How will unfunded "pensions" affect the local economy?

User Forum Topic
Submitted by phaster on September 1, 2014 - 7:48am

Here is a simple question, how do you think unfunded pensions affect the economy, specifically RE prices?

To illustrate specifically what I am concerned with, below is an outline of a local unfunded public pension issue....

*** WHAT YOU NEED TO KNOW ABOUT PUBLIC PENSIONS IN SAN DIEGO ***

A recent wall street journal article essentially said the SD county pension system was using derivaties to manage their portfolio.

"Simply put, it could have a market exposure of $20 billion despite only managing half that amount."

http://online.wsj.com/articles/san-diego...

To show why the current SD county pension "operations" is a bad idea, google "buying stocks on margin" and check out the first search result.

The math is pretty simple to understand (just add "000,000" to the following $ figures):

A Buying Power Example
Let's say that you deposit $10,000 in your margin account. Because you put up 50% of the purchase price, this means you have $20,000 worth of buying power.

http://www.investopedia.com/university/m...

Returning to our example of exaggerated profits, say that instead of rocketing up 25%, our shares fell 25%. Now your investment would be worth $15,000 (200 shares x $75). You sell the stock, pay back your broker the $10,000, and end up with $5,000. That's a 50% loss, plus commissions and interest, which otherwise would have been a loss of only 25%.

Think a 50% loss is bad? It can get much worse. Buying on margin is the only stock-based investment where you stand to lose more money than you invested. A dive of 50% or more will cause you to lose more than 100%, with interest and commissions on top of that.

http://www.investopedia.com/university/m...

A good basic math education, is all that is needed to understand the "downside" risk of a margin account (but all the reports in the media so far do not show this simple "downside" math).

Adding the "options" account variable complicates matters, but kinda explains the lackluster single digit portfolio returns of the SD county portfolio (i.e. the various options w/in the portfolio of "puts for downside protection and "calls" to try and win big on the upside" cancelled each other out - so far, in a market that has gone up), the big unknown is how the "options" are structured within the portfolio and how it react if there is sudden and dramatic turbulence.

Consider all it might take for the "local" house of cards to fall is some kind of foreign black swan event that drops the market towards 10% down, and because of leverage things could suddenly get ugly for the local economy (for example LTCM, which happened in a less complex world, now one has to factor in some thing akin to high speed robo traders, that will sell off a position because of a trigger event, thus converting a "paper" loss into a real loss for the pension portfolio??).

10 billion dollars placed into a margin account to play the options market IMHO is "insane" if anyone was investing their own money, but think I uncovered the motive.

The reason the county pension board might have taken such drastic action is the change in accounting rules which put public pensions on the balance sheet next year.

Few even in the investment community know that:

PUBLIC "Pension liabilities must be included on the balance sheets of the agencies responsible for funding their employees' pensions. Until now liabilities have been buried in arcane footnotes that few read and even fewer understood"

http://articles.latimes.com/2014/apr/09/...

NOTE if San Diego's pension board margin-option strategy fails, the tax payer is on the hook!

One other thing, there is a youtube video (starting at 3:24), where san diego is mentioned at the being at the top of the list (for being the deepest in the hole overall for unfunded pensions and having an unfunded health care plan)

https://www.youtube.com/watch?v=BRr49iAgI9g

If pensions and health care costs have to both be included on the balance sheet, the bond markets are in for a real shock which will ripple through the economy and affect everyone on main street.

If you want understand why there is a problem with pensions in San Diego, read the history of pensions at the state level (which started out well managed and over the years turned corrupt and mismanaged):

http://www.city-journal.org/2013/23_1_ca...

The local(s) (city and county) basically followed the CalPERS model, and what might be telling is the former CEO of CalPERS just plead guilty to a fraud, corruption charge

http://www.latimes.com/business/la-fi-ca...

Submitted by phaster on December 26, 2015 - 12:06pm.

City pensioners get '13th check' bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news...

POLL What should happen with the 13th check?

http://www.sandiegouniontribune.com/poll...

this corrupt $hit for brains give away is well documented and eventually (perhaps soon) will come home to roost and destroy the economy...

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV...

Submitted by temeculaguy on December 29, 2015 - 10:18pm.

phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I'd imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

Submitted by bearishgurl on December 30, 2015 - 4:23pm.

temeculaguy wrote:
phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I'd imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to "Tier A" SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under "Tier I." However, my pension was calculated on a much less generous formula than "Tier A" recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and "brain drain"). However, all of the affected SDCERS members should be fully "retired" by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

Move on, folks .... there's nothing to see here.

Submitted by harvey on December 31, 2015 - 6:40am.

temeculaguy wrote:
The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

That is the trend, and I'm optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.

Submitted by phaster on December 31, 2015 - 12:23pm.

temeculaguy wrote:
phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I'd imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

so have any links to news reports/hard data about updated SD county pension management?

since this is an economics forum thought I'd try and understand what is going on locally (as well as what is happening nationally/internationally) using the intellectual tools I've picked up over the years

basically to try and make sense of the world around me I try relating stuff to concepts found w/in "Newtonian" physics which describes "cause and effect"

grouping all public pensions together is a way to incorporate the concept of a fractal (which is a math set concept that ties to model a natural phenomenon or something that exhibits a repeating pattern at every scale)

this technique of simplifying is standard practice in the study of physics where the goal is to try and understand what is happening to the system (in this case the "economy") as a whole...

some might not understand or relate to the math/science framework I've presented, if so let's examine the modern day economy using basic concepts found in scripture because that ancient document has a lot to say about effects of ethical decisions made by individuals/society using simple metaphor(s) like "sowing and reaping"

Galatians 6:7

Be not deceived; God is not mocked: a man reaps what he sows

Galatians 6:8

Those who live only to satisfy their own sinful nature will harvest decay and death from that sinful nature

suppose a rabbi, priest and imam go to a bar to discuss the topic, I'd bet they might agree that the implication from this passage is that when God says you will reap what you sow (s)he means you will live with the results of your actions (NOTE by including the "(s)" I'm trying to cover my ass and not offend the almighty, because I know the scientific method cannot determine the existence let alone the gender of God).

https://www.youtube.com/watch?v=kWjlkm5g-Tk

all theological joking aside, in an economy how well one does NOW depends upon the PAST decisions and acquired skill-set(s) of an individual or group

said another way, how an economy functions as a system, in the present/future reflects the care or lack thereof from inputs long ago!

so given various reports stating an ever growing problem w/ the viability of various public pensions (along w/ other alarming trends in the global environment) therefore I can only conclude there is eventually going to be some kind of armageddon that will manafest itself in the economic realm, so best to heed warnings

Revelations 16:15

Look, I come like a thief! Blessed is the one who stays awake and remains clothed, so as not to go naked and be shamefully exposed

Warren Buffett

Only when the tide goes out do you discover who's been swimming naked

http://www.businessinsider.com/warren-bu...

http://www.cnbc.com/2015/03/02/buffett-t...

as to what keeps me awake at night, its a fear which is shared by many other americans AND that is that a righteous man cannot escape the collective ill effects of corrupt government which will have consequences as to the future "state" of USA (FYI by "state" I mean the economy as well as other condition(s): stable/unstable, prosperous/un-prosperous, admired/loathed, etc.)

Submitted by phaster on January 6, 2016 - 9:12am.

bearishgurl wrote:

Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to "Tier A" SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under "Tier I." However, my pension was calculated on a much less generous formula than "Tier A" recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and "brain drain"). However, all of the affected SDCERS members should be fully "retired" by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

Move on, folks .... there's nothing to see here.

huh...

first of all seems like Déjà vu (and perhaps a case of sour grapes?)

bearishgurl wrote:

September 2, 2014 - 2:02pm.

Uh, well, I don't think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

.... For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches...

http://www.utsandiego.com/news/2014/aug/...

see also: http://sdcera.com/investments.htm

then not too long after, it was reported

Wall Street Journal wrote:

San Diego County Pension Chief to Resign

By Dan Fitzpatrick
March 19, 2015 6:22 p.m. ET

The chief executive of San Diego County’s pension system announced he would resign at the end of the month, bringing fresh turmoil for the $10.4 billion fund.

San Diego County Employees Retirement Association said in a statement that CEO Brian White and the board had "amicably agreed" that Mr. White's tenure of nearly two decades would end March 30. David Wescoe, former head of the city of San Diego's pension fund, will take over as CEO while the board searches for a permanent replacement.

A Sdcera spokesman said Mr. White made the decision to resign and that he and the board had been discussing the move "over the course of several months." Mr. White said in a statement that "Sdcera has enjoyed great success, which I expect will continue" and that "serving as Sdcera's CEO has been an incredibly rewarding professional experience."

The exit of the system's longtime leader caps a period of strife for a fund that manages money on behalf of more than 39,657 active and former public employees.

Board members and staff members spent much of the past year wrangling over an outside firm's investment strategy that involved the use of derivatives to boost performance. The controversial approach was the subject of a front-page article in The Wall Street Journal.

The board voted in November to find a new internal investment chief rather than rely on an outside manager for that role.

Write to Dan Fitzpatrick at dan.fitzpatrick@wsj.com

www.wsj.com/articles/san-diego-county-pe...

or could there be an ECONOMIC INCENTIVE as to why you want others to move along and not question the news article why "City pensioners get '13th check' bonus"

http://www.sandiegouniontribune.com/news...

bearishgurl wrote:

September 2, 2014 - 2:17pm.

Well, I'm representative of the typical local Suzy Q. Gubment-Pensioner with a fairly low income. But every time I look at listings the places I WOULD be interested in fleeing to (wine country and mtns, in and out of state), I'm finding the home prices to be just as much or higher than where I currently live ... and utilities higher or much higher. And I don't owe very much on my current home ... relative to its value .... and could pay it off anytime I so choose to. And I have a running vehicle and know how to get on the interstate ....

given this information the (re)action seems no different than that of a CEO of a tabacco company who has an economic incentive to keep the public in the dark about the public health costs/dangers of smoking as long as possible AND ethically is par for the course given what another pigg disclosed about typical local Gubment-Pensioner(s)

livinincali wrote:

October 1, 2014 - 8:00am.

I worked on a project for RISK management about 12 years ago, which is the San Diego's self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day.

seems everything also dovetails (WRT possible motives and belief in the existing faulty design of public pensions) which is outlined in the Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV...

in science the goal is to understand fundamental truths and the mindset is to examine the honest "cause and effect" (which is the intellectual/moral framework I try my best to operate in)

as I see things the scientific method is the most objective way to look at an issue since there is little or no regard to the calculus of economics or politics when looking for the "cause and effect"

more often than not when the human emotional calculus of economics vs politics are included, people cheat/lie/steal to obtain an objective (i.e. deluded themselves into believing in a corrupt $hit for brains game plan is viable/sustainable because the math is all but ignored along with understanding the context of the object designed)

it would be like VW telling their customers and regulators to just believe our ads because they state we produce clean burning diesel engines BUT ignore all the evidence to the contrary that there was a design flaw and cover up for many years till we were caught in a lie...

so if you or others care to check the dates of the articles, you stated others should ignore, note that the date I post a link to an article is right around the time I find it while skimming some news source (aka THE EFFECT), and the other link corresponds to what to me looks like (THE CAUSE) which might have happened years ago!

Submitted by XBoxBoy on December 31, 2015 - 4:05pm.

bearishgurl wrote:

Move on, folks .... there's nothing to see here.

Are you sure you didn't speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/go...

Submitted by bearishgurl on December 31, 2015 - 7:34pm.

XBoxBoy wrote:
bearishgurl wrote:

Move on, folks .... there's nothing to see here.

Are you sure you didn't speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/go...

There IS nothing to see as far as the wishes and hopes of those claiming terms of CA gubment pensions already promised .... even decades ago, will change in any way, shape or form. Just ask the cities of Vallejo and San Bern, who have both filed for Chapter 9 BK protection in the past decade if they have gotten any relief from their already-promised pension benefits.

And I thank you for posting this link, XBoxBoy. I've downloaded it and what better time than the last night of 2015 to peruse this long-awaited ruling. I've got to step out at the moment but can't wait to pour me a glass (or two, lol) and dive right into it. Yes, in Cali, the wheels of justice turn slowly ... but alas, they DO turn, people.

I just have one preliminary comment. At first blush, the first page of the ruling is quite telling. The three labor-union charging parties in the ULP were repped by the very best, most experienced, influential and heaviest hitting labor lawyers in the state ... if not the entire country. Don't ask me how I know but suffice to say, I know this first-hand.

We've discussed this particular issues in the ruling here on the forum ad nauseam as it was actually taking place and before and during the time these landmark ULPs were filed. I'd have to dig to find the links but central to this issue (and righter than rain, despite his creepiness, which caused his ultimate downfall) was the infamous former SD City Councilman, SD Mayor and longtime member of the House of Representatives, Bob Filner.

Happy New Year, folks!

Submitted by paramount on December 31, 2015 - 11:26pm.

bearishgurl wrote:

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I've thrown in the hat - when my job dries up, I'm leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I'm living in poverty. Screw that....

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

Submitted by bearishgurl on January 1, 2016 - 8:13pm.

I got sidetracked but am still studying the voluminous long-awaiting PERB decision on City unions ULPs to cause the effects of voter-approved Prop B to be nullified/repealed.

Here's a (rather dated) background link I just found on the subject:

https://ballotpedia.org/San_Diego_Pensio...

And here's a (rather entertaining) background thread I found on the subject :=)

http://piggington.com/ot_public_employee...

I'll be back in a few days (or less) when I've had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It's been a long haul, to say the least.

Submitted by paramount on January 1, 2016 - 10:26pm.

bearishgurl wrote:

I'll be back in a few days (or less) when I've had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It's been a long haul, to say the least.

Don't forget to look into the golden staplers the state has been buying for govt employees that cost hundreds.

When I get back to work next week I'm going to place an order for one and see what happens. I think I already know....

Submitted by FlyerInHi on January 2, 2016 - 12:34am.

paramount wrote:
bearishgurl wrote:

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I've thrown in the hat - when my job dries up, I'm leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I'm living in poverty. Screw that....

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

Voting with your feet is the best way. I already did although I'm still paying CA taxes on CA related income, and property taxes. I hate property taxes that I see no personal benefit from.

I don't mind paying taxes. But taxes should be for services to citizens and the poor. Not golden pensions.

Submitted by phaster on January 6, 2016 - 9:51am.

harvey wrote:
temeculaguy wrote:
The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

That is the trend, and I'm optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.

XBoxBoy wrote:
bearishgurl wrote:

Move on, folks .... there's nothing to see here.

Are you sure you didn't speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/

I don't know what I was thinking not believing what politicians/lawyers said in a press release about the prudent management of a public pension fund, because those professions have always been known for being pillars of integrity and deep intellect

bearishgurl wrote:

September 2, 2014 - 2:02pm.

Uh, well, I don't think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

.... For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches...

http://www.utsandiego.com/news/2014/aug/...

see also: http://sdcera.com/investments.htm

FWIW given the current release of The Big Short, its a great movie which I just saw and encourage all to watch because its entertaining and educational since it illustrates lots of relevant/esoteric info about economic effects people might not have ever pondered or understood the danger of

after you watch the movie consider thinking like Einstein who was fond of "Gedankenexperiment" (or though experiments) and looking at a problem w/ various frames of reference

Morpheus wrote:

This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.

if you've decided to take the red pill, start off w/ the assumption that the all public pensions within the system (county and state level) are fully funded

temeculaguy wrote:

December 29, 2015 - 10:18pm.

As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes.

NOW lets the consider what would happen if we ONLY look at the city of SD and take things at face value (as was reported just before xmas)

City pensioners get '13th check' bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a "13th check" — beyond their usual 12 monthly payments — making this year's holiday bonus the largest such payout in the history of the three-decade-old practice.

But it's become a source of conflict as the city's pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news...

since "The Big Short" is based on actual events, next lets say the CITY of SD issues bond(s) to cover the pension shortfall and not too long afterward some astute investors (from perhaps a soverign wealth fund w/ geo-political motives)

take out swaps on the bond(s) issued by the city [if you see the movie or have yet to see it, note the scene where the economist (Richard Thaler) and the singer (Selena Gomez) are playing black jack and explain to the movie audience, depending upon the tranche the payout ratio was 20:1 to 200:1 on a CDO]

what you should stop and think about is what happens if bond(s) of 2 billion to cover un-funded pension problem here in the city were to fail, which then triggers CDOs (for full face value)

the result would be an implosion of 40 to 400 billion dollars that hits the system (that someone would have to pay), AND THIS fallout IMHO would be enough to take down the rest of the hypothetical "debt free" state (which for comparison has an annual reported budget of around the $120 billion range)

http://www.wsj.com/articles/brown-unveil...

In other words a big short (though experiment) based on an actual public pension problem ONLY in SD (aka enron by the sea), could be viewed as a economic cancer which would nuke an otherwise economically healthy state of california...

so BOTTOM LINE the '13th check' bonus, IMHO cannot be described as anything else than a corrupt $hit for brains idea, given a reported $2 billion shortfall (AND THAT IS EVEN BEFORE one should to ponder the economic dangers associated with "swaps" or other forms of economic warfare)

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries' estimates are grossly incorrect, in the long run true "surplus earnings" are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.

page 286

...like in the just reported BAU city of SD three-decade-old "holiday" practice???

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV...

what should scare the $hit out of anyone with any bit of common sense is that there is a nation wide problem with the mis-managed public pensions AND the reported two billion dollar problem w/ the city of SD public pension, is just the proverbial tip of the ice berg!

Underfunded Public Pensions
in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward

http://www.hks.harvard.edu/centers/mrcbg...

so anyone else see BIG problem(s) ahead or can outline a concrete a example of a larger potential economic headwind we as a nation face?

CA renter wrote:

December 14, 2014 - 5:09pm

...but public pensions are just one part of the problem. They are dwarfed by other types of debt.

Submitted by bearishgurl on January 6, 2016 - 11:36am.

Uhh, phaster? You're trolling now.

I don't think you would be very happy as a current SD city or county "worker-bee" who is subject to mandatory payroll deductions of 7-14% of gross pay (depending on age) to fund their DB pensions. This doesn't even take into account any mandatory payroll deductions they have for union dues and healthplans for any family members they are covering OR any voluntary payroll deductions they have in place to fund their 457 plans.

The average SD city/county "worker bee" (w/ 5-20 years service) currently makes just $15 - $25 hr.

Do you think YOU (phaster) could live comfortably in SD County on your net pay if YOU were a current employee in one of these systems??

Thankfully, I never had to find out as I had a high-earning spouse to help with living expenses while employed as a "civil servant" minion.

Submitted by bearishgurl on January 6, 2016 - 12:01pm.

phaster wrote:

[snip irrelevant commentary and conjecture]

-snip-

uhh, phaster, nice try but if you think this bleached whale "people-of-Walmart" couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back "home" for the holidays to work out at the gym we work out in all year-round!

And the only reason we can exist (or co-exist with a side gig) on our paltry city/county pensions is because our living expenses are relatively low in comparison to the "worker bee" currently raising a family. The COL is lowest for those older (WWII gen) members who retired prior to 2002 and thus purchased their current residences well below $100K.

Contrary to popular belief, SD city/county retirees don't live lavish lifestyles on "golden pensions," people .... NO, not even former sworn staff with more generous "Class C" retirements. We live in neighborhoods and houses most of you worker bees wouldn't even bother getting off the freeway to look at in PAID FOR houses (or nearly so).

Submitted by CA renter on January 10, 2016 - 4:12am.

harvey wrote:
temeculaguy wrote:
The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

That is the trend, and I'm optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.

Fifty years from now, do you honestly think they'll be talking about the success of defined contribution pension plans? Which one do you think will be viewed more favorably, DB or DC pensions, once the DC debacle comes home to roost?

You're dreaming if you think that DC pensions are superior in any way to DB pensions. I agree that some of the formulas are too generous (and have felt that way since the pension increase passed in CA), but DB pensions have been around a lot longer than DC pensions (since the Roman Empire, if not earlier), and they've done exceptionally well, all things considered.

The ONLY way DC pensions (private savings) have ever worked in all of known human history, was when family members were expected -- even mandated, in some cases -- to care for each other until death. I'm not opposed to that personally, but how do you think that's going to go over with the general public in the U.S.?

If Americans are forced to take on the care of their sick and/or elderly relatives, I'd bet anything that they would be willing to pay a small tax on their income, over their lifetimes, that would give them relief from this obligation. Welcome to DB pension plans.

Your thoughts? How do you see DC pensions actually working, over the long term, in real life?

Something for you, and other critics of DB plans, to think about:

http://www.forbes.com/sites/edwardsiedle...

Submitted by CA renter on January 10, 2016 - 3:21am.

FlyerInHi wrote:
paramount wrote:
bearishgurl wrote:

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I've thrown in the hat - when my job dries up, I'm leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I'm living in poverty. Screw that....

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

Voting with your feet is the best way. I already did although I'm still paying CA taxes on CA related income, and property taxes. I hate property taxes that I see no personal benefit from.

I don't mind paying taxes. But taxes should be for services to citizens and the poor. Not golden pensions.

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what's so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them. Very often, they receive an even greater benefit than what they pay because public infrastructure, as a whole, is often worth far more than the sum of its parts.

We desperately need better financial, economic, and political education in our schools. There are far too many people walking around who think that they know what they're talking about when they really have no clue.

Submitted by CA renter on January 10, 2016 - 4:28am.

paramount wrote:
bearishgurl wrote:

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public "outrage" over contracts made long ago with current and former CA local government employees.

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I've thrown in the hat - when my job dries up, I'm leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I'm living in poverty. Screw that....

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

And your employer, a government contractor, paramount? You think they're not ripping off taxpayers?

https://www.youtube.com/watch?v=XwBGFZX6G2Q

https://www.usaspending.gov/transparency...

Submitted by CA renter on January 10, 2016 - 5:27am.

bearishgurl wrote:
phaster wrote:

[snip irrelevant commentary and conjecture]

-snip-

uhh, phaster, nice try but if you think this bleached whale "people-of-Walmart" couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back "home" for the holidays to work out at the gym we work out in all year-round!

And the only reason we can exist (or co-exist with a side gig) on our paltry city/county pensions is because our living expenses are relatively low in comparison to the "worker bee" currently raising a family. The COL is lowest for those older (WWII gen) members who retired prior to 2002 and thus purchased their current residences well below $100K.

Contrary to popular belief, SD city/county retirees don't live lavish lifestyles on "golden pensions," people .... NO, not even former sworn staff with more generous "Class C" retirements. We live in neighborhoods and houses most of you worker bees wouldn't even bother getting off the freeway to look at in PAID FOR houses (or nearly so).

Very true, BG. You can tell who gets all their news from the UT and Fox when they start talking about the "lavish" pensions. LOL!

And, Phaster, the CDO problem, along with any related derivatives, isn't a result of what public employees are doing. That's a problem that is created by the financial industry. Focus your righteous indignation in the right direction. "The Big Short" should have opened your eyes regarding the real perpetrators behind our economic collapse and the booms and busts that have caused most of the problems in the DB world.

If you're really ticked off about taxpayers having to subsidize the lifestyles of others, then you should direct your anger squarely at Prop 13, as well -- and that tax expenditure was never earned while pensions are deferred compensation for work already performed. Prop 13 is a HUGE tax subsidy, often to very wealthy people, which dwarfs California's "pension crisis." If we want to fix our fiscal house, we need to get rid of Prop 13 first (except for a single primary residence); then, we can see where we stand WRT other expenditures.

Submitted by harvey on January 10, 2016 - 3:24pm.

Whataboutism

Soviet propagandists during the cold war were trained in a tactic that their western interlocutors nicknamed “whataboutism”. Any criticism of the Soviet Union (Afghanistan, martial law in Poland, imprisonment of dissidents, censorship) was met with a “What about...” (apartheid South Africa, jailed trade-unionists, the Contras in Nicaragua, and so forth).

http://www.economist.com/node/10598774

Submitted by phaster on January 10, 2016 - 8:49pm.

bearishgurl wrote:
phaster wrote:

[snip irrelevant commentary and conjecture]

-snip-

uhh, phaster, nice try but if you think this bleached whale "people-of-Walmart" couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back "home" for the holidays to work out at the gym we work out in all year-round!

irrelevant commentary??

INTERNAL MONOLOGUE wrote:
the pot calling the kettle black, WTF???

so how to use a MADE UP B$ PHRASE "subconscious-psychological-interpretation(s)?" which struck IN A MOMENT OF boredom/divine-inspiration, while prioritizing the structure of a "rant"

hate to take credit for something that I never intended so for now I'll go along w/ your subconscious-psychological-interpretation that the couple is representative of SD City and County retired workers

truth is I selected the photo because it was the first non-military, civilian color image that came up when I typed the phrase "watching nuclear explosions" using google image search and never gave it a literal "second" thought!

https://www.google.com/search?q=watching...

my reason (as if anyone cares) was basically wanted to stay away from "scary" military nuke images because of headline news (at the time)

http://www.wired.com/2016/01/science-can...

your post(s) in general indicate a lack of critical-thinking and this last post indicates you're vein/insecure about appearance/self-image

to address the issue of "self-image" insecurity, found is a photo of a "fit and healthy" miss mushroom cloud w/ admirers so you can self-project a positive image of SD City and County retired workers,... happy?

since you mentioned it, my second thought is the couple is gazing east-ward (possibly standing in California??? and looking toward Nevada??? the only way to know for sure which state(s), is to locate/match the specific "land-scape" shown)

INTERNAL MONOLOGUE wrote:
to see if (bearishgurl's) subconscious-psychological-interpretation about the photo has any basis in reality lets try a simple experiment

GIVEN she first suggested the photo is representative of SD City and County retired workers AND is set in (polluted backyard?) in the state of Nevada [SO AS stated the couple is located "somewhere" in the state of Nevada AND in the real world that indicates they would have to be facing West-ward (toward the state of California)]

so with the photo on an iPad/iPhone, go out side (on a sunny day) and hold the device arms length away looking first to the east, then toward the west AND see first hand which orientation makes common sense (hint, note the shadows!)

I deduced general direction(s) by noting the right side of the image is illuminated (thinking where the sun is in the sky - to the "south") AND the shadows fall on the people/blast-cloud on the left hand side, so this indicates "north" (given the spherical geometry of the earth)

http://scienceline.ucsb.edu/getkey.php?k...

INTERNAL MONOLOGUE wrote:
should I acknowledge anything I post about psychoanalytics is PURE B$ because I've never taken a psych class or read a psych book BUT did watch pixar's "inside out" which might count as sorta something...

what about noting other observations about the photo that suggest the image was photoshopped???

http://gizmodo.com/5930971/tourists-watc...

nah, should close out and move on...

WRT this tangent, "Gedankenexperiment" tells me your transference-interpretation of a photo which you described/interpreted as bleached whale "people-of-Walmart" couple watching an implosion from their (polluted backyard?) in rural Nevada is PURE B$ to mask self-image insecurities and a simple SCIENCE experiment in the real world can be done to confirm the diagnosis

now back to the serious topic at hand since this is an economics message board where it clearly states at the bottom of the page... In God we trust. Everyone Else Bring Data!

BUT before looking at data, it might be useful to recall lessons taught in middle school, specifically the topic about "compound interest" and basic money management skills (which is key to surviving/thriving day to day in the modern day world)

https://www.youtube.com/watch?v=evDHk7g8SOM

if you have a mortgage, then perhaps you might have heard that you can pay off a loan much faster, by "annually" making an extra -- 13th -- mortgage payment,... what an extra mortgage payment does is directly reduces the principal balance on the loan by the amount of the payment (and the observed effect is exponentially decreasing the payback period)

https://www.youtube.com/watch?v=vF0sZEDFA5I

NOW lets (re)examine ACTUAL "historic" published documents/text (i.e. Data!)

City pensioners get '13th check' bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a "13th check" — beyond their usual 12 monthly payments — making this year's holiday bonus the largest such payout in the history of the three-decade-old practice.

But it's become a source of conflict as the city's pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news...

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries' estimates are grossly incorrect, in the long run true "surplus earnings" are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.

page 286

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV...

anyone able to grasp the power/implications of "compound interest" then reading the published reports should be very disturbed at the mis-management/incompetence/corruption since the PRIMARY CAUSE as to why the "magnitude" of the SD public pension "unfunded" problem exists is due to a simple math concept that was suppose to be learned in middle school...

as-reported for the past three decades the "surplus earnings" (aka 13th payment) was diverted to Gubment-Pensioner(s) every holiday season INSTEAD OF being used for the original goal of trying to make sure the long term average return of the portfolio was achieved (about about 8% as per actuaries' design-estimates)

if anyone is able to think critically about "compound interest" then they will see that making an annual extra mortgage payment and making an extra payment to Gubment-Pensioner(s) every holiday are two side of the same coin; one side allows a mortgage debt to be paid "down" much sooner, the other side makes the debt to pile "up" exponentially over decades!

(bearishgurl) since you have taken the blue pill - its apparent you believe whatever you want to believe!

for all other(s) who dared take the red pill, the BOTTOM LINE seems to be as long as the "surplus earnings" (aka 13th payment) is siphoned off every holiday season for Gubment-Pensioner(s) INSTEAD OF being used to maintain the pension system designed target return rate, the SD pension system as currently structured/operated AND using nothing more than "honest" common sense and middle school math tells us, that the un-funded DEBT issue will basically ALWAYS grow!

http://www.doughroller.net/investing/pow...

Submitted by phaster on January 10, 2016 - 9:39pm.

CA renter wrote:
harvey wrote:
temeculaguy wrote:
The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

That is the trend, and I'm optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.

Fifty years from now, do you honestly think they'll be talking about the success of defined contribution pension plans? Which one do you think will be viewed more favorably, DB or DC pensions, once the DC debacle comes home to roost?

You're dreaming if you think that DC pensions are superior in any way to DB pensions. I agree that some of the formulas are too generous (and have felt that way since the pension increase passed in CA), but DB pensions have been around a lot longer than DC pensions (since the Roman Empire, if not earlier), and they've done exceptionally well, all things considered.

Déjà vu

phaster wrote:

September 8, 2014 - 8:59am.

CA renter wrote:
Many have defined benefits, and DB plans were the norm a few decades ago...you know, when the middle class and the economy were at their strongest.

That era back in the 1950's and 1960's was IMHO an anomaly in world history, because the USA was the only super power in terms of military and manufacturing.

Consider that Japan and Germany back then had no manufacturing base, so DB were a way to instill worker loyalty (or said another way, DB came about because of a good economy, DB for the "middle class" didn't create a good economy).

phaster wrote:

October 2, 2014 - 8:18pm.

CA renter wrote:

You're also clearly ignorant about the differences between DB and DC pensions. DC plans have higher administrative costs and lower returns; DC plans have access to fewer investment options; DC plans don't pool longevity risk; DC plans have lower contribution limits than DB plans (for employer and employee); and DB plans can remain in higher-yielding and more diversified investments and can better manage the ups and downs of the market over time because they are continuously funded by the contributions of current employees and their employers, and benefits are staggered well into the future (pooled investment risks over time and number of people).

News reports about CalPERS and the SD pension board, leads me to believe idiots who over estimate their own management abilities AND have no basic understanding of math or the investing paradox, are at the helm.

Given your logic since CalPERS and SD have "professional" managers, elected board(s) to provide oversight and access to diversified investments, then why haven't they beat the market benchmarks (i.e. the index of the DJ30 or S&P500)?

http://www.marketwatch.com/investing/ind...

http://www.marketwatch.com/investing/ind...

IMHO its because of the "investing paradox."

Simply stated a disciplined small/individual investor can beat market averages over long periods of time, because their trades fly under the radar and are "un-noticed" by the market.

However when the portfolio is in the BILLIONS (as is the case w/ SD), or the HUNDREDS OF BILLIONS (as is the case w/ CalPERS), any trade they make I'd argue is the market (so a different investment style is needed).

phaster wrote:

livinincali wrote:

The one benefit of defined benefit contribution plans, retention, isn't worth the risks, the frauds, the vote buying, and everything else it enables. That's the bottom line. The rewards (reduced training costs retention, etc.) don't outweigh the risks and therefore they should be scrapped..

Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can't be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fund...

The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it's a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said "Unless they're advanced investors, I think they should leave their funds in the TSP because it's simple and it's easy enough that most investors can do it and do it well"

http://money.cnn.com/2014/10/01/retireme...

CA renter wrote:

December 14, 2014 - 5:09pm.

Don't be a a useful idiot. If you're not being paid, you should definitely demand payment from [Strike]the Privatization Movement[/Strike] [CalPERS] for your services. They expect to reap great rewards from the work of people like yourself; make sure to get your piece of the pie.

http://en.wikipedia.org/wiki/Useful_idiot

CA renter wrote:

November 21, 2015 - 3:18am.

I have yet to see Jerry Brown "calling bullshit" on CalPERS. Please include a quote (a real one, not one of your "edited" ones), and cite your source.

REUTERS wrote:

...Governor Jerry Brown, a proponent of a sharper reduction in the expected rate of return, was quick to criticize the move, arguing the pension fund should move faster to cut risk from its portfolio.

"I am deeply disappointed that the CalPERS Board reversed course and adopted an irresponsible plan that will only keep the system dependent on unrealistic investment returns," Brown said in a statement on Wednesday. "This approach will expose the fund to an unacceptable level of risk in the coming years."

http://www.reuters.com/article/2015/11/1...

translate.google.com: (CalPERS = bull$hit)

Submitted by bearishgurl on January 10, 2016 - 9:20pm.

Uhhhhh, phaster, may I ask what you DO for a living?

Inquiring minds would be interested to know.

Submitted by paramount on January 10, 2016 - 9:31pm.

CA renter wrote:

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what's so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them.

I don't know anyone who opposes paying their 'fair' share of taxes, that's not the issue here.

Submitted by bearishgurl on January 10, 2016 - 10:46pm.

phaster wrote:
livinincali wrote:
The one benefit of defined benefit contribution plans, retention, isn't worth the risks, the frauds, the vote buying, and everything else it enables. That's the bottom line. The rewards (reduced training costs retention, etc.) don't outweigh the risks and therefore they should be scrapped..
Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can't be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fund...

"The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it's a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said "Unless they're advanced investors, I think they should leave their funds in the TSP because it's simple and it's easy enough that most investors can do it and do it well"

http://money.cnn.com/2014/10/01/retireme...

W-a-a-a-ay back in the day, I was a payroll clerk employed by the Dept the Defense and can tell you with certainty that the TSP was the best plan in existence to supplement the DB plans for CSRS or FERS members (at that time). Any Federal employee who retires today (or in recent years) and elects to transfer their ENTIRE TSP investment to another vehicle upon retirement is a fool.

'Nuff said.

Submitted by bearishgurl on January 10, 2016 - 10:05pm.

Uh, the Federal TSP plan is technically a "457 plan."

Submitted by harvey on January 10, 2016 - 10:46pm.

CA renter wrote:
Your thoughts? How do you see DC pensions actually working, over the long term, in real life?

Here's my plan, see if you can follow along:

- People save for their own retirement.

- When they retire, they live off their savings.

- If their savings isn't adequate for the lifestyle they would like to have, they adjust their lifestyle.

Here's the part that may be especially difficult for you:

- Retiree's don't take governments to court, demanding more money forcing existing public services to be cut or eliminated because the retirees failed to plan properly decades prior.

It's complicated, I know. Hard to follow without all the compensation formulas, spiking, guaranteed returns, "13th payments" and the long list of other shenanigans. It's really hard to get one's head around the idea that people just save their own money and that's what they get and they don't get to ask for more later.

You see, "DC pension" that you describe as some bogeyman is just a savings account.

But all of the Piggs, save two, have been able to grasp it. Maybe someday you will also.

Submitted by bearishgurl on January 10, 2016 - 11:05pm.

harvey wrote:
CA renter wrote:
Your thoughts? How do you see DC pensions actually working, over the long term, in real life?

Here's my plan, see if you can follow along:

- People save for their own retirement.

- When they retire, they live off their savings.

- If their savings isn't adequate for the lifestyle they would like to have, they adjust their lifestyle.

Here's the part that may be especially difficult for you:

- Retiree's don't take governments to court, demanding more money forcing existing public services to be cut or eliminated because the retirees failed to plan properly decades prior.

It's complicated, I know. Hard to follow without all the compensation formulas, spiking, guaranteed returns, "13th payments" and the long list of other shenanigans. It's really hard to get one's head around the idea that people just save their own money and that's what they get and they don't get to ask for more later.

You see, "DC pension" that you describe as some bogeyman is just a savings account.

But all of the Piggs, save two, have been able to grasp it. Maybe someday you will also.

harvey (aka pri_dk), if you think there are only TWO Piggs who grasp this concept, you need to put on your thinking cap. Let me clue you in, here. There are several more Piggs here who are currently working FT (for the gubment) under the premise that they will eventually be due a pension under a "defined benefit plan."

I'm truly sorry for you that YOU DIDN'T CHOOSE to attempt to "qualify" for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to "jump thru the proper hoops" in attempt to get hired ... alas but you didn't! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.

Submitted by bearishgurl on January 10, 2016 - 11:42pm.

paramount wrote:
CA renter wrote:

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what's so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them.

I don't know anyone who opposes paying their 'fair' share of taxes, that's not the issue here.

The reason you don't "know anyone" opposed to paying their "fair share" of taxes, paramount is perhaps because the neighborhoods you have been living in have been built in the last 15 years or so.

Try living with a neighbor on one side who pays ~$800 year in property tax, a neighbor on the other side who pays ~$400 year in property tax and another neighbor directly across the street who pays ~$650 year in property tax while you cough up ~$4400 year in property tax.

It is disheartening, to say the least. Such are the effects of Prop 13 and its progeny, Prop 58.

The sheer "inequality" of Prop 13 (and its progeny) are VERY MUCH "the issue here."

Submitted by harvey on January 11, 2016 - 7:51am.

bearishgurl wrote:

I'm truly sorry for you that YOU DIDN'T CHOOSE to attempt to "qualify" for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to "jump thru the proper hoops" in attempt to get hired ... alas but you didn't! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.

Typical ad hominem response.

BG, you can't seem to discuss an issue without making personal claims about people that are completely fabricated.

(And then there's the perpetual references to your personal financial situation, which are just plain weird...)

Here's an actual fact: I did have a position that offered a DB pension. I was an officer in the US Army, commissioned through a full ROTC scholarship - a process that requires a few qualifications!

Now please tell us again, for the umpteenth time, how arduous it was for you to get your guberment job. I'm sure your experience makes boot camp and paratrooper training sound like a picnic on a sunny day...

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