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Started By
Message
Pensions may bankrupt Dallas (Reason)
Posted on 2/23/17 at 10:21 am
Posted on 2/23/17 at 10:21 am
LINK
quote:
Dallas Mayor Michael S. Rawlings said in November that he believes the city is "walking into the fan blades," in large part because of unsustainable pension promises made to the city's police officers and firefighters. The fund that is supposed to pay for retired cops and firemen is more than $5 billion in the red. Credit rating agency Moody's believes the fund will be out of money within 20 years, and recent retirees have taken notice: Many have started pulling their money out of the system by the millions (an ill-advised provision in the plan allows this), which is hastening the coming default.
Municipal bankruptcies, though rare, are bound to happen from time to time. But they are not supposed to happen in places like Dallas, where the population and the economy are both growing. If poorly designed pension plans are capable of wrecking an otherwise thriving city, it's time to revise our view of what places are exposed to these risks.
quote:
In some ways, the Detroit bankruptcy was a unique event. With the collapse of the domestic auto industry, the city's population eroded at a rate that's practically without equal outside places that were bombed or beset by a natural disaster.
The underlying story in Dallas couldn't be more different. Over the same 60 years that saw Detroit's population diminish by more than a million people, the Texas city's population almost tripled, going from 434,000 in 1950 to nearly 1.2 million at the last census. With more people than ever paying into the system, Dallas should be sitting pretty.
22
Posted on 2/23/17 at 10:22 am to SlowFlowPro
Dallas is a big city but this has been happening to metro areas for years, and not just because of pensions, but also salaries. Jackson is losing its tax base but its budget keeps increasing. It's because the city itself is one of the top employers.
Posted on 2/23/17 at 10:23 am to SlowFlowPro
so what's the next step with cops/firefighters when pensions inevitably are unworkable? the level of applicants is already shite, can it get even worse?
Posted on 2/23/17 at 10:24 am to NIH
my favorite (or most hated, i suppose) stories are from like LSP who made terrible investments and fricked over their fund
LINK
ALL THE GOLF COURSES
LINK
quote:
MPERS came under scrutiny after recently losing $200 million in the stock market and constructing a new headquarters that is only half full. In addition, reports have surfaced that pension fund took trips at pension-fund expense and spent millions of dollars on golf courses that continue to lose money. At the same time, mandated pension contributions by municipalities have more than doubled in two years and retired police veterans living on MPERS pensions will not get cost-of-living increases or interest on their deferred retirement accounts.
ALL THE GOLF COURSES
Posted on 2/23/17 at 10:25 am to SlowFlowPro
It's pretty bad.
I've seen up close how generous first responder pay/benefits were for Dallas proper in the 90s/00s. It's not shocking at all.
I've seen up close how generous first responder pay/benefits were for Dallas proper in the 90s/00s. It's not shocking at all.
Posted on 2/23/17 at 10:27 am to SlowFlowPro
My mother is about to be leaning heavily on a city pension when she retires. Stuff like this scares the shite out of me.
Posted on 2/23/17 at 10:27 am to SlowFlowPro
oh my goodness.
that would be a disaster
that would be a disaster
Posted on 2/23/17 at 10:27 am to SlowFlowPro
Wish I could remember where I read, but there was a much longer and more in depth article on this I read a month or two ago.
Posted on 2/23/17 at 10:28 am to SlowFlowPro
How many people that work in the private sector get a pension and full healthcare for their entire family for life after they retire? Maybe 5%, 10% at most. I never have. The only retirement I have is the money that I've invested in my 401K plan and IRA and the small matching % by the companies that I have worked for.
The practice of giving government employees and teachers 80% of pay pensions and healthcare for life is seriously damaging cities and this country financially. It's not sustainable.
The practice of giving government employees and teachers 80% of pay pensions and healthcare for life is seriously damaging cities and this country financially. It's not sustainable.
Posted on 2/23/17 at 10:29 am to SlowFlowPro
You mean when elected officials promise benefits today and push off costs until later it can go horribly, horribly wrong?
Who would have thunk it?
Who would have thunk it?
Posted on 2/23/17 at 10:30 am to NIH
quote:
so what's the next step with cops/firefighters when pensions inevitably are unworkable?
Get out of the pension business, give those affected a higher salary and then let them create their own retirement pension. At the company I worked for they had a 401k plan but it was not the kind where the employer matched funds. However, an agreement was worked out with the IRS, I believe it was the IRS, where we could contribute up to 12% of our salary towards the plan. Funny thing is, the plan worked so well with employees maxing out on that 12% that the IRS made the company drop that 12% to 8%.
Posted on 2/23/17 at 10:33 am to Tammany Tom
quote:
How many people that work in the private sector get a pension and full healthcare for their entire family for life after they retire?
Well, for many years it was a tradeoff. You could make more in the private sector, or choose the public sector with a guaranteed pension upon retirement. And for many years, it worked well in most places. Most places are still doing okay, but it takes a strong board or council. What happened in Detroit is understandable. Dallas is a different story. Poor management, and that management getting swindled by slick financial industry folks.
Posted on 2/23/17 at 10:34 am to Homesick Tiger
quote:
Get out of the pension business, give those affected a higher salary and then let them create their own retirement pension. At the company I worked for they had a 401k plan but it was not the kind where the employer matched funds. However, an agreement was worked out with the IRS, I believe it was the IRS, where we could contribute up to 12% of our salary towards the plan. Funny thing is, the plan worked so well with employees maxing out on that 12% that the IRS made the company drop that 12% to 8%.
I agree with this 100%. Its not just dangerous for the municipals but also for the people who bank on it and then get fricked.
Posted on 2/23/17 at 10:34 am to SlowFlowPro
This isn't unique to Dallas; it's pretty much every major city anyway bc you have morons negotiating with unions....unions are thieves and the morons negotiating on behalf of the cities have no fricking clue on how to negotiate. They give the unions everything for political endorsements.
How will Dallas survive? The same way everyone else did....have the Fed take over the debt.
This is why most believe the total Fed debt is well above $120T...not $19.5T.
How will Dallas survive? The same way everyone else did....have the Fed take over the debt.
This is why most believe the total Fed debt is well above $120T...not $19.5T.
Posted on 2/23/17 at 10:36 am to Tammany Tom
I understand the frustration, no doubt, but it is not like we didn't have monies taken from our salaries to foot some of this...same with Social Security, I might add...paid into two retirement systems and would have much preferred access to other alternatives...didn't work that way
Posted on 2/23/17 at 10:43 am to SlowFlowPro
It's the same story everywhere regarding pensions. Firefighters, police, and teachers appoint members to manage massive funds which they have no expertise in doing so. In the case of NOLA, the city has to fill the gap between actual return and required return. Taxpayers get effed.
I imagine most pension meeting are like the one in The Other Guys.
I imagine most pension meeting are like the one in The Other Guys.
Posted on 2/23/17 at 10:43 am to SlowFlowPro
Yea, my dad is facing this in Houston. Just retired from the fire department after 40 years. The government put off any sort of raises (including inflation-adjustments) for many years, instead offering the pie in the sky pension. Turns out the city made crappy investments (what a surprise), and now they're scrambling to cut a deal.
Posted on 2/23/17 at 10:44 am to SlowFlowPro
I hate to say this but when you depend on others to pay you after you retire, you should be very worried.
Unless that money is in your bank account, it can be taken away.
The old school pension system is dead.
Buddy of mine is an officer here in Florida. His retirement isn't with the state of Florida or the county. It's his account which the county contributes to.
No one can ever touch that money. It's his. He might not have a "monthly income" from the state when he retires, but he'll have control over his money.
Unless that money is in your bank account, it can be taken away.
The old school pension system is dead.
Buddy of mine is an officer here in Florida. His retirement isn't with the state of Florida or the county. It's his account which the county contributes to.
No one can ever touch that money. It's his. He might not have a "monthly income" from the state when he retires, but he'll have control over his money.
Posted on 2/23/17 at 10:46 am to SlowFlowPro
This is why you dont depend on government for your future
Posted on 2/23/17 at 10:48 am to SlowFlowPro
The genesis of this problem began with the Texas Legislature in the 1990s when they authorized the City of Dallas and other municipalities to pay 8 to 9 % interest on contributions. The thinking at the time was that by paying a higher return on investment, cops & firefighters would stay employed longer. Now, after years of bad investments, Dallas is trying to repair a broken ponzi scheme whereby outflow of funds is greater than inflow and many retirees have withdrawn all of their funds as a precaution. One bankruptcy firm recommended to the City that they max out their credit to replenish the fund. I know of one retiree who has just been living off the interest. Who the hell gets an 8 to 9% payback nowdays?
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