cost of state pensions: $1 trillion

[BlahBlahYouToo]

NEW YORK (CNNMoney.com) -- Ready for another government bailout? Taxpayers could be on the hook within the decade if current state pension system isn't reformed.
Even if they continue to rake in the projected 8% in annual returns, pension funds in at least seven states -- Illinois, Louisiana, New Jersey, Connecticut, Indiana, Oklahoma, and Hawaii -- could dry up by 2020, and 31 states could be in trouble by 2030, according to a recent study by Northwestern University economist Joshua Rauh.

Some states have already slapped taxes on blueberries, illegal drugs and fur clothing. But as budget shortfalls grow, state legislators are looking for even more creative ways to earn revenue.
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Promised benefit payments are so astronomical that raising taxes would still fall short. The only solution would be to call on the federal government for a bailout, according to the study.
"This is a problem of monumental proportion," said Rauh, an assistant professor of finance at the Kellogg School of Management. "Given that we see the same issue in many states, the total size of a federal rescue plan could exceed the seriousness of the recent economic crisis and potentially cost more than $1 trillion total."
In Illinois, Rauh says the pension funds could be insolvent by 2018 at the current rate. And in the following years, the state will owe government workers $14 billion -- more than half of the state's projected revenue for 2010.
To dodge a bailout, Rauh says the state pension system needs an overhaul that includes allowing states to issue tax-subsidized pension funding bonds for the next 15 years if they consent to other reform measures.
For starters, states must agree to close defined benefit plans to the 1 million new workers who start state jobs annually, and instead offer defined contribution plans and guaranteed access to Social Security, to which only a quarter of public workers currently contribute. Rauh estimates the total cost to the federal government would be about $75 billion.
"Existing pensions would become more secure and new workers would get more than an empty promise, while the country would avoid another massive taxpayer-financed bailout," Rauh said.*

time stop offering pensions to new state employees and have them contribute to their own retirement accounts.

who the hell came up with a system as unsustainable as pensions???

 

[Slew Foot]

It seemed like a good idea 20-30 years ago when you could promise people that suckers in the future would pay them for work done now. Now that the checks are coming due, it looks like a shitty idea, and the guys who came up with it are all dead and laughing in hell.

 

[Mursilis]

I'm just shocked, shocked, that in a democracy, people yet again elected politicians who made short-term promises that, in the long-term, were completely unsustainable. So many chickens coming home to roost in the near future.

 

[zsdersw]

I'm proud to report that Wisconsin's pension system is doing just fine, close to or #1 in the country, IIRC.

 

[nick1985]

I'm just shocked, shocked, that in a constitutional republic, people yet again elected politicians who made short-term promises that, in the long-term, were completely unsustainable. So many chickens coming home to roost in the near future.

fixed

 

[olds]

How many of the pensions problems are related to a state deferring their payments for a number of years?

 

[Mursilis]

I'm proud to report that Wisconsin's pension system is doing just fine, close to or #1 in the country, IIRC.

Congratulations - your reward may be getting to pay to clean up all the other states.

 

[Mursilis]

How many of the pensions problems are related to a state deferring their payments for a number of years?

What is "Almost all", Alex?

 

[bfdd]

fixed

glad to see I'm not the only one that bothers.

 

[nick1985]

glad to see I'm not the only one that bothers.

haha. :thumbsup:

 

[Patranus]

If the government can do what it did to the GM bond holders I am sure they can eliminate these pension plans.

 

[Throckmorton]

Pensions used to be normal. It's just a way of spreading out pay, but of course you're pretending it's money being paid for nothing, and throwing out a big number, to make the idea of a pension seem unpalatable.

 

[dmcowen674]

I'm proud to report that Wisconsin's pension system is doing just fine, close to or #1 in the country, IIRC.

Not to worry, we will take all of Wisconsin's windfall and then some.

 

[BlahBlahYouToo]

Pensions used to be normal. It's just a way of spreading out pay, but of course you're pretending it's money being paid for nothing, and throwing out a big number, to make the idea of a pension seem unpalatable.

why did u become a citizen if you hate america?

 

[OBLAMA2009]

its ridiculous how overpaid government workers are. but its the fault of the voters so theyre getting what they deserve

 

[olds]

its ridiculous how overpaid government workers are. but its the fault of the voters so theyre getting what they deserve

http://www.sacbee.com/static/weblogs/the_state_worker/2010/05/study-state-workers-earn-less.html

http://www.dpa.ca.gov/tcs2006/table-3.htm

http://www.sacbee.com/static/weblogs/the_state_worker/2010/04/study-state-and-local-governme.html

 

[nick1985]

its ridiculous how overpaid government workers are. but its the fault of the voters so theyre getting what they deserve

As olds just pointed out, we often make less than the private world counterpart.

 

[Hayabusa Rider]

http://www.sacbee.com/static/weblogs/the_state_worker/2010/05/study-state-workers-earn-less.html

http://www.dpa.ca.gov/tcs2006/table-3.htm

http://www.sacbee.com/static/weblogs/the_state_worker/2010/04/study-state-and-local-governme.html

Stop confusing people with facts when they already have their minds made up.

Sometimes I want to take some of these people here and construct a geometry problem... er, nevermind

 

[MJinZ]

Stop confusing people with facts when they already have their minds made up.

Sometimes I want to take some of these people here and construct a geometry problem... er, nevermind

OH NOZ. They earn 5% less.

Yet, their pensions effectively allow them to SAVE 100% more.

Don't kid yourself. I'm getting myself a high level government job as soon as I can so I can rape the rest of your poor citizens who are paying for my retirement. I'll probably pick up a Ferrari California at some point after I get my Lotus Evora.

 

[Genx87]

I'm proud to report that Wisconsin's pension system is doing just fine, close to or #1 in the country, IIRC.

Yeah I bet. My buddy and his wife work for govt in Wisc. 13% of their income is put into the pension without them having to contribute a dime. Hard to imagine why this is unsustainable.

 

[olds]

OH NOZ. They earn 5% less.

Yet, their pensions effectively allow them to SAVE 100% more.

Don't kid yourself. I'm getting myself a high level government job as soon as I can so I can rape the rest of your poor citizens who are paying for my retirement. I'll probably pick up a Ferrari California at some point after I get my Lotus Evora.

It certainly isn't 5% across the board or any where near it. I also pay into my retirement.
But I was willing to accept less pay and 12 hours shifts for weeks on end with no days off for a better retirement. It seemed like a fair trade at the time.
Now with critical thinking skills at an all time low, all people actually know about issues are what they glance at in the headlines.
meh.

 

[MJinZ]

It certainly isn't 5% across the board or any where near it. I also pay into my retirement.
But I was willing to accept less pay and 12 hours shifts for weeks on end with no days off for a better retirement. It seemed like a fair trade at the time.
Now with critical thinking skills at an all time low, all people actually know about issues are what they glance at in the headlines.
meh.

Headlines like "Terrorist Bombs WTC Buildings" are crystal shiny freaking clear.

 

[Darwin333]

Not to worry, we will take all of Wisconsin's windfall and then some.

LOL, like hell we will. They will get wise and spend it first just like everyone else.

 

[Vette73]

As olds just pointed out, we often make less than the private world counterpart.

Yep! As a fed HR person I have heard MANY times "why work for you for 80k I can make 100k+ with..." and I have to run a new ad and get more people.
Funny how people keep thinking all Gov people are rolling in cash yet us in HR have a hard time keeping people in many areas.


Oh and at the Fed level we got rid of the good pension in the early 80's. Thats caled the CSRS retirment system. Us new people are on FERS and we get 5% match in TSP (TSP = 401k in private sector) and almost nothing in pension.

 

[Mursilis]

Yep! As a fed HR person I have heard MANY times "why work for you for 80k I can make 100k+ with..." and I have to run a new ad and get more people.
Funny how people keep thinking all Gov people are rolling in cash yet us in HR have a hard time keeping people in many areas.


Oh and at the Fed level we got rid of the good pension in the early 80's. Thats caled the CSRS retirment system. Us new people are on FERS and we get 5% match in TSP (TSP = 401k in private sector) and almost nothing in pension.

What sorts of positions are you looking to fill that you're having a hard time in this economy? Our agency can get into the 100's of applicants per opening.