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Pension Blues
Another Small Win for Sanity

The Government Accounting Standards Board passed regulations requiring state and local governments to keep more honest records of unfunded pensions. The Wall Street Journal reports:

“State and local governments will have to add hundreds of billions of dollars in retiree obligations to their books under rules enacted Tuesday that spotlight the growing costs of health insurance and other benefits owed to former municipal employees.

The new rules approved unanimously by the Governmental Accounting Standards Board, which sets accounting rules for states and municipalities, will require governments to carry their unfunded retiree-benefit obligations on their balance sheets—thus making their overall financial position look worse. Currently, governments are required only to disclose the benefit costs in the footnotes to their financial statements.”

Full public disclosure of the true costs of benefits to city and state workers is an indispensable tool of public management and good governance. It’s astonishing that it’s taken this long to get something this simple done, but both politicians and union leaders don’t want public scrutiny of these deals. This transparency is only the first step, however. Getting a more accurate picture of how bad state and municipal finances is one thing, fixing those finances another. With luck, the newly available records will increase pressure for reform.

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  • iconoclast

    Requirements are good but I will believe matters will change when politicians and bureaucrats go to jail for defrauding the voters.

  • Andrew Allison

    Too bad they can’t require the Federal government to do the same. Perhaps if legislators and the public realized that the current debt including unfunded liabilities is actually north of a quarter-million dollars per man woman and child they might wake up to reality.

    • FriendlyGoat

      If they woke up to reality, they might realize that it is impossible for a child to be born into government debt and get mad every time a politician suggests we’re going to go collect the national debt from babies.

      • richard40

        They will collect when they grow up and get a job, through taxes and spending cuts. Typical leftie dishonesty on your part to suggest we can run up a gov debt without any future consequence.

        • FriendlyGoat

          The way to not run up the government debt was to not abandon sufficient taxation—-as we have.

          • richard40

            So are you now backing off, and conceding that public debt is indeed a concern, if so that is an improvement. I hope you have abandoned your previously absurd position that public debt was not a problem. But you are still way off, any real solution to debt must be based mainly on spending control, for the simple reason that spending has no upper limit, while the max tax rate does.

          • FriendlyGoat

            When you say “spending control”, I hear nothing but elimination of people’s jobs in both the public and private sectors. You know why?
            Because that’s all it is.

  • JR

    Kicking the can down the road is a wonderful strategy, until you run out of road. It doesn’t matter what wing you are, left or right, when you get to “Thereisnofu#$ingmoney” stage. Because at that stage, it’s everyone for themselves. Wear a cup everyone, it’s about to get nasty.

    • fastrackn1

      “Wear a cup everyone, it’s about to get nasty.”

      I tried a several cups but they weren’t big enough…I had to use a bucket….

      • FriendlyGoat

        What is it Sheldon Cooper says on the Big Bang Theory TV show? Bazinga?

        • fastrackn1

          Anyway…it was only a 5 gallon bucket….Bazinga!….

    • richard40

      Public pensions should be abolished, and replaced with 401k’s. A 401k must be funded immediately since it buys investments the employee actually owns, you cant play games with that, it is known immediately how much the retirement system is costing the employer.

  • fastrackn1

    No one deserves a pension.
    Those who can’t save up enough money on their own by using discipline through out their life are losers and deserve nothing.
    Why should anyone receive money after they quit working just because they showed up for work everyday.

    Take away their pensions and let them eat cake…or die in the streets….

    • FriendlyGoat

      Hey, C’mon. I know you do self-employment. But pensions, once upon a time were those things that employees negotiated with corporate employers.

      • fastrackn1

        You are right FG…but these type of things start with good intentions and then slowly get out of control due to human nature. It is just one of the many things that has created the great sense of self-entitlement in our society.
        Why does everyone these days need to be spoon fed and have their hand held through their life?

        Jeezus H. Kryst nailed to the cross, what ever happened to personal responsibility?!

        • Andrew Allison

          The nanny state has eliminated the need for it!

        • FriendlyGoat

          Once upon a time workers took care of their personal responsibility for retirement planning BY NEGOTIATING PENSIONS. The only thing wrong is that Republicans are systematically removing workers’ leverage to negotiate in both the public and private sectors.

          • fastrackn1

            FG, personal responsibility has to do with making your own way in life by taking care of things and making them happen your self through hard work and due diligence…which builds self-confidence and character in any worthwhile human being. Personal responsibility does not involve spending your free time on the sofa watching useless nonsense like sports and America’s Got Talent, or wasting valuable free time with trivial pursuits like riding ATV’s or jet skis, while you simply pay a few dollars a month to a union to take care of and plan your life for you. You think that is personal responsibility?? Seriously? Do you think it is the best way to run a society? Do you think it is the best way to improve the build character in the common man? Really?
            This is not a right or left issue! This is a basic human character issue, and we have become a nanny civilization because of this type of thinking by those who are in control of our society.

            Maybe the republicans see it that way and are trying to make a change, who knows. I am not caught up in Republicans or Democrats…I have freed my mind from that years ago….

          • FriendlyGoat

            I am in complete agreement with you concerning money and time spent on most sports-fan stuff, almost all commercial television and absolutely all jet skis and consumer ATVs. We could now add to that the profound amounts of money and time spent keeping up with social media. I hope we would be in agreement that our erstwhile incorporated entities are enabling and encouraging all those things—–calling the colossal waste of Americans’ time and money on those things “economic development”.

            The idea that workers cannot or should not pool part of their savings in collective plans with professional investment and defined benefits lasting exactly a lifetime for each person (a “pension plan”), however, is not directly related. As a home builder, I’m sure you have subs and those subs have workers. The idea that those workers should all be required to throw their individual savings into the shark tank of the stock market to sink or swim until death is not my idea of sensible society. For heavens sakes, our tax-cut economy has managed to even kill any return on a safe bank CD for conservative little people.

            I DO believe this is all a right-left issue. I believe the political right is systematically vacuuming most wealth upward and the left had better get its act together soon.

          • fastrackn1

            I am not saying people should not use some professionals for investment, but that can be done by individuals seeking out their own professionals and also being active in their investments. It does not need to be forced upon public and private companies to have to pay for pension plans and other over the top benefits…which we are now finding out is a disaster.
            Instead of people pursuing nonsense in their free time, why don’t they use some of that free time to become active in what and where to invest (personal responsibility), so they can become educated about investing which will help them work with their professional…not just pay union dues to have it handled for them. Why should I as a tax payer pay for some putz who has put in their 20 or 25 years in a public entity and then retires still in their 40’s and goes and gets another job while collecting a paycheck from the public entity until they die??…or pay for it in the price of a product when it’s a private company paying for the pension crap.
            I have always invested my own portfolio and have been doing great with my investments. It’s not that hard. Just spend free time researching and using common sense.
            People have become lazy and complacent in the developed world countries because of all the hand holding and coddling that goes on in modern societies. Most people in developed countries don’t have the energy, the work ethic, nor the drive to truly stand on their own…they just show up for work everyday (and only 40 hours a week), and collect a paycheck….which is why so many who come here from 3rd world countries do so much better than those raised here.
            We are polluting our gene pool by allowing those who are net leaches instead of net producers, to survive. If someone can’t stand on their own then, as I said in my first post; let them eat cake or die in the streets….

          • FriendlyGoat

            Glad to hear your personal investments have gone well. It’s just not the reality of most people —–such as the workers you probably see from some of your subs—–and is becoming less likely all the time.

          • fastrackn1

            All those who work in construction here are from 3rd world countries and speak little or no English. They will never work in a pension situation. They will work several years here, save their money, and then go back to their country and use that money for a fresh start there. This conversation has been about the pension workers here and the impact of those type of hand holding systems on the mentality of many here, not about illegal aliens.

            It “not the reality of most people” and “is becoming less likely all the time” because our society is progressively becoming more and more dependent on having their hand held through their life. My investments “have gone well” because I have invested great amounts of time and effort to make sure they do, not sitting on the sofa watching a bunch of multi million dollar spoiled brats pound the crap out of each other over a leather ball, or riding around in circles on an ATV….

          • FriendlyGoat

            I have lived several places in the last dozen years and noted that immigrants with little or no English, as you say, do much —-or most—-of the concrete, framing, sheet rock, stucco, roofing and landscaping. How does a whole industry in Texas and other places get away with hiring these folks year in and year out while the entire conservative side of politics constantly bitches about illegal immigrants?

          • fastrackn1

            It doesn’t matter about right or left. There is no choice with hiring when almost 100% of the work force in certain jobs is done by immigrants who are often not legal. There is just no way around it…so everybody hires them…right and left…no choice. At best maybe a white guy is the guy you sign the contract with, but who knows about his workers if legal or not. Most likely not. It would be tough to find a white guy to do labor intensive jobs in the Texas heat for $8 to $12 dollars an hour. Unless we kick them all out and keep them out (I wish we could. We don’t need this country filled with another heathen race), and level the playing field for employers, no one will be the first to stop using them. It would be an unfair cost disadvantage and would put the employer out of business. It would be like a company saying they will not outsource their manufacturing to China and will be Made In The USA only, then they go out of business because all other competitors continue to outsource to China. Only if the government stopped outsourcing and leveled the playing field for all companies would Made In The USA be cost effective for all manufacturing companies.

            The liberal elite keeps pounding the drums saying we need these immigrants here because “they are doing the jobs that Americans don’t want to do”. That is another one of the many lies propagated by the left to justify letting them in and letting them stay (for the sole purpose of expanding the democratic voter base, and nothing else).
            It’s not that these immigrants are doing jobs that Americans don’t want to do, Americans just don’t want to do them for $8 to $12 dollars per hour….

          • FriendlyGoat

            Seems to me that there are some American working people who keep supporting Republicans on their talk about removing immigrants and sealing the border so tight that no new workers can get it. Then, these workers believe, labor in the Texas heat will become VERY scarce and wages for skilled construction will go WAY UP from the immigrant level of $8-12/hr.

            Trouble is, Republicans in power have no intention of doing what they talk about. The actual intent is to replace “illegal immigrant” with some kind of “legal guest worker” who still does the hot work for $8-12. Beats me why white working-class men in America are so profoundly naive about what the get—–or will EVER get—–from Republicans.

          • richard40

            If that is your concern, then you should oppose both illegal immigration, and increased legal immigration, which many conservatives now do. Of the 2 illegal immigration is far worse, since it creates people who are outside the rule of law, and the support of law, and amnesty is no better, since it merely rewards illegal actions. But if you wish to restrict both illegal and legal immigration, given our present job market, I will support you.

          • FriendlyGoat

            My “concern” is that white working-class men think they are going to get something from conservatives to raise wages here by curbing immigrants.
            They are going to get no such thing and I wish they’d stop being so stupid as to support conservatives on that point.

          • FriendlyGoat

            Some conservative voters do not favor a flood of guest workers, but they don’t know that their candidates absolutely will not join them in opposing the business community in such a way.

          • fastrackn1

            Just as there are some American workers who keep supporting Democrats on their talk about giving millions of illegal immigrants amnesty or want a more open border policy and increased immigration from south of the border even though it will hurt those same Democrats. But that doesn’t matter to the liberal elites who’s main objective is not the poor working-class person (who by the way, in their mind, is really only good enough to cut their grass or repair their broken TV set, not to ever have a dinner with), but to expand the voting base of the democratic party. It beats me why white working-class men in America are also so profoundly naive about what they will ever get from Democrats too.

            Now see how futile the ‘blame the Democrat/Republican rhetoric’ is. That’s why I avoid it like the plague, but just wanted to show you how meaningless it is and why I moved on from it long ago. Both parties are to blame for this immigration mess, just for different reasons.

            Labor will not become scarce if we close the borders and send the illegals back, it will just be filled by those who were doing it before the mass immigration. The costs for labor will rise because of it and that would be better for all native born Americans. $8 to $12 dollars an hour to me isn’t even enough to pay for gas and groceries these days, but when 3 or 4 Hispanic families share a rented trailer, drive a 20 year old car and pool with it to work, buy everything used at Goodwill, keep chickens in their back yard for eggs, etc., they can make it work.

            Not exactly the American Dream for those born here now is it?….

          • FriendlyGoat

            What white working-class men got from Democrats is fair labor standards, support for their collective bargaining, OSHA and workers’ comp for their bodily risk, unemployment compensation for their employment risk, Social Security and Medicare for old age, public schools for their children and a route to health insurance—–if they don’t kill it. There has never been any mystery why a working person should support a Democrat. The mystery is why they are now listening to preachers and the NRA, neither of whom ever gave working people a damn thing.

          • fastrackn1

            Sure…all that and so much more came ONLY because of the Democrats…NOTHING GOOD came from Republicans…okay sure…if you say so. All Democrats and their policies are good, and all Republicans and their policies are bad…okay, got it…WHO KNEW?

            FG, if you will go back and start reading from the top of this chain of messages…my initial comments that started this conversation, you will see how YOU just couldn’t resist interjecting comments about bad Republicans and good Democrats. You can’t seem to have conversation without bringing that into the conversation, and then dragging it down to what this message chain has ended with. My initial comments had nothing to do with Democrats and Republicans, they had to do with the hand holding of adults through their lives, and Personal Responsibility as I see it. That is the conversation I wanted to have, not the usual BS conversation about Democrats and Republicans. I just like to bring a different perspective onto this blog, not the usual crap everybody else yaks about, or to have boring, overly-intellectual conversation that is wordy but offers little in substance.
            You are to the Democratic party what my mother is to the Republican party, which is likely why I have become so party-averse over the years and why I NEVER talk politics with my mother. She thinks Obama is the second coming of Beelzebub and the Democrats and their policies are pure evil….sound familiar?

            So from now on on this blog I will no longer have conversation about Republicans or Democrats. If those words come into the conversation, I will not reply and simply move on. I am not here to debate ad nauseum about Republicans or Democrats, it is useless and no one can win. I will however, comment about the extreme left (like liberal elites for example), and extreme right (like bible thumpers for example) policies, if they collide with how the world should function (as I see it, anyway).

          • FriendlyGoat

            You’re free to have whatever conversations you want. Maybe I shouldn’t have replied to “no one deserves a pension.” Maybe I shouldn’t have replied to “let them eat cake…..or die in the streets”.

            You and I have talked about a lot of things—–but, sorry to say, I believe those comments are beyond ridiculous in modern political America. You might want to ask your mother whether those two statements are nearer the philosophy of the Democrats or nearer the philosophy of the Republicans. I think it’s the latter, which is why I again brought up the modern political two-party divide. These major issues are what our elections are really about, after all.

          • fastrackn1

            “Maybe I shouldn’t have replied”

            No FG, you should always comment, I just want to leave the Democrat/Republican thing out of it. Actually I am a combination of both, so….

            Of course my comments are “beyond ridiculous”, but ridiculous compared to what the average person thinks because most people don’t think in the way that I do, and it isn’t anything that I don’t know…I am not so deluded by my own thoughts that I don’t know how they compare to the average person or how others might view them. I know exactly who I am inside and out and I also know exactly how my thoughts measure up against the average person. I also am not deluded by attachment to a particular political party or religion, and all of the trappings of being so.

            Most of my comments on this blog have (in my mind) nothing to do with politics, they have to do with my strong belief in Darwinism, genetics and how it affects different races, and other proven sciences…which are mostly supported, funded, and accepted by the left.

            I believe the strong (not necessarily physically) should survive, and the weak should not be enabled by our ever-coddling societies so as to multiply and ruin the gene pool. This has nothing to do with Republicans or Democrats.

            Did you read the June 9th Main article here called Your Brain On Screens, if not you should. It gives great insight into what peoples obsession with smart phones and computer screens in doing to not only change their minds, but to also change their physical motor skills.

            This will eventually change our genetics, and not for the good…just like all of our societal coddling and enabling will eventually change our genetics, and again…not for the good.

            The human race seems hell bent on destroying tens of thousands of years of evolution with our modern civilization and our enabling of the weak in our society. No matter how big our brain is, we are still just another organism.

            It will not end well…mother nature always wins in the end….

          • richard40

            “I am in complete agreement with you concerning money and time spent on most sports-fan stuff, almost all commercial television and absolutely all jet skis and consumer ATVs. We could now add to that the profound amounts of money and time spent keeping up with social media. I hope we would be in agreement that our erstwhile incorporated entities are enabling and encouraging all those things—–calling the colossal waste of Americans’ time and money on those things “economic development”.”
            I certainly dont agree with that. What people choose to do with their own money is their business, and people have very different ideas on what they consider important. Some choices are better than others, but that is their business, not that of some leftie busybody.

          • FriendlyGoat

            fastrackn1 was expressing his preference that people spend their time or money on financial endeavors which might actually benefit or secure their futures. He’s right about that. but you could go call him a leftie busybody if you want.

          • richard40

            Which has now mostly given way to 401k’s, which are far better, since they are fully funded immediately, not a future promise which can be broken.

          • FriendlyGoat

            401(k)s are okay if employers actually contribute to them with a match and if the investment choices are not loaded with fees. But neither of those are always the case at all.

          • richard40

            So are you now going to say companies can only offer 401k’s if they have a matching contribution, or regulate their fees, even though many companies used to offer no retirement plan at all. I hope you are not saying that. You yourself said that pensions used to be negotiated with employees, so why cant those same employees negotiate 401k terms. And those who dont have a 401k can still use IRA’s, or just save money and invest it on the side, I did all of these.

          • FriendlyGoat

            Sure, employers can offer 401(k) plans with no match and charge all costs to the employees in fees. They do it quite a lot, but reasonable people know that is no equivalent to pension plans of old funded by employers.

          • richard40

            Actually its considerably better than an old time pension plan where you got nothing because you did not work there 20 yrs, or the company goes broke and leaves you with nothing.

          • FriendlyGoat

            The good ole government in 1974 passed ERISA, the Employee Retirement Income Security Act, signed by Gerald Ford. Among the purposes of that act were regulations eliminating ridiculous vesting periods, such as the 20 years you cite, and a great deal of oversight of employers concerning the funding of plans, the disclosure of details to employees and establishing the fiduciary relationship so that employers could not just raid the pension funds and run away.

            As always, without government rules and oversight, the employment relationship would be one-sided and riddled with fraud against workers. We have known that in America for over 100 years.

          • richard40

            That act also left the taxpayers getting stuck with bailing out failed pensions, and like all heavy regulation it ends up with the gov injecting politics into basic economic decisions, with associated lobbying and political corruption. The 401k is by far the best solution, because they must be funded immediately, you cant play games with that.

          • FriendlyGoat

            But the 401k you are bragging upon is often mostly funded by workers alone. Most people don’t know, for instance, that even the famous matching contributions were encouraged by law due to an original provision that “highly-compensated” employees at a company would be limited in the percentage of income they could defer in 401k to that percentage voluntarily elected by “non-highly-compensated” employees. The original matches were set up as magnets to get more participation by the rank and file—-in part for the benefit of the higher-level employees.

      • http://www.picsofcelebrities.net/blog/2012/05/08/voice-season-finale Cromulent

        They didn’t work for corporations either. Ever hear of GM? Pay people and let them manage their own affairs.

        • bannedforselfcensorship

          Then there are the corporations who fail. Something must happen to their pensions.

          I’m sure the finance guys worked it all out, but it just seems so antiquated to assume a company could be in business so long that it could easily offer pensions schemes.

    • richard40

      In the private sector pensions have mostly given way to 401k’s, sometimes with a corporate matching contribution. A similar thing should be done with public pensions. The advantage with that approach is if the public entity contributes anything, they must turn over that cash immediately, since the 401k buys the employees personal investment immediately, so the public entity cant possibly conceal what its obligations are. Its also tougher for employees to game the system (like gaming the high 3 system many public entities use, by working 17 yrs in a low pay job, then changing to a high pay one for 3 yrs, and getting a 20 yr pension on the high pay job).

      The disadvantage of a 401k for the employee is they bear the risk of any market downturns on the investments, and their return is limited to what the investment earns, not a guaranteed return like in a pension (although that risk can be mitigated by investing in fixed rate investments, like bonds, where the rate of return is steady, but typically less). But there are advantages for the employee as well, first they normally get vested after only 5 yrs, so no risk of having to work for 20 yrs to qualify, only to get laid off 1 yr prior. Also the employee can change employers, and carry the 401k with them, which you cant do with a pension. Also, the employee does not have to bear the risk of the pension promising entity going broke, and leaving them with an unfunded pension.

      • fastrackn1

        I don’t have a problem with 401K’s. I think they are a good idea. It’s pretty hard to abuse those.
        But to me pensions are ridiculous and should be done away with. Like any give-away program, they started with good intentions and slowly became an insane over-indulgence (due to human nature),…especially in the public sector….

        • richard40

          I agree completely.

  • http://www.picsofcelebrities.net/blog/2012/05/08/voice-season-finale Cromulent

    Next step is eliminating public pensions altogether. Let people manage their own retirement.

  • bittman

    I thought unions have been required for many years to fund 80% of their projected pensions and that they are required to report to the government to validate this.

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