Pensions killing NY

NWT: about 3 weeks ago

The paper has points, but once again fails to find a credible victim to illustrate them.

The retired veteran served from 1971-1975 and has a long history of suing the U.S. to get his pension (for "anxiety disorder") increased from 10% to 100%.

I don't find the foreclosure, but there're multiple bankruptcies. If he's not a logical candidate for "credit outcast", then who should be? What lender should be forced to let him borrow at less than usurious rates?

greensdale: about 3 weeks ago

http://www.nytimes.com/2013/04/28/business/economy/pension-loans-drive-retirees-into-more-debt.html?src=recg

A Vulnerable Age
Loans Borrowed Against Pensions Squeeze Retirees
By JESSICA SILVER-GREENBERG
Published: April 27, 2013

To retirees, the offers can sound like the answer to every money worry: convert tomorrow’s pension checks into today’s hard cash.

But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards.

In lean economic times, people with public pensions — military veterans, teachers, firefighters, police officers and others — are being courted particularly aggressively by pension-advance companies, which operate largely outside of state and federal banking regulations, but are now drawing scrutiny from Congress and the Consumer Financial Protection Bureau.

The pitches come mostly via the Web or ads in local circulars.

“Convert your pension into CASH,” LumpSum Pension Advance, of Irvine, Calif., says on its Web site. “Banks are hiding,” says Pension Funding L.L.C., of Huntington Beach, Calif., on its Web site, signaling the paucity of credit. “But you do have your pension benefits.”

Another ad on that Web site is directed at military veterans: “You’ve put your life on the line for Americans to protect our way of life. You deserve to do something important for yourself.”

A review by The New York Times of more than two dozen contracts for pension-based loans found that after factoring in various fees, the effective interest rates ranged from 27 percent to 106 percent — information not disclosed in the ads or in the contracts themselves. Furthermore, to qualify for one of the loans, borrowers are sometimes required to take out a life insurance policy that names the lender as the sole beneficiary.

LumpSum Pension Advance and Pension Funding did not return calls and e-mails for comment.

While it is difficult to say precisely how many financially struggling people have taken out pension loans, legal aid offices in Arizona, California, Florida and New York say they have recently encountered a surge in complaints from retirees who have run into trouble with the loans.

Ronald E. Govan, a Marine Corps veteran in Snellville, Ga., paid an interest rate of more than 36 percent on a pension-based loan. He said he was enraged that veterans were being targeted by the firm, Pensions, Annuities & Settlements, which did not return calls for comment.

“I served for this country,” said Mr. Govan, a Vietnam veteran, “and this is what I get in return.”

The allure of borrowing against pensions underscores an abrupt reversal in the financial fortunes of many retirees in recent years, as well as the efforts by a number of financial firms, including payday lenders and debt collectors, to market directly to them.

The pension-advance firms geared up before the financial crisis to woo a vast and wealthy generation of Americans heading for retirement. Before the housing bust and recession forced many people to defer retirement and to run up debt, lenders marketed the pension-based loan largely to military members as a risk-free option for older Americans looking to take a dream vacation or even buy a yacht. “Splurge,” one advertisement in 2004 suggested.

Now, pension-advance firms are repositioning themselves to appeal to people in and out of the military who need cash to cover basic living expenses, according to interviews with borrowers, lawyers, regulators and advocates for the elderly.

“The cost of these pension transactions can be astronomically high,” said Stuart Rossman, a lawyer with the National Consumer Law Center, an advocacy group that works on issues of economic justice for low-income people.

“But there is profit to be made on older Americans’ financial pain.”

generalogoun: about 5 months ago

In light of the events of yesterday in Newtown, I propose a moratorium on the bashing of public employees on this forum for a few weeks. Instead of complaining about pensions and the salaries of civil servants -- who do the important and necessary jobs you wouldn't be caught dead doing because you're oh so clever -- perhaps you should reflect on the heroism of the school principal and school psychologist who rushed a man pointing an automatic weapon at them and lost their lives; or the teachers who were shot to death while shielding children with their bodies. Your precious economic theorizing and soulless carping are so absolutely insignificant and inappropriate at a time like this.

jason10006: about 5 months ago

Some BN stories on out of control pensions. Since sometimes RS is not a complete loonie.

http://www.bloomberg.com/news/2012-12-14/californian-s-609-000-check-shows-true-retirement-cost.html

This story links to a whole series on pensions. Scroll down to see:

"America's Great Payroll Giveaway: a Six-Part Series
Part 1: In Race to Spend More, California Leads
Part 2: A Bidding War for Prison Psychiatrists
Part 3: Pension Funds Make Managers Rich
Part 4: Retirement Bonanzas
Monday: Top Paid Cops
Tuesday: Poorer Schools, Richer Pay"

huntersburg: about 8 months ago

Governor Moonbeam.

aboutready: about 8 months ago

A liberal democrat. Fancy that.

Riversider: about 8 months ago

(Reuters) - California Governor Jerry Brown and lawmakers have reached a deal to raise public employees' retirement ages, have them pay more into their pension accounts, and cap retirement payments in a vast overhaul of the state's pension system that he says will save $30 billion.

"We have lived beyond our means," Brown said. "The chickens are coming home to roost and this is just one in a series of countermeasures that will be required over the next decade."

http://www.reuters.com/article/2012/08/29/us-california-pensions-idUSBRE87R13B20120829?feedType=RSS&feedName=domesticNews

somewhereelse: about 9 months ago

"I find it disingenuous, RS, to blame public unions and only public unions. Democratic AND republican politicians agreed to these pension deals. They are the ones with the power to do so, not the unions."

Except those politicians are bought and paid for by the unions. Try getting elected in this town without them.

Riversider: about 9 months ago

http://www.youtube.com/watch?v=zPxMZ1WdINs

rangersfan: about 10 months ago

fg has now officially jumped the shark. Probably happened quite awhile ago, but just stopped reading....

jason10006: about 10 months ago

I guess it could be even worse than it is in NYC.

MTA vs. WMATA: Why Metro Is Terrible

http://www.bloomberg.com/news/2012-07-20/mta-vs-wmata-why-metro-is-terrible.html

jason10006: about 10 months ago

"Fiscal Crisis in States Will Last Beyond Slump, Report Warns
By MARY WILLIAMS WALSH and MICHAEL COOPER 11:00 AM ET

Long after the economy rebounds, states will face financial problems that include rising health care costs and underfunded pensions, a task force of budget experts said...."

http://www.nytimes.com/2012/07/18/us/in-report-on-states-finances-a-grim-long-term-forecast.html?_r=1&hp

GULP!

Riversider: about 10 months ago

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today reported a 1 percent return on investments for the 12 months that ended June 30, 2012, falling short of its benchmark that returned 1.7 percent. CalPERS assets at the end of the fiscal year stood at more than $233 billion
http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2012/july/preliminary-returns.xml

alPERS is both corrupt and incompetent. If it were a private firm, the lies about return on investments would send executives to jail and billions in lawsuits filed.

“The California Public Employees’ Retirement System (CalPERS) is the biggest public pension in the country. It is also deeply underfunded. Depending on the measure used, they have just 55-75% of money needed for future expenses while 80% is considered the minimum to be safe. Their return is currently less than 99% of big pension funds.

On March 12, CalPERS voted to lower their expected return from 7.75% to 7.5%, ignoring the advice of their own chief actuary that it should be 7.25%. More than a few investment professionals consider a projected rate of 7.75% to be unrealistically high in these times and question whether 7.25% is realistic.”

Now we know that CalPERS is in the lowest 1% of all pension funds—what else would you expect from a California government agency?

CalPERS needs a Trustee and new management—the purpose of the new management is to close the agency—California deserves honest government, not corruption and incompetence as usual.

http://capoliticalnews.com/2012/03/21/calpers-lies-about-equity-returns-private-firms-would-be-shut-down/

huntersburg: about 10 months ago

> How are taxpayers "not to blame"

How are taxpayers to blame but yesterday you said borrowers are too naive and aren't to blame?

notadmin: about 10 months ago

> financeguy, again, like the debate about speculators and banks, you seem to rile only one side, in this case, the guby, but not the unions ? It takes two to tangle. They are all to blame. The only party not to blame is the taxpayers!

Do taxpayers need to be financially literate themselves to elect financially literate politicians? If that's the case, then we shouldn't expect optimal and reasonable budgetary decisions as possible outcomes. To be financially literate one needs to be good at math, that's the weakest area of our public school system.

During a deep but short love affair with C-Span I got a chuckle from a representative of our area, Bronx, discussing the bank bailouts. He said with a straight face that he had to look in the dictionary to see the difference between a billion and a trillion. That means that pre-bailout talk this guy was confused about USA's GDP, USA's on-the-books debt levels, even his own state's GDP well before these talks.

Is this guy able to understand by himself what's the optimal allocation of more than a trillion taxpayer's money? He gets confused reading the numbers! Imagine him advocating for them, confusing billions with trillions. Using bribing, lobbying will come easier as decision making tools given abilities.

jason10006: about 10 months ago

"The unions are complicit in corrupting the entire process."

Yes I agree 100%. I just don't agree when people say its JUST the unions, and ignore the fact that Republican AND Democratic politicians for years have been playing along. Often, the GOP with cops and firefighters, and Dems with teachers, but often both parties with all of the above.

financeguy: about 10 months ago

Weird, I thought the job of managers is to manager and of budget managers is to manage budgets. I didn't realize we were paying school teachers and firemen to do that. If balancing the budget and investing the pension fund is their job, perhaps we should be paying them at Wall Street rates.

The taxpayers elected the politicians who decided to defer costs into the future (i.e., now) and proposed to allow the voters to not pay taxes for the services they wanted, instead borrowing from from government employees. And, of course, it was the taxpayers who walked off with the lower taxes. So even if they were "not to blame" in voting for politicians who promised the impossible (but convenient), they were the beneficiaries.

How are taxpayers "not to blame" while teachers and police and secretaries who did their jobs according to the contracts they were offered are corrupt??

My view is that usually markets work better when laws aren't changed midstream to give new rights to the most privileged. And those who are paid and trained to be responsible ought to take responsibility, not force the less privileged to clean up the messes they made.

The way to avoid governmental corruption is to pay ordinary government workers a decent wage, not to constantly seek ways to teach them that laws apply only to people who have no choice. Especially government workers with guns.

On the other hand, politicians and especially pension fund managers who claimed that pensions could earn 10% a year by investing with Wall Street donors, are a different story. I don't see why we pay them at all -- usually Wall Street is quite willing to finance its advertising even without governmental assistance.

LICComment: about 10 months ago

From Nicole Gelinas- But the other huge factor is cops’ pensions.

Last year, New York City taxpayers put nearly $2.1 billion into the cops’ $24.7 billion pension fund to pay for future benefits — up from more than four-fold from the 1999-2000 average. (Cops’ own contributions are $207 million, but they pay only 9 percent of the total.)

If pension costs for cops had “only” doubled in a decade, we’d have an extra $1 billion a year — enough to hire at least 5,000 cops.

One problem is that the pension fund isn’t earning the magical returns expected of it. It’s supposed to generate 8 percent returns a year — but has managed just 5.76 percent annually over a decade. . . .

Benefit payments — the amount we send every year to retired cops — have nearly doubled since the head count hit its peak, to $2 billion a year.

That’s because we let cops retire so young (as soon as after 20 years of service) with a half-salary benefit, including overtime.

The NYPD has more than 12,096 retirees who are younger than 55, making an average of nearly $43,000 in pension benefits. This doesn’t include officers who were injured — nor does it include retiree cops’ annual “bonus” payment that starts at $2,500 and rises over time to $12,000.

Twelve years ago, the city had 3,526 retirees under 55, who made a benefit of less than $30,000.

Here’s a truly scary stat: New York is inching toward paying more retired cops than active ones — with 27,890 regular retirees now, up from 18,793 in 2000. (Include the 15,095 retired on disability, and we’re already there.)

As average wages and overtime have risen — from $60,955 in 2000 to $97,811 in 2010 — so have pension payouts, and thus the incentive to retire young.

To control pensions, you’ve got to first control pay — but current-worker pay is up 37 percent since 2000 even as the number of people we pay is down.

LICComment: about 10 months ago

The unions are complicit in corrupting the entire process.

str33teasier: about 10 months ago

financeguy, again, like the debate about speculators and banks, you seem to rile only one side, in this case, the guby, but not the unions ? It takes two to tangle. They are all to blame. The only party not to blame is the taxpayers!

Riversider: about 10 months ago

If governments breach their contracts with their employees, why won't everyone else who might be able to make some money by breaching a contract they wish they hadn't made try to do the same? Rot begins at the head, as the saying goes.

The contracts were a joke, unions exchanged votes for a contract against the interests of the cities at large, and if the cities fail, then there won't be anything to collect at all.

financeguy: about 10 months ago

If governments breach their contracts with their employees, they will no longer be able to hire on the longstanding basis of lower pay for greater security. Either pay will go up, or government services will go down. That's going to cost the next generation of taxpayers rather badly.

jason10006: about 10 months ago

I find it disingenuous, RS, to blame public unions and only public unions. Democratic AND republican politicians agreed to these pension deals. They are the ones with the power to do so, not the unions.

jason10006: about 10 months ago

Nebraska, Not California, is King of Municipal Collapse - Bloomberg

http://www.bloomberg.com/news/2012-07-16/nebraska-not-california-is-king-of-municipal-collapse.html

Riversider: about 10 months ago

http://globaleconomicanalysis.blogspot.com/2012/07/political-cartoons-place-blame-on.html

Riversider: about 10 months ago

http://globaleconomicanalysis.blogspot.com/search?updated-max=2012-07-15T14:47:00-05:00&max-results=3

notadmin: about 10 months ago

> Bankruptcies are a wonderful part of our economic and legal system, just as forest fires are an important part of nature. Screwing with them, like Obama did in Detroit, creates bigger disasters down the road.

+1. what's not sustainable...

Weird how many people get caught by surprise with this Ch9 though. Would you buy a house in a county with pension issues about to pop-up? Why be such a martyr? Better to wait till pension burdens are fixed to a level that young families can afford. Just my 2 cents.

Young families have everything to lose by catching that falling knife imho. They need to retain mobility given uncertainty of job situation, they need more services like education that go down in quality. But also face the brunt of the burden cause these counties in distress often pass prop 13 type of protections for the retirees, which are just a wealth transfer from those that buy homes at inflated prices to those that enjoyed buying homes super cheap. It's a transfer in the wrong direction imho.

Riversider: about 10 months ago

Schumpeter

huntersburg: about 10 months ago

Bankruptcies are a wonderful part of our economic and legal system, just as forest fires are an important part of nature. Screwing with them, like Obama did in Detroit, creates bigger disasters down the road.

notadmin: about 10 months ago

> "San Bernardino third California city to seek bankruptcy"
> I guess this is is how it will end up being solved. California, ironically, is leading the nation in fixing the pension problem as cities go
> bankrupt one by one and forcibly lower them. Not pretty.

imho defaults are the only way to adjust all main costs (housing, education, entitlements, pensions) to what young working families can afford to support. it's a big adjustment, but it has to happen given that big real wage increases will not materialize any time soon.

Riversider: about 10 months ago

http://www.npr.org/2012/07/07/156416876/scrantons-public-workers-pay-cut-to-minimum-wage

The city of Scranton, Pa., sent out paychecks to its employees Friday, like it does every two weeks. But this time the checks were much smaller than usual. Mayor Chris Doherty has reduced everyone's pay — including his own — to the state's minimum wage: $7.25 an hour.

jason10006: about 10 months ago

"San Bernardino third California city to seek bankruptcy"

http://www.reuters.com/article/2012/07/11/us-sanbernardino-bankruptcy-idUSBRE86A05320120711?envprodusx=0

I guess this is is how it will end up being solved. California, ironically, is leading the nation in fixing the pension problem as cities go bankrupt one by one and forcibly lower them. Not pretty.

huntersburg: about 10 months ago

>> No, you idiot. MEDICARE, as I said, is in trouble. SS is not.

21% shortfall isn't "in trouble"? What is the threshold? 40%

notadmin: about 10 months ago

> No, you idiot. MEDICARE, as I said, is in trouble. SS is not. You are the zealot on this.

just cause i know how to adjust variables that matter to a range that reality can deliver? get a life, if you like it, keep it! why would i care?

i'm out cause i realize it has a ponzi structure and i'm not into ponzis. you are buying into projections that are not realistic. just like when young boomers think their pensions are just fine cause there's this 8% annual return they will deliver. am i going to convince them about not believing in it? what for? it's their choice.

accepting what the CBO assumes is for wishful thinkers like you, not for reasonable people. did it take you by surprise that there has been nill to negative immigration from mexico since 2005? it didn't surprise me 1 iota. did it surprise you that we have high youth unemployment? it didn't surprise me at all. are these 2 key variables being accurately reflected in the projections you accept as "reasonable"? of course not! there's been no real wage increases during the last 30 years... but wait, given that boomers are retiring and SS needs funding CBO will assume that there will be real wage increases. do you know what "reverse engineering" means? it's done so people like you don't freak out and instead promote this ponzi in blogs like this one.

being young it just doesn't work for me, and also i have a "no ponzi" policy. maybe you don't like that expression of freedom? if you care about us joining the system in earnest, work making it as good a deal for the young as it's for those retired right now.

streakeasy: about 10 months ago

question, is pension income taxed as regular income?
question, is rent subsidy taxed as regular income?

jason10006: about 10 months ago

No, you idiot. MEDICARE, as I said, is in trouble. SS is not. You are the zealot on this.

Anyway, back to the actual topic:

"Mediation Fails, Pushing Stockton Toward Bankruptcy"

http://www.nytimes.com/2012/06/28/us/stockton-california-heads-for-bankruptcy-court.html?_r=1&hp

notadmin: about 10 months ago

> "based on what? ah yeah... like i think i already told you, unrealistic assumptions."
The non-partisan CBO. Its not too difficult to see what they base this upon.

exactly. adjust their least rosy scenario to reality, if you dare :0-). anyway, we both know you will not do it, and instead keep on contributing as much as possible cause you will be getting such an awesome deal!!!

> Everything else you write is nut job conspiracy BS.

i don't blame your ignorance. SS/medicare and pensions are discussed with the religious fervor that housing was once upon a time.

jason10006: about 10 months ago

"based on what? ah yeah... like i think i already told you, unrealistic assumptions."

The non-partisan CBO. Its not too difficult to see what they base this upon. Everything else you write is nut job conspiracy BS.

notadmin: about 10 months ago

> SS will be able to pay at least 79% of current benefits INDEFINITELY if nothing is changed by 2030 or

based on what? ah yeah... like i think i already told you, unrealistic assumptions. go ahead, your math should be enough given that's not rocket science if you finish high-school. change those assumptions for realistic ones and tell me what's in store.

hey, actually, i don't want to convince you. if you like the system go ahead and contribute as much as you can. even send some donations, i bet they accept those.

> People like you like to conflate medicare, which IS in trouble, with SS, which is not.

people like me are not lazy enough not to go to the reports, see the scenarios, whether they are realistic, adjust and do the math right. so far baby i got it right each single year! yep, that's right, it's that easy. no surprise for me each year they adjust when the system cannot deliver or whether it's in red.

i mean, it's THAT easy! it wasn't even time consuming. but hey, like i said, the more resources to pour into that ponzi, the less you compite with me for real assets, so go ahead :-)

jason10006: about 10 months ago

notadmin, you are the math-illiterate one. SS will be able to pay at least 79% of current benefits INDEFINITELY if nothing is changed by 2030 or. That is not bankruptcy or ponzi-scheming. That is reality. So the choices are some combination 1) cutting benefits 2) raising the retirement age 3) raising the payroll tax rate 4) raising the income limit of said payroll tax.

Socialist is correct that #4 alone would not only eliminate the problem if made "infinite" - it would in fact give SS a permanent SURPLUS.

#1 by itself would mean exactly that - everyone would just get 21% less.

#2 by itself would mean raising the age to above 70.

#3 - you could actually do the OPPOSITE of #3 if you did #4 - by raising the income limit, you could LOWER the rate and still balance things out.

If you did both #2 & #3, you could lower the rate further.

People like you like to conflate medicare, which IS in trouble, with SS, which is not.