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The NY actuary has proposed lowering expected pension investment returns from 8% to 7%. Even though it is a joke to think that they will get even close to 7% in the next few years with a predicted global recession in the making, even the reality of such a change will put greater pressure on NY tax payers who contribute mightily to the pension funds.
This is another headwind for local buyers. The city has depended for so long on foreign buyers, I wonder if SE'ers think the impending global problems will 1) bring more foreign buyers to NYC who might be looking for safe havens or 2) discourage foreign buyers who might want to hang on to money in volatile markets, reject the inevitable higher property NYC taxes, become concerned about the lack of local support of the local RE market due to layoffs in financial industry and now, NYC legal industry (Dewey, La Boeuf just filed bankruptcy tonight)
pensions will be cut starting with health care benefits. remember that what cannot be paid, will not be paid. retirees and near retirees should plan accordingly if they can make changes to their spending plans imho.
benefits are gonna get cut. Cuomo has already shown he's not going to raise taxes.
uh oh, Dewey and LeBoeuf went bankrupt, the end of the world is coming.
Stick a decimal point next to those expected pension investment returns and they start to look realistic.
I certainly hope they cut pensions paid out to current recipients rather than tax the younger generation even more so that the baby boomers can continue to get something that their juniors won't see a dime of.
I think the pension funds should just hire inododo since his returns are better than everyone else. It's like every day for him is March 2009, or so he says.
Look, I'm a huge proponent of paying cops and firefighters (and other public sector workers) their fair pensions.
I just had my eyes seriously opened this weekend. I really had no idea it worked this way. Met two retired cops in their MID-40s -- one who's collecting a pension of $70K, the other $100K.
First of all, their pensions should be 1/2 of the average of their ENTIRE CAREER, not 1/2 of their final year where they freakishly worked 40 house of OT.
And second -- why they hell are they allowed to COLLECT on their pensions in their 40s?? I have a union pension in which I'm already vested, but of course I can't touch until I'm at least 62. WTF?? No wonder we're going bankrupt! We've promised to pay these two guys $170,000 a year for the next HALF CENTURY for doing NOTHING!!!
And that's just TWO retired cops!!
Put me on the other side of the issue now.
I agree with Matt. There must be a way to balance our regard for the tough work these people do (they do put their lives on the line) with the fact that a 40-something year old healthy man has a life expectancy into his 80's....assuming he took the job at say 22, are we supposed to pay him for 60 yrs for a job he did for 20 yrs?? I was going to say that this is ridiculous, but then i realized it isn't relevant what i think about it - what is more relevant is the fact that it is UNSUSTAINABLE.
Why not a forward starting pension? At age 62 (65 would be better), you collect whatever they would have been paid now, adjusted for inflation. For the years between 42 and 62, they can work like the rest of us.
Apt23, My take is you've jumped to the wrong conclusion. The nations muncipalities are waking up to the stupidity of providing life time pensions starting at age 50 to the public workers. The accounting math of assuming 8% stock market returns in a 3% environment means that this problem can't be solved on the backs of the tax payer. You'll see more and more the workers sharing more of the burdens and responsibilities.
you know Matt there are consequences of many life choices.
You put the uniform on and trade personal safety and short term gain into a long range plan which begins to pay off in about 20+ years. Those have been the published rules in my life time. I agree that the last two year gig is an abuse of the system. All you have to do is ralley the troops and change it.
If I hear you right, you want to diminish the deal cut by collective bargining.
A return to the guilded age where wealthy industrialists manipulated police and politics with money and influence.
I do believe we have arrived.
RS: From the article:
But lowering their investment assumptions, even slightly, means turning for more cash to local taxpayers — who pay part of the cost of public pensions through property and other taxes.
..... and that is just lowering investment guidelines to 7%-- which is unattainable. They can only achieve 7% thru hedge funds that are beyond their risk profiles. So yes, benefits will be cut just as in Rhode Island, municipal bonds will be strained and politicians will be torn between votes of unions/pension recipients and property owners. I think they will have to split the difference --cuts AND taxes seem likely in spite of the guv's promises re: tax hikes.
"If I hear you right, you want to diminish the deal cut by collective bargining.
A return to the guilded age where wealthy industrialists manipulated police and politics with money and influence."
These deals weren't cut through "collective bargaining".
Don't kid yourself; they were all back room deals manipulated politically by men of money and influence.
We are, indeed, here.
The public peniosn issue is a microcosym of what is wrong with the very concept of public sector unions. Unions throw their support for public officials who agree to over-generous benefits packages, and the understanding is never disclosed to the public at large. Now that the unions have benefits which the city can't afford their interests are no longer alligned with the city as a whole. They don't care whether the city can afford them or not, they want them. The unions receive all the benefit yet carry little of the tax cost associated with them. FDR warned about this.
tell that too any of out vets that may do 3 tours in Iraq or Afgan, but don't complete 20 years and leave with no benefits .. yet a cop or a firefighter can reach tenure after 7-10 years and have full health benefits when they reach retirement age.. write parking tickets for 7 years and get full benis upon tetirement? utter BS
Seriously, tough to consider something collective bargaining when the union is on both sides of the table. Who do you think gets the officials "bargaining" elected. And how much do you think the officials care about the unsustainability of this "bargaining" when they know they will not be in office when the house of cards fall down
I've been involved in REAL collective bargaining for more than 15 years. It would greatly ease our efforts if we workers had a direct influence in who "management" was on the other side of the table!
It's not just the projected investment returns, but the assumptions regarding the longevity of workers in retirement and the higher actual incidence of health claims. Harry Wilson ran for comptroller citing the abuses of state and city pensions and despite being unheard of in local politics almost won. It wasn't too long ago that the story broke that Long Island Railroad union workers were falsifying worker comp claims to retire early.
"First of all, their pensions should be 1/2 of the average of their ENTIRE CAREER, not 1/2 of their final year where they freakishly worked 40 house of OT."
Yet the unions don't want to seem to budget on stuff like that...