citizens be free to renounce the obligations of the past?

Assuming we do end with a civil, political resolution, it will be a balancing act. Current consumption versus the obligations of the past. The burden will be spread between the two.

Arguments to the effect of "hey I wasn't a part of that" may work in some contexts, but I don't see it in this one. For example, none of the AO posters fought in WW2, yet thousands of Americans died then to preserve the liberties we enjoy today. Surely some obligation is owed there. We are part of a society, and that society has a past.

And make no mistake - eventually the finger pointing will be aimed at pension actuaries. Our profession should prepare to face that head on.
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  #163  
Old 03-11-2012, 11:20 PM
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Originally Posted by Eimon Gnome View Post
I am simply pointing out the issue is not so cut and dried as the limabean paints it. Why should current citizens be free to renounce the obligations of the past?

Assuming we do end with a civil, political resolution, it will be a balancing act. Current consumption versus the obligations of the past. The burden will be spread between the two.

Arguments to the effect of "hey I wasn't a part of that" may work in some contexts, but I don't see it in this one. For example, none of the AO posters fought in WW2, yet thousands of Americans died then to preserve the liberties we enjoy today. Surely some obligation is owed there. We are part of a society, and that society has a past.

And make no mistake - eventually the finger pointing will be aimed at pension actuaries. Our profession should prepare to face that head on.

I'm not saying that only retirees/public employees will take a hit. I'm saying =everybody= will take a hit -- taxpayers, bondholders, retirees, current employees, etc.

Here's a recent NYT article to give you a flavor:
http://www.nytimes.com/2012/03/11/ny...tion.html?_r=2
Quote:
On Tuesday, Suffolk County, one of the largest counties outside New York City, projected a $530 million deficit over a three-year period and declared a financial emergency. Its Long Island neighbor, Nassau County, is already so troubled that a state oversight board seized control of its finances last year.

And the city of Yonkers said its finances were in such dire straits that it had drafted Richard Ravitch, the former lieutenant governor, to help chart a way out.

Even as there are glimmers of a national economic recovery, cities and counties increasingly find themselves in the middle of a financial crisis. The problems are spreading as municipalities face a toxic mix of stresses that has been brewing for years, including soaring pension, Medicaid and retiree health care costs. And many have exhausted creative accounting maneuvers and one-time spending cuts or revenue-raisers to bail themselves out.
It is difficult for municipalities to tax businesses and working people who moved away decades ago. We've already seen one set of retirees having to get absolutely nothing for a year and a half before some deal was ironed out (Prichard, Alabama) -- and they're not getting 100% of what they were promised in the new deal. Central Falls, RI retirees are seeing haircuts -- that's still working its way through courts - but again - if they don't have the money to fulfill all the promises, they won't be fulfilled.

And it is that stark. If the resources aren't there, no amount of words on paper will make them come into being. You can keep increasing tax rates, but you can't go higher than 100% - income-generating people and business do keep moving away if they find the tax regime too onerous, especially if the money is going to support benefits for people who stopped giving service decades ago.

As for those who fought in WW2? I have no issue with fulfilling promises to those, specific individuals. Especially given that most of them will be dead within the decade (if not already dead, like both my grandfathers.)
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  #164  
Old 03-11-2012, 11:26 PM
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Oh, and EG? You seem to be hung up on arguing how things should be.

That would have been a useful argument 40 years ago.

The meat of what I post in this (and the prior) threads are how things are and how they will develop, no matter the "good intentions" of whatever parties. I got started on this kick because I was tired of hearing "government doesn't go out of business" in addition to the assumption that, no matter what, these pensions will be paid. My point was that these assumptions were not true.

I'm not saying it's a good thing that retirees are going to end up with less than what they had expected. I'm just saying they are going to end up with less.

That's an easy prediction right now, given that there exist retirees who have already been forced to take less than what was originally promised.
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  #165  
Old 03-12-2012, 08:13 AM
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Speaking of what's actually going on - let's see how it's going in Central Falls, RI:
http://www.cbsnews.com/8301-18563_16...s-are-slashed/

Quote:
The smallest city in the nation's smallest state -- Central Falls, Rhode Island -- is bankrupt. The main reason is it can't afford the pensions for its retired city workers. How the city is digging out of its financial hole may have consequences for city pensions in other cash-strapped towns across the country.

For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.

"My daughters grew up here, went to school here. It's all gone," said Mike Geoffroy, a retired firefighter.

He said he could not make the payments on his house after his pension was cut by $1,100 a month. The small apartment he now calls home is a shrine to better days and fond memories.

"We're all born and raised here. We worked for the city. It's very disheartening the way they're treating us," Geoffroy said.

Former judge Robert Flanders now runs Central Falls as its receiver. He took the city into Chapter 9 bankruptcy.

"In Chapter 9, you can do things that are impossible outside of it - blow up contracts on day one, restructure pension obligations - so the savings begin immediately," Flanders said.

Flanders slashed the pensions of 114 retired firefighters and police officers, some by more than half.


Central Falls is a tiny town, but the message coming from here is huge -- pensions are not sacrosanct, and it's a message being heard in bankrupt towns across the country.
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  #166  
Old 03-12-2012, 10:42 AM
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He said he could not make the payments on his house after his pension was cut
Perhaps it is prudent to wait until one's house is paid off to retire?
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  #167  
Old 03-12-2012, 11:12 AM
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Perhaps it is prudent to wait until one's house is paid off to retire?
Well, I'm sure he thought it was prudent, since everyone has said that the pensions always get paid. As far as he was concerned, it's like still being a firefighter and assuming you'll be getting your salary (and that it can only go up).

Until recently, these assumptions were considered reasonable.
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  #168  
Old 03-12-2012, 11:51 AM
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what are the hurdles to filing ch 9?
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  #169  
Old 03-12-2012, 12:11 PM
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what are the hurdles to filing ch 9?
http://www.businessinsider.com/heres...kruptcy-2011-7

Quote:
1. Are all municipalities eligible for Chapter 9 bankruptcy protection?

Johnston: A state actually has to authorize a municipality to file a Chapter 9. Some states, like California, have done that on a blanket basis — any city can file for bankruptcy. Some states have no municipal bankruptcy option whatsoever, and some states authorize it on a case-by-case basis. Right now in California, there is proposed legislation that would remove that blanket approval, and authorize it on a more case-by-case basis.

To file a Chapter 9, a municipality has to establish that it’s insolvent and that bankruptcy is tin the best interest of its creditors. So most of the decisional law in Chapter 9 is about whether a municipality is actually in a case — whether it’s okay for the municipality to file for bankruptcy, whether the case was filed correctly, whether it was filed in good faith. There is much less case law about what an appropriate plan for restructuring is.

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Old 03-14-2012, 10:27 AM
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Sort of surprised you missed this one, MP. Automatic trimming of pensions in WI. http://www.jsonline.com/business/ret...142281095.html
"Retired public employees face more pension cuts" "Tens of thousands of retired public employees in Wisconsin whose pensions have been reduced for four straight years probably will see another cut in 2013.

For tens of thousands more, pension payments will remain frozen at levels that in many cases fall far short of the rate of inflation." ...
"Not everyone is taking cuts. Wisconsin guarantees public retirees that they won't fall below their initial pension level. People who have reached that mark - a rapidly growing number that next year will exceed half of all retirees - are exempt from further reductions.

But that also shrinks the pool of retirees eligible to absorb a cut, and increases the size of the reduction for them.

"Fewer shoulders to bear the burden," said Keith Brainard, research director for the National Association of State Retirement Administrators.

During the first two decades under the system, Wisconsin public retirees never experienced reductions in payments from their core pension fund.

Quite the opposite. Many did very well for many years."
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