'Sue Me' Over Pension Cuts?

Leo Kolivakis's picture

Darrell Preston of Bloomberg reports, Christie Says ‘Sue Me’ as Pensioners Challenge Cuts:

Jersey Governor Chris Christie said he doesn’t mind breaking promises
to pensioners to close a $10.5 billion budget deficit -- even if they


“I have bigger issues than who
sues me,” said Christie, 48, a Republican and former federal prosecutor
who wants to end cost-of-living increases for retirees. “Get in line.”


workers in Colorado, South Dakota and Minnesota are already suing their
states, which are among 18 that want to pare pension costs by
increasing employee contributions, raising the retirement age or curbing
cost-of-living increases.


believe it’s unconstitutional,” said Gary Justus, 63, a retired
mathematics teacher in the Denver public schools who’s a plaintiff in
the Colorado suit. “These are contracts that I and 100,000 other
retirees worked for.”


U.S. cities, counties and states face a $3.6 trillion gap
between their pension assets and what they’ve promised retirees,
according to a study by Robert Novy-Marx of the University of Rochester
and Joshua Rauh at Northwestern University. States must also contend
with $140 billion of budget deficits next fiscal year, according to the
Center on Budget and Policy Priorities, a Washington research group.


Pressured to cut spending and not raise taxes, public officials are focusing on pensions, said Ron Snell, senior fellow at the National Conference of State Legislatures.
State plans cover 24 million active and retired workers, according to
the Denver-based organization, about 8 percent of the U.S. population of
309 million in 2010.


Out of Proportion


saying New Jersey’s retirement benefits are “wildly out of proportion
with the private sector,” proposed eliminating automatic cost-of-living
increases last year. The state has also stopped paying into its


Illinois lawmakers lowered retirement benefits for
new workers last year. The state will borrow $3.7 billion this month for
its fiscal 2011 contribution, the second consecutive year it sold bonds
to make payments.


States exhausted “more palatable” actions
such as cutting staff and expenses, Fitch Ratings said Jan. 25 in a
report that gave a negative outlook to the state-debt sector. They face
the “most difficult” fiscal year since the U.S. recession began in
December 2007, Fitch said, as federal stimulus payments end.


strain of funding pensions intensified as markets fell during the
18-month economic contraction, the longest since the 43-month slump of
the Great Depression, according to the National Bureau of Economic
Research. Asset values fell to about 76 percent of obligations in 2009
from about 82 percent in fiscal 2008, according to data compiled by


Least-Sound System


Illinois has the
least-sound system, with a funded ratio of about 51 percent, followed by
Oklahoma and Kentucky, according to the Bloomberg data. Missouri,
Oregon and Arkansas are in the middle with about 80 percent, a ratio
considered adequate by actuaries.


The “rapid” growth of unfunded
obligations prompted Moody’s Investors Service to issue a combined
measurement of states’ debt and pension liabilities for the first time
on Jan. 27 so investors can compare them with companies. Pressure to
fund retirements will continue to have a “negative impact” on state
credit ratings, Moody’s said.


Novy-Marx and Rauh study puts unfunded pension liabilities for states
alone at $3 trillion. It’s higher than the $1 trillion projected a year
ago by the Pew Center on the States. The authors say governments
understate liabilities because of over-optimistic assumed investment


Bankruptcy Proposal


Former U.S. House Speaker
Newt Gingrich, a Republican and potential 2012 presidential candidate,
has proposed allowing states to restructure their finances in
bankruptcy-like proceedings giving them more leverage in bargaining with
employees over wages and pensions.


More than 20 states considered changes to pension plans last year, according to the National Conference of State Legislatures.


many proposals to count” have been introduced so far in 2011, said
Snell, the National Conference of State Legislatures’ pension expert.
Lawmakers in at least a dozen states, including California, New York and
Ohio, have “serious” proposals, he said.


Republican Governor Rick Scott, facing a $3.6 billion deficit, said
yesterday that state employees should contribute to their pensions. New
Jersey Senate President Stephen Sweeney, a Democrat, said on Jan. 31
that he’ll introduce legislation that goes beyond Governor Christie’s in
trimming benefits.


Real Savings


“We’re looking at a
year of trying to make widespread and significant changes,” said Snell.
“Some of these can provide real savings, if they can be done.”

states may switch from plans that provide specific benefits to
so-called defined-contribution systems, which are like 401(k) plans used
at companies.


Three states -- Alaska, Nebraska and Michigan -- have
required them, and Utah will beginning July 1. Six make them optional.


Jersey’s Christie said in an interview that taking away cost-of-living
increases for retirees would break a promise. It’s necessary, he said,
because the state’s pension system is $46 billion short of funds.


is no alternative,” he said at Bloomberg’s New York headquarters on
Jan. 25. Previous officials “knew when they promised it they couldn’t
afford it.”


Missed Contributions


Christie’s statements don’t sit well with Steve Baker, a spokesman for the New Jersey Education Association,
whose 200,000 members are covered by the state pension. He said the
state failed to make contributions to its pension funds in 13 of the
past 17 years, including two under the current governor.


his tough-guy, let-them-sue-me rhetoric fails to solve the problem,”
said Baker. “Until the governor wants to sit down with all the parties
and come up with a solution that solves the problem, the governor isn’t
doing his job.”


The lawsuits filed in Colorado, Minnesota and
South Dakota challenge changes in cost-of-living adjustments, according
to court documents.


Colorado eliminated annual increases of at
least 3 percent, according to court records. Justus, the retired Denver
teacher, said losing the adjustments would erode his purchasing power by
35 percent over 30 years. He estimates it would cost all Colorado
workers in the plan $40 billion.


Setting Precedent


allows the state to abrogate that contract?” said Justus, who lives in
Evergreen, Colorado. “If it’s allowed to stand, it will set an
incredible precedent for the state to cut benefits again.”


cuts, which included higher participant contributions and an increased
retirement age, were in the public interest after investment losses in
2008, said Gregory Smith, general counsel for the Public Employees’
Retirement Association, known as PERA.


“The legislation was
passed to keep the fund from running out of money,” Smith said in via
telephone. “We had to reduce the payouts by the fund immediately.”

Joe Kafka, a spokesman for South Dakota
Governor Mike Rounds, declined to comment on the lawsuit. Attorney
General Marty Jackley’s spokeswoman, Sara Rabern, declined to comment.
Minnesota Governor Mark Dayton’s spokesman, Jeremy Drucker, didn’t
return a phone call and e-mail seeking comment.


No Rulings Yet


None of the three lawsuits has been ruled on and there is little precedent for some of the proposed pension changes, said Amy Monahan, a professor at the University of Minnesota Law School in Minneapolis, who studies the legality of changing pension benefits.


lot of states are flying blind because there aren’t a lot of cases,”
said Monahan.


“There is so much legal uncertainty about what is

California and Illinois have constitutions that make
it difficult to change benefits, said Monahan. Others, such as Maine
and Connecticut, have fewer legal constraints, she said.


Courts have found that pensions are a property right, said Stephen Pincus, an attorney with Stember Feinstein Doyle & Payne
in Pittsburgh, who brought the three lawsuits. The key to whether
existing benefits can be cut will be language that determines if a
pension is a legal contract and when the agreement becomes property, he


A state may be able to change the law if there is a “real
substantial likelihood the government cutting is on the edge of
financial ruin,” according to Pincus.


“The state has the power
to protect its citizens,” said Monahan. “If your fiscal situation looks
dire, you could do it to stay solvent.”


States shouldn’t be allowed to make pension cuts a priority over other liabilities, said Pincus.


our position that a state can’t pick and choose obligations it doesn’t
want to pay,” said Pincus. “Are you going to creditors and saying you
can’t pay your 30-year bonds?”


The cases are: Gary R. Justus et el v. State of Colorado et el, 2010CV1589, District Court, Denver County, Colorado; Howard Swanson et el v. State of Minnesota et el, 62-CV-lO-5285, Second Judicial District, Ramsey County, Minnesota; Merton B. Tice Jr. et el v. State of South Dakota et el, Civ No. 10-225, Sixth Judicial Circuit, Hughes County, South Dakota.

is my take on this situation. States are doing whatever it takes to
shore up their pension plans, including raising contributions, raising
the retirement age, cutting cost of living adjustments and if need be,
cutting benefits. As I stated before, when the money runs out,
everything is on the table.

But there is another side to this
story. There is an ideological war being fought between private
interests and the public sector. You only have to read this Economist blog post
on pension liabilities to get a flavor of where the debate is heading.
All of a sudden, public pensions have become public enemy #1 and
politicians are scrambling to slash pension costs. In some cases, this
is justified but in others it's pure fear mongering at its worse.

seems like there is a concerted effort to weaken public pension plans. I
spoke to a senior Canadian pension fund manager who told me he worries
that the Canadian defined-benefit model will not survive. I'm not going
to get into details, but a huge part of the problem centers around
compensation and how the media perceive compensation at public pension

Canada is much better than the US in terms of compensating
public pension fund managers. A lot of US state pension plans are run by
civil servants who rely entirely on pension consultants to make
investment decisions. And those that don't are having a hard time
attracting and retaining competent pension fund managers because their
compensation is ridiculously low. With such flawed governance models, it
shouldn't surprise anyone to see so many state pension funds under

And now we have politicians reneging on the pension
promise telling pensioners 'sue me' if you're not happy. While I
understand Governor Christie's predicament, he should be a little more
humble and admit that bad political decisions and terrible governance
played a huge role in New Jersey's pension debacle. If it was his mother
or father who worked all their lives as a teacher, policeman,
firefighter or civil servant and were now collecting a state pension, I
doubt he would be so cavalier with the tough-guy rhetoric.

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mrdenis's picture

Yes indeed , the politicians bribed the unions with for the best wages and the Mercedes healthcare plan in return for the votes .it's high time the taxpayer made good ....let them go out and work 2 jobs if they must ,just pay up 

just_looking's picture

The problem are that it is too easy to collect an out of line pension for too long.  When social security and pensios were first put into place the retirement age was 65 and the life expentency was 68 so three years of 'exposure'.  Now retirement at 50 and life expenctency of 85 and you exposure is greater than the possible contributions.


Addditionally it is reasonable that beneficiaries should be paying into their pension and the benefit should be related to the paid in amount, and contributions to health care should also be included in this.  Public sector wages are no longer lower than private sector, it is difficult to ever lose your job so outsided benefits do longer make sense as their is no playing field to level.


Go ahead, get out of public sector and go get a private sector job.

RKDS's picture

News flash: Chris Christie is an Islamopandering kleptothug.

tekhneek's picture

Taking money away from people that worked for it after having promised that money is probably a bad idea, especially when they all own semi-automatic guns.

DOT's picture

Come on Leo, how is it different when the state defaults on prompt payment

(9-14 months) on contracts with vendors ? Employers go bust and workers lose their jobs.

Promises made will become promises broken.  I have appreciated your insights do you think moving foward is possible without pension haicuts ?

topcallingtroll's picture

Interesting comments. For the populists out there you could raise rates in the top 1 percent to 90 percent and assuming they kept working and paying those taxes it would solve the problem for about five years if the top 1 percent makes about 35 percent of total income. You can do the back of the napkin calculations yourself if you want. The amount politicians have overpromised and overspent is incredible. You are going to be upset over tax increases anyway even if they manage to end COLA's on the public pensions, and cap medicare medicaid and SS. We could get rid of the military and that buys us another five to ten years. There is a shitload of rebalancing coming these next 20 years. Everybody has to give up something and the bottom 50 percent are going to have to become net federal income tax payers again and lose their subsidies. The top one percent will pay more in taxes. I can assure you for that the majority are going to be extremely poor in retirement. Just try to stay healthy. Poor healthy people can be fairly happy and we are all going to be poorer. In my more pessimistic moments when I look at the worsening EROEI in the future I feel like calling a top on civilization but there is hope for muddle through but no hope of having the retirement of the babyboomers. Gen x y and millenium babies are going to be the bagmen for the boomers and.cutting pensions is one way to gain some fairness for the younger generations.

Salinger's picture

And now we have politicians reneging on the pension promise telling pensioners 'sue me' if you're not happy

Instead of suing perhaps  pensioners from the civil service could go on strike or better still get off the golf course at age 50 something, after 30 grueling years wasting tax payer dollars and get a job (for the first time in their life). That's not to paint every civil servant as a lazy, incompetent scum sucking leach but take a look at California, it's borderline criminal.


Leo you say "bad political decisions and terrible governance played a huge role in New Jersey's pension debacle."  Others might say extortion by the public unions had a lot to do with it.


(with apologies to the basement dwelling trolls who frequent ZH)



OnTheWaterfront's picture

I hope he gets caught having sex with Jim Mcgreevey

OnTheWaterfront's picture

The fucked up part is that our legal system is so slow that even if the state does get sued, he will be out of office long before the courts rule on the case.

Mercury's picture

If it was his mother or father who worked all their lives as a teacher, policeman, firefighter or civil servant and were now collecting a state pension, I doubt he would be so cavalier with the tough-guy rhetoric.

But if it was his mother and father who got wiped out in 2008, lost their private sector jobs, have seen their taxes go up and are now worried about the inflationary effects of QE4EVA,  it all makes perfect fucking sense.

It will never fly though. Muni governments, ultimately backed by the Feds, will suck private wealth dry and grind up taxpayer children for fertilizer before one check to one public employee bounces.

Get a government job.  That will be the last shoe to drop.

Zero Govt's picture

the State parasites have gorged and over-rewarded themselves... there's a recession on, so sit back and watch them moan, bleat and the State sector cook itself in its own porky juices... if there's one upside to a Depression, it's the non-stop free entertainment and comedy provided by the State porkers going on a diet.... this should be sooooo much fun, enjoy ;)

working class dog's picture

What kind of retirement package does the governor of New Jersey get? Shouldn't his pension be tied to the same fund as all of the other state pensioners?

I say get out the camels, horses, and whips and have the cavalry ride thru the state capitol than continue on to wall street, and then finish off the road trip at Washington DC.

goodrich4bk's picture

Can somebody explain to me the differency between a promise to repay borrowed money and a promise to repay borrowed labor?

If a state can't afford to keep its promises, why are some promises (bonds) sacrosanct and others (pensions) not?  Why isn't the only fair solution bankruptcy and an equal haircut for all?

Until Christie announces that promises to bondholders (most of whom are, by definiation, very wealthy) are to be ignored, too, I have a difficult time getting misty-eyed at his so-called "courage".

Bob's picture

That's the bottom line of all these pension "crises":  Selective default that screws actual working people while further enriching the insatiable "investment" class.

ebworthen's picture

Precisely; why is this simple concept lost on people like him?

Hal n back's picture

it was the corrupt govt's which sold out to unions and gave the golden benefit plans to the unions. The union leaders knew it was unaffordable--the govt leaders knew it was unaffordable the school boards knew it was unaffordable. the union employees jus thought it was too good to be true--and it was.

How do you measure say a govt, and govt, that has consistently across the country piled on debt and deficits as an easy way out--inept of corrupt or both.


How do you measure performance of states for example when the infrastructure is breaking down and there is not even enough money to hire union employees  to fix it?


How do you measure  school systems when the parents, in general don't give a rats ass about what the kids learn and how they perform viz a viz other countries we are competing against. Its not just the money thrown at the education system, its the home life which encourages learning.


How do we reward teachers who are part of a failed system? With 36 week work years and  guaranteed retirement at age 55 with spiked salaries and with full heath care, dental and vision benefits?

The police and fire workers are the only ones most would not change places with in a NY minute--and we still know that like many professions many of those are corrupt and look for easy ways out.


The system is BK and the game is over as we knew it. The unions want christe to discuss the situation with them--as if they wil give anything away--its not in their DNA.


The unions and leaders are every bit as selfish as say wall streeters.


if they were not, they would have already  worked to reduce their benefits (probably ill gotten gains) so the money could be redirected to the current budgets "for the benefit of the children" that the teachers spoke about so often.


Atlas has Shrugged





Miles Kendig's picture

Crime is contagious.  If the government becomes a law-breaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. - Justice Brandeis

Governor Christie is welcoming anarchy with his flippancy regarding the rule of law.  He & others act as if the rule of law does not apply to them.  Congratulations Cas Sunstein, you got what you wanted.  Lawless government.  Society will catch up soon enough.

Optimusprime's picture

The specific quote you make from Brandeis is worthy.  Brandeis, himself, however, is a dubious source.  It was HIS contorted (lawless?) reasoning that was used as justification for US entry into WWI.

Sam Francis was characterizing our system as one of "anarcho-tyranny" fifteen years ago.

ebworthen's picture


"Inviting anarchy"; yes, and it is what Washington did with the bailouts and QE and POMO and ongoing debauching of the currency.

realitybiter's picture

But what if the whole premise of the pension benefit is flawed?  What if it is just another promise that can't be kept because it was a lie the whole time?  Is Christy behaving lawlessly then?  The lawlessness was the original promise, not calling the system on the lie.


That said, I completely agree that Wall St should have burned in 2008.  This discussion is a good case in point of the result of ignoring moral hazard...immorality all becomes relative.  And relative to the crap that our politicians pulled on us bailing out the banks, nothing is immoral.



RKDS's picture

It's not.  Out here in PA, they're crying about an unaffordable pension spike this year or next year.  Yes, the number floating around sounds high.  But what they don't tell you is that A) employee costs are about 3% of the $30 billion budget and B) this spike is directly caused by the state deferring its contributions for the last 8 years.

What did the state do with the money it was supposed to be putting into the pension fund?  Did it retire debt or repair crumbling bridges?  No, it just wasted it as usual (more no-work cronies, boondoggle contracts, COLAs for welfare, etc).  We had a $1 billion surplus left by the previous governor and it too was squandered.


Pike Bishop's picture

OK. Now, we're startin' to get there.

The real thuggery is only starting. If you can take some of it away from the pensioners, you can take it all away. All you need is the consent of the mob.

Geez, after all, everybody else is hurting.

If peoples' property rights have to be sacrificed, it's OK.

It's an emergency, extreme actions are necessary. And pensioning is obviously a socialist boondoggle, anyway.

In the end, we can all rest better when the "common good' has been served.

What a fuckin' joke.

Nobody gets to take a moral high-ground, until the Bankers and Mortgage lenders get indicted and go to jail. This country can't go anywhere until that happens.

It's called arrested development.

Wait until it gets really desperate. We'll be selling Rhode Island and its citizens to foreign interests for medical experiments and cheap labor.

The rationalization will be, it's only a geographic change for the citizens.

By then, it won't be a rationalization, it'll be the truth.

Bob's picture

"Since the 80s many employers have stopped offering health care, pensions and other benefits to their employees. Many are also cutting pay and hours, while increasing the workload. So more and more people are hurting. As more and more of us fall further and further behind, corporate/conservative propagandists use resentment to drive anti-union feelings. They tell people to oppose unions, saying, 'Why should they have it so good?' The real question you should ask is, 'Why should we have it so bad?'"


Our situation is identical to that of the Irish.

nmewn's picture

"Nobody gets to take a moral high-ground, until the Bankers and Mortgage lenders get indicted and go to jail. This country can't go anywhere until that happens."

The problem is...it was all done legally...I don't think politicians are going to vote to hang themselves.

Afterall...as Senator Chuckie Schumer says "we have three branches of government. We have a House, a Senate and a President."

I shit you not...that's what this bozo said...here is your problem...them.


Some of the dumbest fucks on the planet.

lynnybee's picture

p.s. ....... love ZEROHEDGE ...... I can swear, be foul.   I'm too much of a lady to do that in real life.

Bob's picture

I'm loving this new side of you, lynnybee!

Let it all out.

lynnybee's picture

Please do not forget:    In the Social Security Reform Act of 1983, Alan Greenspan   DOUBLED  the withholding social security taxes.     Greenspan was thinking ahead to when the baby boomers retired.    He said, " the baby boom generation will pay for both their parents' retirement & their own retirement. " ........... so, he doubled the taxes........


get off our asses & get out into that street (with my cane) & PROTEST !! REVOLUTION !! NO MORE FEDERAL RESERVE BANK !!  JPMORGANCHASE IS BANKRUPT / THE U.S. BANKING SYSTEM IS BANKRUPT / THE GOVERNMENT IS BANKRUPT / EUROPE IS BANKRUPT .......... fuck the whole thing........ what about our kids & grandkids ....... SIGNED:   GETTING MADDER BY THE MINUTE IN OHIO.

ebworthen's picture


Chris Christie is a typical pussy Republican.

Rather than go after the banks for robbing the pensions and individual investors and every citizen vis-a-vis the FED, Treasury, and Congressional bailouts using taxpayer dollars; Christie instead attacks the promises made to people who have put 20-30 years or more into public service.  What a pussy. 

You don't promise someone something for 20-30 years then take it away.

Guess what Government assholes?!?!  If you take away the promises you have made to me in Social Security, Medicare, Pension that I PAID INTO EVERY PAYCHECK - I reserve the right to NOT pay any of MY obligations in the form of mortgage, bills, taxes, etc.

Still no adult understanding of MORAL HAZARD and what happens when you selectively debase the rule of law.

You (Washington, Wall Street, and U.S.A.) have lost all of my trust and allegiance.

Freddie's picture

Hey old man. Republicans suck but Dems are abolsute shit.  You voted for the muslim - he fucked the world and bankrupted America so now it's time to pay the piper.  You probably voted for him.   Public service is an oxy moron.

ebworthen's picture

Old?  *cough*

I'm not a Demican or a Republicrat.

Politics is the distraction.

Politics is the gear driven bunny rabbit on the greyhound track to make certain we ALL run in circles.

Public Service is not an oxymoron if you serve; there are legions of public servants making median to less than median wage doing good honest work. 

I have done plenty of both private and public work and service and gotten screwed by Wall Street AND Washington both ways.

That is the point; wake up sleepers.

Montgomery Burns's picture

Wake up asshole. The "muslim" is just continuing to do what a long line of his predecesors, repubs and dems, did. Can you please try to be a more subtle rascist?

President Palin's picture

Dude, you don't understand.  If the Wall St. banks, oops, I mean government wants it, they are going to take it.  You have no say in the matter.  Ever.

ebworthen's picture

I do have a say, hard to ignore 9 mm and .223 caliber lead.

That's after I use civil means of disobedience, discourse, debate, or expatriate.

If I'm backed into a corner I have no problem following the heritage of the Founding Fathers.


realitybiter's picture

Bernie Madoff promised returns for nearly 20 years and it was all a lie.  Our public pensions are absolutely no different.  They are a lie.  The benefits are based on figures which can't pencil.  It is a ponzi.  Putting it on government letterhead doesn't change it.

Bob's picture

It's all a ponzi, everything

Isn't it about time we stopped using empty rhetoric in the war to divide, conquer and drain the lowest 80% of the population?

Common_Cents22's picture

Let's see,  Goldman Sachs didnt have to sue to get made whole via AIG.   They must have friends in high places.

lynnybee's picture

too bad that wages in the public sector have literally STUNK for the past 20 years.    big corporations made sure of that !!   through WALL ST. & WASHINGTON D.C. the policy was that wages in this country would be driven down to the lowest possible denominator & millions of jobs would be off-shored to other slave-wage countries...............THEREFORE, many people made a consious decision to try to be employed in public sector jobs, knowing that these jobs would be a means to support a family & have a retirement.      In 1978 when my husband signed up to work for the Federal Government we were only earning $9,000/year, but, we knew that if he stuck with it, put in his years, paid into his pension, & was a hard worker, we could have a good life.   Believe it, 1978, $9,000 / year with a pension waiting for us after 35 years of service .................. & now we are villified for this 35 years later .......... too bad the private job market was destroyed through WALL ST. & WASHINGTON policy makers .   fuck Wall St.   they are the ones who decided to off shore millions of good - paying jobs ........... WAL-MART & TARGET & PANERA , people !!! that's all that is left in this country ......... trying having a good life on $8.50/hour ........... TAKE THEM DOWN, REVOLUTION AGAINST A CORRUPT WASHINGTON & WALL ST. ........... they want the depression, they are deliberately trying to reduce wages again & deliberately putting in place policies that will REDUCE THE ECONOMY by 20% .    That's a fact, policy to reduce the economy & they don't care who starves ......... REVOLUTION IS COMING & IT IS ABOUT TIME.   ............ signed: Mad as hell in OHIO

Bob's picture


ebworthen's picture

lynnnybee - Exactly! 

The citizens of the U.S. were sold out to China for the crony capitalists and their Washington D.C. lapdogs.

This isn't about politics; it's about ethics, morality, and the rule of law.

I agree, it is time for revolution.

Montgomery Burns's picture

Right fuckin on!!! I'm happy to take a haircut on my pension as soon as we raise the tax rate on people making more than a million a year back up to 90%.

nmewn's picture

Most of it comes from capital gains...the liquidation will be...um, shall we say, impressive.

Montgomery Burns's picture

Private sector pensions (read: 401k) mostly suck. Why should public sector pensions be any different? You want a good retirement peon ? Go work on wall street. We're gonna change the rules now 5 years before you retire. Sucks to be you.

realitybiter's picture

And another thing.  To be clear, on social security, when I say I want something, I mean I want it today, not a promise to pay me sometime 65, 70, then 75....I want a dollars before they aren't worth jack. 


And that is the biggest irony.  The public pensioners are playing their part in destroying the currency.  Their demands to hold the line will only help Uncle Ben further destroy their currency.  Like German Generals panhandling in 1922, the pensions won't buy jack even though they got their promises!

curmudgery's picture

Go Christie!  Public employee compensation and benefits have been on a long-term rape-the-taxpayer trend:  bogus one-way ratchet compensation comparisons with other public jurisdictions only, high salaries, high benefits, 20-30 or more years of retirement at COLA-protected full-pay,  double and triple dipping, salary-spiking cabals.  All fed by disingenuous politicians and abetted by childlike desires for never-ending visits from the tooth fairy.  This long-brewing travesty badly needs to be corrected.  Anyone who takes the first steps toward fairness in public vs. private sector compensation and benefits  is going to be wildly unpopular with the hogs at the trough.  Private sector workers, who work as hard (ok, lets drop the PC and call it what it is - harder&longer) as public employees will have a different reaction, seeing that fairness may one day be restored, we may not be doomed to descend into a third-world society where regulators and enforcers are treated as mandarins while the workers that build and make what society needs to survive and prosper get screwed.  Go Christie!  +++.  F Yeah! 

El Hosel's picture

    PERA employees are on the gravy train alright. I knew a disfunctional drug addict/alcoholic Park and Rec "middle manager" who earned $80,000 to sit home and get stoned for the last few years of his "career".  Now he is going to collect most of his salary for life, at tax payer expense.

realitybiter's picture

I find it philosophically bizarre that folks can easily accept that social security benefits can and should be "means tested", aka cut, yet public pensions are somehow off limits.  Also, most of these defined benefit plans were calculated with mathematics pulled out of a dark place, which if explored would likely lead to "fraud" questioning as follows:

"How did you arrive at these benefit promises?

Oh, we made some actuarial calculations.

And how did that work out?

Oh we weren't even remotely close.

What data did you use?

Oh, it was based on future expectations.

What about historical data?

We didn't feel it applied.

This is grossly negligent at best, fraud at worst.  Questioning whether to steal bread from your starving kids though, so you can have seconds, is immoral.

And that is all this is. Arguing "this is a contract" is immaterial if the fundamentals are fraudulent. And we all know they are. It is Madoff with a public seal of approval.

I think we should have a massive power on reset. Add up the contributions, the taxpayer (they like to say employer, sounds better) contribution, and whatever real returns that have been realized. Cut a check. Everyone gets a 401K. Cry me a river, you are making nearly twice what the private sector makes AND getting it on the way out the door.

Just to let you know that we are all in, if the bankrupt public pensions will agree to these terms, I am sure the bankrupt social security system can work out something similar. I would settle for 75% haircut if I could get something from the hundred of thousands of dollars I have contributed to social security. Anything, really.

That should get 'em fired up!

LowProfile's picture

Seems to me they can just say the financial crisis was an "act of God" that caused the pension underfunding.