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The Last Laugh: Illinois Pension System Charged For Not Disclosing "Structural Underfunding"

Tyler Durden's picture


The topic of Illinois' various insolvent pension systems is not news to regular Zero Hedge readers. One needs but to recall our articles from mid/late 2010: "61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Becomes Next AIG-In-Waiting By Selling Billions In CDS", "Illinois' Pension Fund Death Spiral Revisited: "10 Years Of Money Left" or "Illinois Teachers' Retirement System Enters The Death Spiral: AIG Wannabe's Go-For-Broke Strategy Fails As Pension Fund Begins Liquidations" in which we clearly explained how the state's teachers pension fund was systematically doing everything in its power to mask its massive underfunding, and the fact that it was rapidly running out of money.

The retiremnet fund, in turn, took things very personally, prompting Dave Urbanek, Public Information Officer at the Teachers’ Retirement System of the State of Illinois (TRS), to write this response:

Please remove your post of Tyler Durden’s inaccurate analysis of the Illinois Teachers’ Retirement System. It is not excellent. It is wrong.


TRS is not in a death spiral. We’ll still be operating and paying pensions for years to come.


We could potentially sell $3 billion in assets if the Illinois General Assembly does not come up with its annual contribution to TRS. The state owes us $2.35 billion. Two other state pension systems are also selling assets until the state makes its payments to them. That is the only reason we are  selling assets.


We are not selling assets because we are on the risky side of any investments, as Mr. Durden claims. Here are the facts: We could potentially sell $3 billion in assets. Last year our investment income totaled $4.6 billion – a 13 percent return. We did not lose money. We have $33 billion in total assets. We will pay $4.1 billion in pensions and benefits during the current fiscal year. Do the math. We are not in a death spiral.


What Mr. Durden doesn’t say – and won’t because it ruins his story – is that TRS sold $1.3 billion in assets last year for the same reason: The General Assembly hadn’t yet come up with its annual contribution. The state ultimately sold bonds and made the payment, and we not only got our money back  from the assets we sold but did not have to sell any further assets.

Alas, a few months later things went from bad to worse for the entire state of Illinois' retirement system, following news that "Underfunded Illinois Pension Fund Under Investigation By The SEC For Accounting Fraud." As the WSJ then reported:

"An issue being examined is whether Illinois was taking future savings and treating them as current reductions in the cost of the pension fund, said Robert Kurtter, a managing director in the public finance division at Moody's Investors Service, who said his firm spoke with Illinois officials about the inquiry. One of the measures that Illinois took to save costs was to raise the retirement age for newly hired Illinois workers.


Illinois's pension system is only about 50% funded with liabilities of about $136 billion, according to Moody's. The underfunding, one of the  worst among states in the nation, is partly the result of the state frequently skipping its recommended contributions to fund.


Illinois was informed by the SEC of the inquiry in September, Ms. Kraft said. Illinois has included mention of the SEC inquiry in documents being prepared for the sale expected in the next few weeks of a approximately $3.7 billion bond, said Ms. Kraft. The debt is expected to allow the state to make a required pension-fund contribution


The inquiry is the latest example of the SEC probing a state's financial disclosures related to pensions. In August, the federal agency accused New Jersey of failing to properly disclose the true health of its two largest pension funds. New Jersey authorities settled the SEC case without admitting or denying wrongdoing."

Today, over two years after the above news, the SEC finally concluded their analysis of one part of the massively underfunded Illinois Pension system and found the Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009. The SEC also said Illinois failed to disclose that it had underfunded the state's pension obligations, increasing the risk to its overall financial condition.

Reuters completes the already well-known picture: "Illinois has one of the worst-funded pension systems in the country. Governor Pat Quinn and the state legislature are currently locked in a political battle as to how best to fix an unfunded liability of $96.8 billion - a gap so large, it has led Illinois to have the worst credit rating among U.S. states."

In chart form, the state's woeful situation is as follows via the WSJ:

Illinois had a response: it neither admitted nor denied the SEC charges. Of course.

Illinois "believed it to be in its best interests to enter into a settlement with the SEC," according to a statement from the governor's Office of Management and Budget. "The State has cooperated fully with the SEC throughout the inquiry."


"The state neither admits nor denies the findings in the order, which carries no fines or penalties." the statement said.

Needless to say, it would be more than ironic to fine an already broke state retirement fund a fine when its original transgression was that it was, well, broke and was misleading investors.

Finally, from the SEC charge:

According to the SEC’s order instituting settled administrative proceedings against Illinois, the state established a 50-year pension contribution schedule in the Illinois Pension Funding Act that was enacted in 1994. The schedule proved insufficient to cover both the cost of benefits accrued in a current year and a payment to amortize the plans’ unfunded actuarial liability. The statutory plan structurally underfunded the state’s pension obligations and backloaded the majority of pension contributions far into the future. This structure imposed significant stress on the pension systems and the state’s ability to meet its competing obligations – a condition that worsened over time.


The SEC’s order finds that Illinois misled investors about the effect of changes to its funding plan, particularly pension holidays enacted in 2005. Although the state disclosed the pension holidays and other legislative amendments to the plan, Illinois did not disclose the effect of those changes on the contribution schedule and its ability to meet its pension obligations. The state’s misleading disclosures resulted from various institutional failures. As a result, Illinois lacked proper mechanisms to identify and evaluate relevant information about its pension systems into its disclosures. For example, Illinois had not adopted or implemented sufficient controls, policies, or procedures to ensure that material information about the state’s pension plan was assembled and communicated to individuals responsible for bond disclosures. The state also did not adequately train personnel involved in the disclosure process or retain disclosure counsel.

And to think that one of these same personnel tried to take us to task over two years ago, when in reality Mr. Urbanek was llikely just as clueless as those people that the SEC described as "not adequately trained."

Sadly, in the end we know we will have the last laugh in the TRF case as well. Sadly: because it means that millions of pensioneers and still working Illinois teachers will lose all the money they have invested toward their retirement. Sadly, also, because this kind of ponzi scheme is now pervasive to all of America, its economy and its capital markets. Which is also the reason even the smallest down day has become anathema to the central-planning authorities who now run the entire economy of the US out of a small corner office in the Marriner Eccles building.

And sadly because where Bernie Madoff got an effective life sentence, when a "legitimate" entity does precisely what Madoff Securities was doing for decades, they get a slap on the wrist, and have to neither admit nor deny guilt.

As long as this treatment of borderline criminal financial malfeasance continues, nothing can and will ever change. Until then, Illinois and all other insolvent states, will fund their underfunded status by selling bonds direct to greater yield-chasing fools. This strategy will work, until it doesn't.

Only then will the Fed's liquidity tide finally go out, revealing that absolutely everyone was swimming naked.


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Mon, 03/11/2013 - 19:42 | 3321063 McMolotov
McMolotov's picture

Q: How do you fine a state?

A: You don't, so they continue to give it to you right up your poop chute.

Mon, 03/11/2013 - 19:50 | 3321084 Dr Paul Krugman
Dr Paul Krugman's picture

Let me guess - everyone here thinks Illinois will go bankrupt soon; the same people who thought Detroit would declare bankrupcy any day now.

Have any of you been outside of your bunkers in the last few years?

Mon, 03/11/2013 - 19:56 | 3321104 McMolotov
McMolotov's picture

Detroit didn't declare bankruptcy but is being taken over by the state. That's apparently a win in your book.

And the only time I leave my bunker is to dump my "bucket" on that fucking cat of yours, in case you've been wondering about the smell.

Mon, 03/11/2013 - 19:59 | 3321114 american eyedol
american eyedol's picture

maybe the tylers can be hired by the sec

Mon, 03/11/2013 - 20:31 | 3321191 Clint Liquor
Clint Liquor's picture

Your assumption that the SEC finds value in competence, is wrong.

Mon, 03/11/2013 - 20:37 | 3321204 sunaJ
sunaJ's picture

So what's next?  Is it federal bailout of pensions with capital controls (ie. buying up of treasuries as a retirement portfolio requirement)?  How long would that game last?

Mon, 03/11/2013 - 20:41 | 3321220 pemdas
pemdas's picture

I'm from Illinois.  Rhode Island, can we borrow your legislature for a few months?

Mon, 03/11/2013 - 21:56 | 3321387 solgundy
solgundy's picture

I think the total assets of the private IRA & 401-K accounts adequately cover the government pension short falls across the land, thus the truely worthy of a retirement check will thank you suckers for saving your money in those other government fraud accounts all those should have paid the taxes along the way and stayed out of the trap.

Mon, 03/11/2013 - 22:29 | 3321438 Professorlocknload
Professorlocknload's picture

 It's called "The Pension Benefit Guarantee Corporation," and it's loaded! Back end, that is.

 But, like FDIC, it has a hotline wired into Treasury, so the "wealth" will be spread.

Mon, 03/11/2013 - 20:31 | 3321189 smlbizman
smlbizman's picture

its amazing how they really stick to the rules when it involves wiping out the peons...(sorry, rules say we cant bail you out. wouldnt want to break dem rules) would think they have a plan....

Mon, 03/11/2013 - 22:38 | 3321452 eatthebanksters
eatthebanksters's picture

I think it is outstanding how the best and brightest in the Illinois government have now moved on to Washington bring their proven solutions to our nation!

Tue, 03/12/2013 - 04:59 | 3321719 Dingleberry
Dingleberry's picture

Did this fucker mention Detroit as an example of fiscal prudence? What the fuck? See the new this week?

Mon, 03/11/2013 - 19:57 | 3321108 dick cheneys ghost
dick cheneys ghost's picture

How would you suggest Detroit deal with $14 Billion in long term debt?

Mon, 03/11/2013 - 20:50 | 3321242 Herodotus
Herodotus's picture

They are going to sell their water system that serves 4 million people to Goldman for $10 billion.

Mon, 03/11/2013 - 21:01 | 3321275 max2205
max2205's picture

TBTTOOTC. too big to throw out of the country

I love a good pissing contest

I am sure nobody will serve time for accounting fraud.

Mon, 03/11/2013 - 21:25 | 3321326 El Oregonian
El Oregonian's picture

"How would you suggest Detroit deal with $14 Billion in long term debt?"

Sell the U.P. (upper peninsula) to the Chinese... er, wait... Never mind, they have already.

Tue, 03/12/2013 - 01:00 | 3321587 in4mayshun
in4mayshun's picture

Launder drug money like the big banks?

Mon, 03/11/2013 - 19:59 | 3321113 Ben Jammin Bernanke
Ben Jammin Bernanke's picture

Fuck You krugman!

Mon, 03/11/2013 - 19:59 | 3321115 yogibear
yogibear's picture

Oh, Illinois won't go bankrupt. It's Obama's home state. It will be bailed out by the endless money printing.

LOL, Why be productive or work? Just print.

Let's keep  increasing SSI, welfare and food stamps. Print me some more money!!!



Mon, 03/11/2013 - 20:11 | 3321146 CheapBastard
CheapBastard's picture

Meet Neil Codell an Illinois educator with a $26 million state pension. 

Look for 'Codell, Neil C' -- 4th from the top of the list.  His estimated career pension is $26,661,604.  That's almost $27 million for a single administrator within just one local Illinois school system (Niles, to be exact).





Mon, 03/11/2013 - 21:15 | 3321311 Totentänzerlied
Totentänzerlied's picture

Think of the children. Or something. I'm sure there's a poor excuse somewhere. Many, in fact.

Mon, 03/11/2013 - 20:26 | 3321177 kaiserhoff
kaiserhoff's picture

Friendly amendment, Yogi,

Illinois is my home state.

Obama doesn't have one.

Mon, 03/11/2013 - 21:06 | 3321287 Whiner
Whiner's picture

Whose worried? Not me. There's plenty of folks to tax in Illinoise alone. Hell, Chicago can shoulder this by itself. What's the fuss? The Land of Lincoln citizens got nowhere to go. Pull-eese don't come South.

Mon, 03/11/2013 - 19:59 | 3321117 michigan independant
michigan independant's picture

Yes they drained our balance sheet for our services locally and sent it to a the socialist paradise swamp in detroit you demented man.

Mon, 03/11/2013 - 19:59 | 3321119 myne
myne's picture

We have the technology to keep coma patients alive for decades after their brains have died.

Zombie banks and states are hardly surprising. They can remain alive indefinitely while their sponsors remain able to provide.

Mon, 03/11/2013 - 20:19 | 3321161 Dr Paul Krugman
Dr Paul Krugman's picture

Zombie is a term I use frequently - I use it to refer to those who do not understand how wrong they are concerning economics, yet can not change their viewpoint due to some fundamental flaw in their hollow head.

Thus many of you here; wrong, as the depression improves you clutch your pet rocks and believe, any day now, the world will end. 

The powerful thing about Obama's 2008 platforn was hope, you know.  Maybe you all should have hope for a better day and get off your armchairs and help out the economy for once.

Mon, 03/11/2013 - 20:31 | 3321192 dick cheneys ghost
dick cheneys ghost's picture

I did help the economy..............I maxed out my credit cards.......Its not my fault that I cant pay them back.........

Mon, 03/11/2013 - 22:25 | 3321428 Never One Roach
Never One Roach's picture

dick, now you need to go back to college and major in Booze and bright-eyed, Big Titted Co-eds with a $120k loan to help you out. I'd recommend art history.

Tue, 03/12/2013 - 01:09 | 3321596 in4mayshun
in4mayshun's picture

Responding to this idiot is like feeding a stray cat-once they know their pathetic state elicits an emotional response, they'll never leave.

Mon, 03/11/2013 - 20:38 | 3321209 dolph9
dolph9's picture

Maybe you should get out of your chair and trash your office?

Because in your view, cleaning up the mess would be good for the economy, right?

Mon, 03/11/2013 - 20:50 | 3321243 20834A
20834A's picture

"Zombie is a term I use frequently - I use it to refer to those who do not understand how wrong they are concerning economics, yet can not change their viewpoint due to some fundamental flaw in their hollow head."

Funny, that is what I think about YOU!

"Thus many of you here; wrong, as the depression improves you clutch your pet rocks and believe, any day now, the world will end."

Your admit that we were in a depression, and now we're in a deep recession?

Now I have some HOPE that you may someday see the error of your ways. I'll take hope where I can *reasonably* get it.

Mon, 03/11/2013 - 21:02 | 3321276 shovelhead
shovelhead's picture

My pet rock is an Easter Island statue.

Hooray for extinction!

Mon, 03/11/2013 - 21:10 | 3321288 PubliusTacitus
PubliusTacitus's picture



In case you hadn't noticed, Dr Shitforbrains, there is no recovery; there is 14% unemployment; there are a record number of people on foodstamps and government assistance (feature, not a bug for you), and there is massive rising poverty, caused by your policies.


It appears it is you who knows nothing about economics, dumbfuck.

Mon, 03/11/2013 - 22:21 | 3321423 Chuck Walla
Chuck Walla's picture

Dear Dr, Krugman, I have done all I can for the economy. I have lost my job, gone on unemployment and am now getting food stamps. What else is left?


Mon, 03/11/2013 - 22:51 | 3321468 archon
archon's picture

Well, the government claims that unemployment and food stamps both return somewhere between 179% and 184%  back into the economy, so you're more productive than most people who have jobs.  Keep up the good work, citizen!

Mon, 03/11/2013 - 22:42 | 3321455 eatthebanksters
eatthebanksters's picture

You must be MDB're too stupid to be Krugman (he would not engage in a losing argument) and you have the vocabulary of a MDB.


BTW,  hope can't feed you.

Mon, 03/11/2013 - 22:45 | 3321460 archon
archon's picture

Says the guy who predicted that the first trillion would end the depression, but when it didn't work, in hindisght concluded that it should have been more like three or four trillion, and an invasion by space aliens might have speeded things along nicely.  HAHAHAhahaha.... 

Mon, 03/11/2013 - 22:53 | 3321470 myne
myne's picture

Well, if I was ever unsure whether this was you or not, your crude and thinnly veiled personal insults validated it.

You have a terrible reputation amoungst professional economists. They regard your arguments as child-like because you always revert to personal attacks.

How about you show some data?

How about you provide some actual analysis of the data instead of ideologically driven opinions.


The "zombies" here are not the sort to be swayed by cheap insults. 

We like facts, and sure, we like off-the-cuff cheeky analysis at times, and even a bit of chest beating here and there but we don't generally suffer boring schoolyard slanging.

Tue, 03/12/2013 - 07:29 | 3321813 eatapeach
eatapeach's picture

MDB, is that you?

(Edit: sorry, eathebanksters, I see you are ahead of me. I second your hypothesis.)

Tue, 03/12/2013 - 09:53 | 3322159 orez65
orez65's picture

"One of the walking dead" is the term that I use to describe you.

Your brain is dead and you fuck up everything you touch.

Mon, 03/11/2013 - 20:02 | 3321122 HD
HD's picture

"Have any of you been outside of your bunkers in the last few years?"

I left my bunker recently for fresh supplies. Unfortunately all the store had in stock was horse meat and kool aid.

Mon, 03/11/2013 - 22:43 | 3321458 eatthebanksters
eatthebanksters's picture

Yeah...DHS had bought all the ammo...

Mon, 03/11/2013 - 20:10 | 3321143 Rustysilver
Rustysilver's picture

Dr Paul,

Have you?

Mon, 03/11/2013 - 20:13 | 3321149 akak
akak's picture

Krugman's bunker lies at the top of a very tall, and very isolated, ivory tower.

Mon, 03/11/2013 - 20:31 | 3321193 Scro
Scro's picture

Dr. Paul Krugman

I up voted your comment because I feel it's beneficial and necessary to provide positive feedback to the mentally challenged.

Mon, 03/11/2013 - 20:43 | 3321226 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Swimming naked is fun and liberating, you should try it sometime.  It might help your disposition.

Mon, 03/11/2013 - 21:00 | 3321269 PubliusTacitus
PubliusTacitus's picture

No, Illinois is bankrupt now, asshole.

Mon, 03/11/2013 - 21:10 | 3321296 Professor Fate
Professor Fate's picture

And, of course, there is no provision in the bankruptcy code for a state to file.  They simply go dormant...unable to access the debt markets until the great and most powerful "Bernank" eases them quantitatively back into ponzi solvency by purchasing all Illinois municipals and adding them to the Fed's balance sheet.  The future is crystal clear.

Fate the Magnificent

"Push the Button, Max"

Mon, 03/11/2013 - 21:30 | 3321334 Go Tribe
Go Tribe's picture

Fine. You go live in that shithole. You can find cheap housing right next to some bangers and ho's. And no, I'm not referring to Georgetown.

Mon, 03/11/2013 - 23:12 | 3321492 neutrinoman
neutrinoman's picture

Detroit is being taken over by the state of Michigan, as a final alternative to declaring bankruptcy. The latter is considered so radical and disruptive that everyone's trying to avoid it, even though, in fact, the city is bankrupt.

In the US legal system, states can't go bankrupt in a formal sense. But they can go bankrupt de facto; a number were such in the 1930s. Soon Illinois and California will join them. It will be funny to watch, because of the strenuous denials. But it's nice to see the SEC waking up to what's been going on and even considering charging someone with criminal fraud. For states in the worst shape and unable to change course, some prosecutions are the alternative to an unavailable judicial bankruptcy.

Tue, 03/12/2013 - 00:24 | 3321554 H E D G E H O G
H E D G E H O G's picture

go back in your hole dick head.

Mon, 03/11/2013 - 21:10 | 3321295 mofreedom
mofreedom's picture

Sell the state to China.  Rye, rye.

Mon, 03/11/2013 - 21:27 | 3321328 mofreedom
mofreedom's picture

if the farmers in illinois don't have the courage to pull their honeywagons and manuer spreadera up to the capitol in springfield or daly plaza in chicago and spray and spread, respectively, they deserve to be chinese right now, today.

Mon, 03/11/2013 - 21:41 | 3321354 mofreedom
mofreedom's picture

but why don't they fight?  cause they're rich from fed printing, they've been bought off, our rural class to fight, their kids will not forget what their fathers didn't fight.

Mon, 03/11/2013 - 22:17 | 3321415 Chuck Walla
Chuck Walla's picture

Everybody gets paid in Illinois. Unfortunately, its not the people who are supposed to be paid, but only the guys who dreamed up a Barack Obama to do their bidding as drone master on the American economy.  Poor teachers who believed all this Happy HorseShit, just useful idiots.



Mon, 03/11/2013 - 22:36 | 3321448 archon
archon's picture

Well, in fairness to the TRS, the administrators of the system might not ahve been competent enough to realize they were in a death spiral when they took exception to Tyler's analysis.

Mon, 03/11/2013 - 19:45 | 3321072 SMG
SMG's picture

If the SEC really did it's job, this sham would have been ended decades ago.

Mon, 03/11/2013 - 20:55 | 3321255 Omen IV
Omen IV's picture

Please - if the banks can commit fraud certainly Illinois should be able to do as they wish - there are no rules - there is no retribution - there is nothing other than beating the system -

do your part and fuck the system - stop complaining!

Mon, 03/11/2013 - 19:46 | 3321075 rhinoblitzing
rhinoblitzing's picture

The former senator from Illinois now occupying the white house should be impeached!

Mon, 03/11/2013 - 19:49 | 3321078 Seasmoke
Seasmoke's picture

There is never just one public parasitic cockroach.

Mon, 03/11/2013 - 19:48 | 3321080 Joebloinvestor
Joebloinvestor's picture


Blago is already in jail, no one else is going to lose anything except maybe some credibility and that is after the fact.

If persons were punished for this (banned from any public office for starters) then it would be great news.

Mon, 03/11/2013 - 19:51 | 3321085 fonzannoon
fonzannoon's picture

i await the day when all chicago public employees face a 50% cut in their benefits, or a default where they lose everything, so the rest of the federal employees get a look at their future.

Mon, 03/11/2013 - 19:53 | 3321088 Dr Paul Krugman
Dr Paul Krugman's picture

You await total ruin - you must be a pleasant person to know.

Mon, 03/11/2013 - 19:57 | 3321096 fonzannoon
fonzannoon's picture

Do you hear that, Mr. Krugman? That is the sound of inevitability.

That is the part you seem to miss. It is not what I want, or don't want, or await. It is just reality.

The irony is, the day that happens, is a good day. We can possibly finally start to rebuild with a more sustainable system. Maybe the next generation finally has a shot at a future....maybe.

So you, in effect are the unpleasant person to know.

Mon, 03/11/2013 - 20:02 | 3321111 McMolotov
McMolotov's picture

Paul probably can't hear much of anything while he's listening to his favorite song, "La-La-La I Can't Hear You" by The Asshats.

Mon, 03/11/2013 - 21:28 | 3321329 Totentänzerlied
Totentänzerlied's picture

Nah, they'll just join up with the FSA and demand an unbridled communist dictatorship under the hilarious assumption - the only thing they care about, when push comes to shove - that it will work for them.

It is the natural conclusion of trusting unaccountable persons with something so important for so long with so little interest.

Keep trusting large, unaccountable institutions with your futures, plebs, what could possibly go wrong?

Mon, 03/11/2013 - 19:59 | 3321116 1C3-N1N3
1C3-N1N3's picture

Fonz correctly awaits ruin, which correctly awaits you.

Mon, 03/11/2013 - 20:34 | 3321200 Scro
Scro's picture

Dr. Paul Krugman

I will only up vote your comments for a short time.

Mon, 03/11/2013 - 23:50 | 3321525 myne
myne's picture

Short term stimulus will likely fall short of the goal.

Eternal quantitative upvoting is required to restore confidence.


Mon, 03/11/2013 - 21:03 | 3321280 PubliusTacitus
PubliusTacitus's picture

The policies you advocate are causing total ruin.


You are a despicable person, as we all know.

Mon, 03/11/2013 - 20:43 | 3321225 CH1
CH1's picture

i await the day when all chicago public employees face a 50% cut in their benefits

I await a day when they no longer plunder the productive people of Chicago.

Mon, 03/11/2013 - 21:14 | 3321308 fonzannoon
fonzannoon's picture

I await the day the dow drops 12 points.

Mon, 03/11/2013 - 21:41 | 3321355 Totentänzerlied
Totentänzerlied's picture

"productive people of Chicago."

Ahahaha. Good one!

Mon, 03/11/2013 - 19:56 | 3321097 JLee2027
JLee2027's picture

They're all Ponzi schemes. I've given up any expectation to any government related retirement funds and kissed all my forced contributions bye bye.

Mon, 03/11/2013 - 19:56 | 3321103 myne
myne's picture

The US system seems quite backwards compared to the Australian Superannuation system.

Relying on one single entity to cover your retirement?! Madness!

We can even manage ours ourselves. It's not perfect, but it's a damn sight better than the US craziness.

Mon, 03/11/2013 - 20:30 | 3321187 NotApplicable
NotApplicable's picture

Don't worry, your day is coming. This disaster will be localized in some respects, but not others. TINA told me so.






Tue, 03/12/2013 - 00:33 | 3321558 myne
myne's picture

Sure. No where is perfect. But here's a simple fact:

It doesn't matter where you work. Private or government, you MUST save 9% of your income into a superannuation fund.

That fund is entirely up to you. A systemic collapse of the superannuation industry is unlikely to wipe out more than 50% of the system because about 50% of the funds are self-managed.

Tue, 03/12/2013 - 04:06 | 3321679 Buckaroo Banzai
Buckaroo Banzai's picture

Rest assured, your scheme is a ponzi scheme as well. You just didn't dig far enough down your chain of assumptions. To wit: What happens when your currency becomes worthless?

Tue, 03/12/2013 - 07:16 | 3321796 myne
myne's picture

The majority of the human race is a ponzi sceme drpendant on easily obtained energy for survival. We're little different to bacteria in a petri dish feeding on the few grains of sugar placed in there.

Forget currencies. We're all playing the same game: be the last to starve.

On a long enough timeline...

Tue, 03/12/2013 - 08:28 | 3321896 tarsubil
tarsubil's picture

People on Earth are like bacteria on a petri dish? Bacteria on a petri dish are in a highly homogenous and closed system. That comparison is infantile in its ignorance.

Tue, 03/12/2013 - 04:14 | 3321686 Hobbleknee
Hobbleknee's picture

What prevents the government from stealing from the funds?

Mon, 03/11/2013 - 19:58 | 3321109 Schmuck Raker
Schmuck Raker's picture

Oh well, there's always the BlackHawks...

Mon, 03/11/2013 - 20:00 | 3321118 Northeaster
Northeaster's picture

This is amusing. Why? Read some CONgress Members financial disclosures, some are in fact invested in Cook County bonds (LoL). I don't live there, but I looked it up a couple years ago when I was interested in financial disclosures of my politicians. Apparently, Cook County is a complete dump and should be BK under normal accounting rules (which of course don't apply).

This will continue until...

Mon, 03/11/2013 - 20:00 | 3321120 JustObserving
JustObserving's picture

The Federal government is exempt from any scrutiny of underfunding of Social Security and Medicare.  Otherwise it would be underfunded by $123 trillion.

Ignorance is bliss.

Mon, 03/11/2013 - 20:12 | 3321147 machineh
machineh's picture

Yeah, when is the SEC gonna make US Treasury sign a consent agreement for failing to inform buyers of US debt that Soc Sec and Medicare were underfunded to the tune of tens of trillions?

The SEC beats up on defenseless states -- the little satans -- while letting the Great Satan who employs them skate.

SEC -- Sucking Every Cock

Mon, 03/11/2013 - 20:07 | 3321127 pashley1411
pashley1411's picture

Another agent of the gubermint looks up and says, "chit, where did those icebergs come from!".    Fortunately the government is effective only in spending money, not in doing anything useful.

The Illinois "end game" is already written.     The Fed will buy Illinois bonds, including retirement bonds, and reissue the debt with the full faith and credit of whatevathefck the Fed's credit rating is at that moment.

I'm starting to resent any inference that the game is anything other than being totally stacked against reality.   If your going to party at the Red Queen's court, leave your sanity at the door.

Mon, 03/11/2013 - 20:09 | 3321136 SmittyinLA
SmittyinLA's picture

Has anybody ever been prosecuted for municipal bond fraud? EVER? 


(nobody is looking at the bond proceeds, spending, kickbacks and "fees" either)


LA is actually much much worse.

but they have better accountants in CA

Mon, 03/11/2013 - 20:09 | 3321141 Kastorsky
Kastorsky's picture

home of Rahm Israel Emanuel and his sidekick the Community Organizer

Mon, 03/11/2013 - 20:14 | 3321152 machineh
machineh's picture

Illinois may go under. But thank G-d Israel will be saved!


Mon, 03/11/2013 - 20:19 | 3321157 yogibear
yogibear's picture

LOL, David Axle-rod up the the Illinois taxpayers butt.

The whole corrupt Chicago political system has been transported to Washington and is in operation.

Mon, 03/11/2013 - 20:09 | 3321142 1C3-N1N3
1C3-N1N3's picture

Time for downstate to break away from Chicagoland -- downstate being everything outside Chicagoland.

Except for Springfield. They can have Springfield.

Mon, 03/11/2013 - 20:14 | 3321151 The Invisible Foot
The Invisible Foot's picture


Mon, 03/11/2013 - 20:21 | 3321167 gould's fisker
gould's fisker's picture

Where the fuck is squeezy the pension python when you need him!!!  They better find squeezy or everyone is completely fucked:


Mon, 03/11/2013 - 20:30 | 3321184 Kastorsky
Kastorsky's picture

"Squeezy the Pension Python" ?!


political leaders omg

Mon, 03/11/2013 - 20:22 | 3321171 q99x2
q99x2's picture

Time for the police to start collecting banksters instead of guns.

Mon, 03/11/2013 - 20:24 | 3321174 surf0766
surf0766's picture

So the marxist fined .. the marxist?????????

Mon, 03/11/2013 - 20:30 | 3321188 ImReady
ImReady's picture

I feel for the teachers. They have to deal with the brats and the asshole parents for 30 yrs and then get shafted out of their retirement. The unions sold these people down the river when they encouraged them to forgo SS contributions and sign on to TRS. Criminals. All of them!

Mon, 03/11/2013 - 20:35 | 3321199 surf0766
surf0766's picture

Most of them knew exactly who they were getting in bed with. Lock and step  , all for the greater good bullshit. I have no sympathy for anyone who uses the "How could we have knownn" crap.

Mon, 03/11/2013 - 21:01 | 3321271 hooligan2009
hooligan2009's picture

could do it for nothing on a home pc..the reason education costs so much is because it is a social forum and allows parents to park their kids for 6 to 7 hours a day with a stranger in an insecure environment...just saying

Tue, 03/12/2013 - 08:22 | 3321878 Prisoners_dilemna
Prisoners_dilemna's picture

Teachers, the puclic school types, are anachronistic, relics with bad attitudes because "no one appreciates the work we do for the kids" and "we're underfunded" and "i hate my kids".
My teacher sister in law.
For the kids and ZHers both!

Mon, 03/11/2013 - 20:35 | 3321202 stant
stant's picture

lol even the gangstas lose thier pensions ,bernke screws everybody

Mon, 03/11/2013 - 20:37 | 3321207 fonzannoon
fonzannoon's picture

Think about a 50k a year pension. If someone gave me me a goal of 50k/yr in secure income, I would need them to give me at least 1.5 mil in a lump sum, so that I could ladder some investment grade bond portfolio.

 If that same person with a 50k pension has free healthcare, that would normally cost them what....15k/yr?

So 50k pension plus free healthcare means an equivelant of at least someone in the private sector saving about 1.75 mil to achieve the same benefits.

How many people are retiring with 1.75 mil?.....and 50k is nothing. By me they are getting 100k plus. At least 50% of them are on total that 100k is tax free. So take that 1.75 mil and make it 3 mil above.

It's the biggest scam running.

Mon, 03/11/2013 - 20:59 | 3321263 hooligan2009
hooligan2009's picture

i agree..except that the retirement age will be lifted to a barely tolerable age that allows 20 years in retirement, funded by a non-inflation proofed pension of a 5% equal drawdown of a starting capital.

that means a $50,000 costs $1 million (50,000 times 20 years).

small saving from your numbers i know, but when you multiply the difference of 500,000 by the number of retiring people (tens of million?) you get  a very large sum.

that sum will of course go to fund managers, bankers and politicians from policies that reduce the rate of increase in deficit funding.

Mon, 03/11/2013 - 21:26 | 3321323 tenpanhandle
tenpanhandle's picture

"the state frequently skipping its recommended contributions to fund."  Damn I totally know how they feel.


Mon, 03/11/2013 - 21:11 | 3321302 yellowsub
yellowsub's picture

The joke is going to be on the taxpayers!


Tue, 03/12/2013 - 00:06 | 3321538 Dineroguru
Dineroguru's picture

The only fly on the brown stuff is that they have to get the money from WORKING stiffs...and which company would choose to locate in Illinois?

Mon, 03/11/2013 - 20:38 | 3321210 notquantumdum
notquantumdum's picture

Imagine that.

Mon, 03/11/2013 - 20:40 | 3321217 dolph9
dolph9's picture

Illinois = Detroit = Lehman = AIG = Fannie Mae = GM = America.


Remember, people, it is YOU who will be expected to pay up.  Always remember that.

Mon, 03/11/2013 - 21:29 | 3321332 tenpanhandle
tenpanhandle's picture

Thanks alot dolph.  Do you know how much alcohol I had to consume... order to forget that?

Mon, 03/11/2013 - 20:46 | 3321233 tony bonn
tony bonn's picture

this story is so rich...the incompetent, criminal, porn addicted sec is wrist slapping illinois for failures of fiduciary responsibility when legions of wall street banksters rape the nation daily....the clueless, misinformed, ponzier (or is it ponzeur) dave urbanek declares solvency and the perpetual ability to pay while selling assets and praying for the debt financed state contribution to come through....all the while illinois' finances are in shambles....

the teachers - and i wish all public "servant" whores - will eventually get their just desserts....the problem with socialism is that you eventually run out of other people's money.....

but the banksters got theirs and that's all that counts....

Mon, 03/11/2013 - 20:51 | 3321248 WmMcK
WmMcK's picture

ponzier (or is it ponzeur)

I prefer "ponzi artist", but really anything but "ponzer"

Mon, 03/11/2013 - 21:01 | 3321265 Dalmatian
Dalmatian's picture

I am a teacher from Illinos.  I worked in the public sector for three years a little over a decade ago.  I now work at a private school.  I cashed out my TRS money and it TOOK A YEAR TO GET MY MONEY!  I had accumulated $12,000 in those three years.  I called TRS and was constantly being put on hold for long periods of time, or I would get transfered to another person and then hung up on.  When I asked if I could roll over my TRS retirement into my ROTH IRA they said NO!  I mean, come on, that is standard to be able to roll over your retirement account from one place of employment to the new.  As soon as these shinanigans started, I panicked.  Then I told them to just give me the money in the form of a check, and they said that the penalty would be large.  I told them I didn't care, and that I wanted my money as soon as possible.  I got back around $8,000.  I'm upset that I got taxed a penalty, but my gut instinct told me to just cash out.  Glad I did.  That whole TRS is gonna fall like a house of cards very soon.  Those public school administrators play a lot of dirty business behind closed doors.  I've heard some administrators making 200,000 per year, and then right before retirement jack up their yearly salary by a third -or even more- to get a higher pension!  I heard some substitute teachers who were also friends with politicians be able to sub for a couple days and then get a full pension!  Boy does that piss me off!

Mon, 03/11/2013 - 21:13 | 3321303 fonzannoon
fonzannoon's picture

Dalmation I think it is universal that you cannot roll a tax dererred retirement plan, which I believe the TRS plan is, into an after tax (roth) vehicle. I think you could have rolled it into a traditional or rollover IRA, but maybe there is some special guideline I don't know about there.

In any event your gut move to get the money out seems to have been the right one.

Tue, 03/12/2013 - 08:13 | 3321859 Prisoners_dilemna
Prisoners_dilemna's picture

"upset that I got taxed a penalty", "friends with politicians...full pension...Boy does that piss me off" So it's not remorse you feel for the three years of accepting stolen funds. Its envy of a parasite more efficacious than yourself?!?
Good for you for getting out of the public make work system. Hopefully your current pay and retirement contributions more accurately reflect the value you bring to the world educating 12 kids a year on a single subject.

Im envious of Tyler. His ability to see thru terrocrat drivel far surpasses my own. Last laugh indeed, excellent.

Mon, 03/11/2013 - 21:14 | 3321309 Coldfire
Coldfire's picture

It will be horrible to watch tax-eaters who lived off blood money taken by force from the productive eating dog food in their old age. Horrible.

Mon, 03/11/2013 - 21:33 | 3321339 tenpanhandle
tenpanhandle's picture

At that point it won't be dogfood being eaten; it will be dog eat dog.

Mon, 03/11/2013 - 22:10 | 3321402 Monedas
Monedas's picture

When they talk about old people eating dog food .... don't think of that cheap hash made of guts and grain .... think firm chunks of horsemeat in a savory, dark gravy .... served over rice or spiced up with curry powder  !

Mon, 03/11/2013 - 21:36 | 3321346 snblitz
snblitz's picture

You misunderstand.  They will be eating Soylent Green.

Mon, 03/11/2013 - 21:32 | 3321337 CharliePrince
CharliePrince's picture

illinois  is tops in corruption..  every pol is a crook.  

Mon, 03/11/2013 - 21:57 | 3321386 holdbuysell
holdbuysell's picture

"TRS is not in a death spiral. We’ll still be operating and paying pensions for years to come."

Public denial has just confirmed that TRS is in a death spiral.

Whoever's left, turn out the lights.

Mon, 03/11/2013 - 22:04 | 3321397 Monedas
Monedas's picture

That's not really Dr. Paul Krugman .... is it ?

Mon, 03/11/2013 - 22:14 | 3321410 akak
akak's picture

If it spends like a Keynesian duck, and talks like a Keynesian duck, and prints like a Keynesian duck, and quacks like Keynesian quack, er, I mean duck, .....

Mon, 03/11/2013 - 22:05 | 3321398 americanspirit
americanspirit's picture

Hey guys - whoever is posting as Dr. Paul Krugman is baiting you. Do you really think that sleazy bastard would expose himself by posting on ZH? OK Dr. krugman - what's your home address and the middle name of your oldest child?


Oh, by the way, my real name is Barack Obama and I know where you all live. And I have my middle finger on the drone button.

Mon, 03/11/2013 - 22:15 | 3321412 Monedas
Monedas's picture

Maybe it is him .... slumming around the blogs ?

Mon, 03/11/2013 - 22:55 | 3321472 palmereldritch
palmereldritch's picture

He's got all of MDB's absurdity and none of the hilarity. So yeah.  Maybe it is.

Mon, 03/11/2013 - 22:20 | 3321418 Artful Dodger
Artful Dodger's picture

It doesn't take a genius to conclude that essentially all public pension systems are fucked. Which means, of course, that nobody will ever be allowed to publically conclude as much and make policy changes while they can still be made.  No, the government-trough retirees will BLAME BLAME for the failure of pensions to produce unrealistic returns, and they will whine about all their OTHER money not earning interest (I'll take that complaint from someone without a fancy pension, but if you have one, STFU about interest rates), and will continue to insist on their RIGHT to RAPE future generations, which if you haven't noticed is quite a common theme these days. Sick, sick entitlement society that knows no bounds. This will be the historical view 100 years from now, if society still exists. Guarantee it.

Mon, 03/11/2013 - 22:29 | 3321426 Monedas
Monedas's picture

The government workers who are retired now .... have it good .... wait till the peasants go house to house .... and burn ém out !  I'd like to see Barney Frank "necklaced" by his disaffected constituents !

Mon, 03/11/2013 - 22:28 | 3321432 AndrewJackson
AndrewJackson's picture

This would be hilarious if it weren't for the fact that all my family on both sides live in the freaking state. Here is an interesting tidbit about the state of illinois pension system. The system is so agregious that the top 100 school administrators in the state account for over a 1 billion dollar liability. Thats right folks, 10 million per administrator. All for the sake of the children. Last I checked, though, states like illinois and new york produce a crop of kids in which only 20% can read/write on a basic college level. 


...and they will try to claim it as my debt. What a joke. This whole gigantic ponzi of a country needs to just go down like the hindenberg. 

Mon, 03/11/2013 - 22:31 | 3321440 Monedas
Monedas's picture

Public education is child abuse .... it's that simple !

Tue, 03/12/2013 - 06:54 | 3321771 SmallerGovNow2
SmallerGovNow2's picture

More like indoctrination....

Tue, 03/12/2013 - 00:01 | 3321533 Dineroguru
Dineroguru's picture

Quick...What national political figiure floated to the top of the Illinois cest pool in record time?  Hint: it is not Abe Lincoln.   What a great training ground for how to scam people on the national level!

Tue, 03/12/2013 - 00:09 | 3321540 yogibear
yogibear's picture

Wait and see how Obama does.


Illinois, Land of Criminals 

Illinois Governors In Prison: 4 Of State's Last 7 Governors Were Convicted, Imprisoned


_Rod Blagojevich – Governor from 2002 through 2009, when he became the first Illinois governor in history to be impeached. Convicted of numerous corruption charges in 2011, including allegations that he tried to sell or trade President Barack Obama's old Senate seat.

_ George Ryan – Governor from 1999 through 2003. After leaving office, was convicted of racketeering for actions as governor and secretary of state. In November 2007, began serving a 6 1/2 year sentence in federal prison.

_ Dan Walker – Governor from 1973-1977. Pleaded guilty to bank fraud and other charges in 1987 related to his business activities after leaving office. Spent about a year and a half in federal prison.

_ Otto Kerner – Governor from 1961-1968. Resigned to become judge, then was convicted of bribery related to his tenure as governor. Sentenced to three years in prison.


Tue, 03/12/2013 - 02:34 | 3321634 ECE
ECE's picture

Krugman, you are the worlds largest mouthpiece for idiot bravado.

Detroit is already Bankrupt.  Declaration?   really?  

Irregular ineffectual socialist micro economics on a grand scale is what you pride your pale self.    How anyone tolarates your blather is still a mystery.   rational logic be damed.   I saw an interview tonight where you spewed and created bullshit facts to suit another off handed lie to push your central control narrative.  You elites have a decent command of the english language to confuse your constituency (uninformed voters) but anyone who graduated from high school with any logic, and a small following of recent history can smell your lies and bullshit miles away.  its too bad you hide behnid all the liberal rags you work with.  Never challenged by anyone of any caliber to drag your ugly lying ass out on the floor with facts.

No black and white on anything right?   Friggin Grey all over you liberal freaks.   Your time is coming,  not just the fact that you are single handedly helping to crush the Times out of existence once and for all.

At least i should thank you for that.   come see the real world some time. 


Tue, 03/12/2013 - 02:35 | 3321635 ECE
ECE's picture

Krugman, you are the worlds largest mouthpiece for idiot bravado.

Detroit is already Bankrupt.  Declaration?   really?  

Irregular ineffectual socialist micro economics on a grand scale is what you pride your pale self.    How anyone tolarates your blather is still a mystery.   rational logic be damed.   I saw an interview tonight where you spewed and created bullshit facts to suit another off handed lie to push your central control narrative.  You elites have a decent command of the english language to confuse your constituency (uninformed voters) but anyone who graduated from high school with any logic, and a small following of recent history can smell your lies and bullshit miles away.  its too bad you hide behnid all the liberal rags you work with.  Never challenged by anyone of any caliber to drag your ugly lying ass out on the floor with facts.

No black and white on anything right?   Friggin Grey all over you liberal freaks.   Your time is coming,  not just the fact that you are single handedly helping to crush the Times out of existence once and for all.

At least i should thank you for that.   come see the real world some time. 


Tue, 03/12/2013 - 04:42 | 3321703 AgentScruffy
AgentScruffy's picture

Good work, Tyler. Even the style of letter they wrote to you reeks of "uneducated idiot bureaucrat."

And a pox upon them for thinking it's morally acceptable to tell the public they neither deny nor admit the SEC's claims.

Tue, 03/12/2013 - 04:42 | 3321704 AgentScruffy
AgentScruffy's picture

Good work, Tyler. Even the style of letter they wrote to you reeks of "uneducated idiot bureaucrat."

And a pox upon them for thinking it's morally acceptable to tell the public they neither deny nor admit the SEC's claims.

Tue, 03/12/2013 - 04:55 | 3321716 Tom Green Swedish
Tom Green Swedish's picture


Teachers are paid so high they don't even need a retirement (they get paid more than the average worker and have 3 months off every year that's their retirement)


Tue, 03/12/2013 - 05:02 | 3321720 Dingleberry
Dingleberry's picture

This story is so ironic on so many levels. Been to Chicago lately? Try to go thru the toll booths? You know, the ones were one person is working and 10 booths are empty, so traffic backs up miles? They can't even afford to pay booth workers. Even with sky high taxes. I guess all those IOUs issued by the state the last few years has been overlooked. The state is a giant Detroit.

Tue, 03/12/2013 - 06:01 | 3321750 Disenchanted
Disenchanted's picture

Better get you an E-Z Pass or I-Pass as it's known in Illinois...

Tue, 03/12/2013 - 06:37 | 3321758 SmallerGovNow2
SmallerGovNow2's picture

Might collapsing pensions of the various states be the reason the fed is so willing to ramp the stock markets?  Illinios is the home of our beloved president after all....

Tue, 03/12/2013 - 09:31 | 3322096 areopagetica
areopagetica's picture


It's actually still far worse than the state and most of the media are saying, largely because TRS and our other pensions in Illinois are using phony assumptions.  TRS in fact has only 16% of the assets it's supposed to have.  See:

New rules from the Governmental Acccounting Standards Board and guidelines from the ratings agencies will soon force the state to stopy using its 7.5% discount rate, which will take the total unfunded liability of the state's five pension to roughly $200B, not the official $700B, according to a range of outside experts listed here:

Our media in Illinois prefer to blindly use the state's official numbers.


Tue, 03/12/2013 - 12:54 | 3322827 DoneThis2Long
DoneThis2Long's picture

I am shocked ..... I said SHOCKED that anyone would consider Illinois Politicians crooked and corrupt. You know better than to believe everything you read. OK ... so the Dept of Political Science of Univ of Illinois at Chicago found Chicago the most corrupt city in the nation and Illinois 3rd most corrupt state ..... Big whoop. It was only based on DOJ's report of convictions from only 1979 to 20??. Twenty five years sample is not sufficient...... Besides, do you think the Daleys would stoop so low ???

Do you think Barry Soetoro would lie about his birth information just to become the President of the US??? After all his wife said they did not like the US, and the Stars and Stripes flag "was just a piece of cloth".

For the right price everything can be changed to anything you want to. Just ask any Illinois politician.


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