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Pension Panic
Californians See Their First Pension Cut

For years, we’ve been warning this day was coming: California pensioners in the small town of Loyalton have just been told that their benefits will be cut in 2017. Fox Business reports (h/t Pension Tsunami):

For the first time in its 85-year history, the California Public Employees Retirement System, CalPERS, is drastically cutting benefits for public retirees. Starting January 1st, four retired City of Loyalton public employees will have their pensions cut 60 percent.  For 71-year-old Patsy Jardin, that means her pension will drop from about $49,000 a year to a little more than $19,000.

In an interview with the FOX Business Network, Patsy asked, “How am I going to make it now? What am I going to do?”

Fellow Loyalton retiree John Cussins is asking the same question since his pension will also drop 60 percent, to $1,523 a month.

Three years ago, Loyalton pulled out of CalPERS for current employees after being told that its accounts were only 40 percent funded even though the city had reliably paid its dues to the system. Now, CalPERS openly admits it’s punishing current Loyalton retirees for that decision.

This is just the beginning. CalPERS is only 65 percent funded overall, after failing to realize its expected 7.5 percent return. Fox explains what’s likely to happen next:

CalPERS is actually considering cutting its “discount rate” to just 6.4% to reflect what it expects to be smaller returns in the future.  That will require cities, towns and other municipal entities in the CalPERS system to pay more money to cover their employees. Some may have to raise taxes to do it. Others may opt to leave CalPERS just as Loyalton did.

CalPERS appears to be using Loyalton to send a signal to others considering pulling out of the fund. But neither staying nor leaving is a good option here. Either benefits will be drastically cut or taxes will go up to fund them. The only alternative would be a federal bailout, and with a GOP-controlled Congress and White House, there’s a fat chance of California getting that.

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  • James_Eric

    Jesus. I’m going to slit my wrists.

  • Andy

    Is this pension fund insured? Are the retirees going to receive the balance from a different source (federal guarantee fund of some sort)? Or are they really that screwed?

    • bff426

      I don’t believe that public pension funds are eligible for backstopping from the Pension Benefit Guarantee Corporation. It is only for private employers.

  • Maddog

    We’re from CalPers, and we are here to help . . .

    http://www.maddogslair.com/blog/were-from-calpers-and-we-are-here-to-help

    . . . economize on pension payouts! Er, cut your pensions payments by 60%. Such are the wages of believing the pension cabal when it says, “Everything’s good!” It isn’t, and if you have money in a public pension you need to become proactive in it, NOW!

    “For years, we’ve been warning this day was coming: California pensioners in the small town of Loyalton have just been told that their benefits will be cut in 2017. Fox Business reports (h/t Pension Tsunami):

    For the first time in its 85-year history, the California Public Employees Retirement System, CalPERS, is drastically cutting benefits for public retirees. Starting January 1st, four retired City of Loyalton public employees will have their pensions cut 60 percent. For 71-year-old Patsy Jardin, that means her pension will drop from about $49,000 a year to a little more than $19,000.

    In an interview with the FOX Business Network, Patsy asked, “How am I going to make it now? What am I going to do?”

    Fellow Loyalton retiree John Cussins is asking the same question since his pension will also drop 60 percent, to $1,523 a month.

    Three years ago, Loyalton pulled out of CalPERS for current employees after being told that its accounts were only 40 percent funded even though the city had reliably paid its dues to the system. Now, CalPERS openly admits it’s punishing current Loyalton retirees for that decision.”

    This is uglier than it sounds. Cities leaving are hit with massive losses, even though they paid in exactly what the pension fund said they needed to pay in. The reality was that because the discount rate was much too high, the cities were not paying in enough, but CalPers knew that demanding more would have resulted in investigation, and ultimately accountability, so they didn’t. Now when the cities take the reasonable position of leaving, they get hammered.

    I expect this to devolve fairly quickly into myriad lawsuits, because everyone should have the opportunity to litigate their pension benefits. Or something.

    The blue states are in terrible condidtion regarding the pension issue, the red are in a better state, but still precarious. All need to address the issue now, not later, all will defer until the bankruptcy.

    Good luck to all who have public pensions, regardless of state. Time to become active, and to understand your status.

    Mark Sherman

  • ——————————

    This is what happens when you rely on others take care of your life and you do little or nothing to take care of it yourself….

    Hmmmm…I wonder if all these upcoming pension problems will hamper the recent Cali secession efforts…he he he he

  • FriendlyGoat

    From the link:
    ““The City of Loyalton defaulted on their retirees,” CalPERS Deputy Executive Officer Brad Pacheco said. “They made a bad decision and those retirees are going to suffer for it.”

    Loyalton is a town of about 800 in Sierra County, CA, which just voted 58% for Trump and 33% for Clinton. This probably explains why the city has a government which decided to be recalcitrant against its blue-state pension plan. In any event, they managed to demonstrate who gets whacked when politics go red.

    • JR

      So CalPers is 65% funded because of red politics. Cool story bro, tell it again.

    • Ed C

      So this illustrates the hateful vindictiveness of blue politics.

  • JR

    The solutions here are obvious.
    1) Increase the power of the State. If the State had more power, it would make problems go away.
    2) Increase rates of taxation to confiscatory levels above a certain level randomly determined by Comrade FG.

    As an official spokesman for Comrade FG, we both approve of this message.

    • FriendlyGoat

      Oh, hello darlin’. I bet you’d enjoy the quilt festival in Paducah. Ever been? It’s not that far from where you live in Arkansas, right?

      • JR

        As Comrade FG is now suffering from advanced Alzheimer’s disease, it is my job to keep his Statist spirit alive.

        • FriendlyGoat

          Static Spirit? Is that one of those new bottled cocktails for whippersnappers?

          • JR

            And here’s a Chinese business man relocating his business to US (to employ US workers) because of high taxes at home. I guess he hasn’t learned from you that high taxation causes employment. Enjoy your Alzheimer’s!!!
            https://www.yahoo.com/news/china-tycoon-moves-jobs-us-citing-high-taxes-093204655–finance.html

          • FriendlyGoat

            Man from China say: Taxes not too high in USA.

            Man from New Jersey say: Wow, I didn’t know that.

          • JR

            Wait until man from China gets a hold of new taxes under President Trump. It will be awesome. With Trump scuttling anti-Israel resolution, it is gratifying to know that he is already making America great. I’m genuinely excited. This guy has his head in the right place and an insatiable desire to win.
            But it turns out your theory that higher taxation leads to higher employment is wrong. But if you understood that, then you wouldn’t be my pet fool, now would you? I’m telling ya, the irony of the situation is not lost me.

          • FriendlyGoat

            Once upon a time there was a city called Washington, suddenly flooded with those who had an “insatiable desire to win”. The story goes like this. They lose their budget-mindedness long enough to feather the nest of every sharpie in the country on as permanent a basis as possible and then spend several years imposing austerity on all lessers via many kinds of budget cutting. Those subsequent years are where jobs are lost from shrinking demand because so much less government-spent money is sloshing around. The winners repair to some very fine golf resorts and the lessers wonder what happened. That’s your bedtime story, sweetie. It will be “playing everywhere” by 2018, 2019.

          • JR

            Your ability to exist in an alternate reality is funny. See, this is exactly the kind of original content I want. Pure unadulterated Comrade FG.
            I like how you ignored the move to lower tax jurisdiction, with lower taxes being cited SPECIFICALLY as the reason for the move. Your cognitive dissonance is awesome.
            But you know what is even MORE awesome? Yes, my taxes will go down, but way more AWESOME than that? Today at the UN Obama tried to betray and stab Israel in the back one more time. And then… a miracle. A Tweet from Trump and the resolution just poof… disappeared. Now that’s getting things done. That’s leadership. It feels good to be led by the man like Mr. Trump.

          • FriendlyGoat

            This IS called The—– AMERICAN—– Interest—–remember? You have several comments today which are way off in the weeds of inappropriate.

          • JR

            I thought talking about American politics is part of being in the American Interest. Is Mr. Obama not an American? What about Mr. Trump? What about UN, is US not part of it? I’m not sure what you mean. Spell it out for me. Quote what I wrote that you find “way off in the weeds of inappropriate”. Please note, that unlike a coward like yourself, my comment section is open.
            Plus, not a bad attempt of the “Look…. SQUIRREL” tactic. Yes, let’s ignore the economics. Let’s ignore the fact that the Chinese businessman specifically mentioned lower taxes as his reason for moving. Let’s ignore all that. Right, Comrade? Why let that pesky reality interfere. amiright? I haven’t seen you try to slither away like this in a long time. Like I said, your cognitive dissonance is awesome. As in AWESOMELY funny.
            BTW, position for my pet anti-Semite is open ever since Dan Greene left. You are more than welcome to fill in. you know you want to.

          • FriendlyGoat

            Not that TAI may care, but I flagged your number from Genesis 12:3 on another thread with respect to Obama. It is out of the scope of proper political discussion on the range of American issues which are in play with the presidency when taken as a whole. The implication that Trump’s election has occurred because Obama is under God’s curse due to scripture about Abram or Israel should not appear in any comment section which has a sensible moderator.

            So I flagged your comment immediately above too—–to explain why I flagged the first one and now this one. There is noting anti-Semitic about this. You are assaulting half the country and all of the domestic issues with a patently false religious premise. Not cool.

          • JR

            And once again, no mention of economics. OK, I’ll let it go. Economics is not your strong suit.
            Now, what have we here? Let’s take a look.
            “Not that TAI may care, but I flagged your number from Genesis 12:3 on another thread with respect to Obama.” So somebody called Obama a mean name and you want to censor them? Come on grandpa. Get with the times. Insulting Presidents is cool again. Ask all your Leftwing friends. Hell, you can compare them to Hitler now. It’s true, you can. Should we censor them as well? Or does this (SPOILER ALERT!!) only happens to the speech you personally disagree with.
            “The implication that Trump’s election has occurred because Obama is under God’s curse due to scripture about Abram or Israel should not appear in any comment section which has a sensible moderator.” That’s your interpretation of what I wrote. So you are offended by something and want it banned? Well, aren’t you a little fascist, Comrade Friendly Goat? You precious little snowflake. You interpreted something in a way that offends you, and you demand it removed from your sight. The Bible says what is says, history is what history is, I can quote whatever damn well please.
            “You are assaulting half the country and all of the domestic issues with a patently false religious premise. Not cool.” How am I assaulting half the country on patently (are you sure?) false religious premise? Please be specific. Please quote me so that I know in the future to not assault half the country on patently false religious premise.
            If you think the current state of the Democrats is somehow disconnected from it’s shift to the Left and more anti-Israel position, well, that’s your choice. I see things differently. That is MY choice. In case you haven’t noticed, there is a LOT of commentary about Israel on TAI. So Israel will feature in the comments section. It may feature in a way that you are uncomfortable with. But please consider the possibility that I just don’t give a f*ck about your feelings.
            I’ll leave you with this, Comrade FG. I expected that a call for censorship will come from a Leftwing statist like you. Yet, i’m not afraid. I’ll let Isaiah 54:17 explain.
            No weapon that is formed against thee shall prosper; and every tongue that shall rise against thee in judgment thou shalt condemn. This is the heritage of the servants of the LORD, and their righteousness is of me, saith the LORD.
            P.S. I love seeing the mask slip a little bit and for a scary totalitarian statist to come out. The dissent must be crushed, dissenters must be crushed, what ever is not approved by Comrade Friendly Goat must be crushed. Well, suck on deez, buddy. You are just a pet fool, nothing more.

          • JR

            I wrote you a long response that got removed. Short version: Suck on deez, biznatch. Longer version: Keep telling on me, pet fool. I’m not afraid of you and your attempts of censorship. I will let Isaiah 54:17 explain.
            No weapon that is formed against thee shall prosper; and every tongue that shall rise against thee in judgment thou shalt condemn. This is the heritage of the servants of the LORD, and their righteousness is of me, saith the LORD.
            But at least you stopped with the whole “I’m a moron with Alzheimer’s” gig. That was getting tiresome.

          • FriendlyGoat

            I read your long response and flagged it as inappropriate, and I am flagging this, your short response, and my own words here as well.

            Since, due mostly to your constant mean-spirited harassment on a daily basis on all topics, I am inches from abandoning this forum for better pastures anyway, there is something important which needs to be said to TAI. It is this. If the comment section here is devolving to claims that God is smiting everyone except those with certain views about the destiny of Israel, then the title “The American Interest” needs to be changed—–or perhaps better, the TAI writers should continue their work AND close their comment section.

            What you are now throwing is not just inappropriate participation in a forum designed for the broad range of topics in the actual “interest” of Americans, but it does not even remotely represent the fair-mindedness of the majority of Jewish people in America who voted for Barack Obama twice and heavily against Donald Trump. I can’t imagine why TAI would want to encourage you or anyone else to use its forum for outrageous religious claims which are quite capable of generating the anti-Semitism which every decent person seeks to avoid.

          • JR

            so you did read it? Goodie….
            I doubt they will close the comments section. They didn’t close it after Dan Greene suggested all Jews should be exterminated. Although, in all fairness, I’m not a little biznatch like you, so I didn’t report him.
            I never said God is smiting anybody. I’m just quoting the Bible. Sorry if that offends you, but I won’t stop.
            I don’t care how many traitors are out there. The path of righteousness doesn’t stop being a path of righteousness if a small minority of people travels on it. You must be happy Obama did manage to stab Israel in the back. Thankfully, President Trump already tweeted out his response. Your Messiah will fail you one last time.
            As for you leaving this forum, don’t let the door hit ya where the Lord split ya. I certainly won’t miss you. Sure, i would have to find another pet fool, but I’m not too concerned about that.
            Just remember, I’m not afraid of you, your censors or your judgement. I’ll let Isaiah 50:9 explain….
            Behold, the Lord GOD will help me; who is he that shall condemn me? lo, they all shall wax old as a garment; the moth shall eat them up.

          • JR1123581321

            Hey there bud, You know I can create a lot of accounts, right? BTW, my comment about Obama is gathering likes like flies on honey. Don’t you get it yet? You will never win.

          • Anthony

            In the spirit of Christ (Christmas – as not much consideration given to WRM’s Traditional Yuletide Blogs), here’s a small gift: thebaffler.com/salvos/trumped-abandoned-faludi

          • FriendlyGoat

            Thanks. Scary stuff coming to bad fruit. I wish you blessings personally, nonetheless.

  • Angel Martin

    suddenly, a defined contribution pension plan doesn’t look so bad.

    A defined benefit plan sounds great until they default.

  • Jacksonian_Libertarian

    Monopolies are Bad, but the Government Monopolies are the Worst.

  • Blackbeard

    This is why the Left must, absolutely must, control the federal government. These sorts of crises are going to be coming thick and fast in the blue states and only the federal government’s ability to run deficits can bail them out. Of course ultimately this will wreck the federal government’s credit too, but kicking the can down the road is a time honored staple of blue governance.

  • Rodney

    Is CalPERS only reducing pensions of retirees of cities that pulled out or across the board in general? If the cuts are targeted, might they be making themselves vulnerable to an equal protection claim?

  • Andrew Allison

    Hmmm, 4.3 million of Hillary’s 2.8 million plurality come from CA and the the Dems have been cynically arguing for abolishing the Electoral College. I can’t wait for CA’s appeal for a Federal Bailout!

    • Rural Inbred

      California pays $20 to $100 billion more in federal taxes each year than it gets back from DC. Those tax dollars in turn go to moocher red states like Oklahoma, Alabama, Wyoming, etc., etc.

      If your t bagger government ever decided to make an example of California, the residents could elect (via a ballot referendum) to suspend all federal tax transfers.

      California’s budget issues would immediately be resolved.

      • Andrew Allison

        Wrong on multiple counts. Thanks to 40-plus years of more-or-less continuous Democrat control, California is essentially bankrupt. Cities are already seeing 25% to 35% of their revenue going to pensions and the cost are rising fast. The next resession is going to turn over a lot of rocks. Incidentally, federal taxes are set by Congress and collected from individuals by the IRS.

        • Rural Inbred

          I noticed your complete lack of citations. You’ll forgive me if I gloss over your comment.

          • Andrew Allison

            That’s rich given the absence of any from you.

  • seattleoutcast

    $49,000 a year? That’s a pension? Someone here will tell me that CEOs don’t deserve their pensions but retired public employees deserve fifty grand a year. I guess public workers are more equal than the taxpayers.

    Right.

  • K. E.

    To the CA retirees I have an answer: Sell your pricey CA real estate and move to Wyoming or something.

    • M Snow

      Nevada.

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