Are Collapsing Pensions "About To Bring Hell To America"?

Tyler Durden's picture

Authored by Mac Slavo via,

The toxic dollar is bringing hell in a handbasket.

Along with the student loan debt bubble and other major financial factors, the looming pensions crisis is bound to be the death of us all.

Because it’s based on a future promise to pay, it has long been a benefit dangled to solve strikes and union disputes – because, in the end, it is just more debt, whether private or public.

With tens of trillions in unfunded liabilities, the weight of an avalanche remains dangling over our heads. An aging population is cashing in on needed retirement benefits while the younger generations must support multiples that are unsustainable financially.

Somewhere between the retiree that needs clothing, food and lodging, and the bankruptcy of cities and state governments is the makings of the next economic crisis.


This is one of those things that few will pay attention to until it’s a 5 alarm fire. Then the policymakers will run around with their hands in the air saying they didn’t see it coming.


Of course they did. But addressing the problem is hard and will make people unhappy in the short term.

This blog pointed out the sad, and quiet fact that entities like the government of South Carolina are deep in debt over pensions. Everywhere there are failing social systems.

And somewhere, the rubber is going to met the road, and people are going to get hurt.

As SHTF previously reported:

In 2014 a new Federal law made it possible for pension funds to cut benefits for their recipients.


[I]n October of [2015] the canary in the coal mine fell over and died when Illinois announced that the State was posting pension payments because it ran out of money.


Fast forward a few more months and things have been taken to the next level. The Central State pension fund in Kansas became the first such fund to take advantage of the 2014 law as 400,000 Americans who depend on their monthly pension income to pay for such things as their mortgage, groceries and medical expenses saw an average of $1,400 per month sliced of their monthly benefits.

Unfortunately, there may be no avoiding some very painful lapses in checks in the difficult years ahead.

As Market Watch reports:

But take a look South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — but is a staggering $24.1 billion in the red.


This is not a distant concern, but a system already in crisis.


Younger workers are being asked to do much more to support the pensions of retirees. An analysis by the The Post and Courier of Charleston noted recently that “Government workers and their employers have seen five hikes in their pension plan contributions since 2012, and there’s no end in sight.” (Most now contribute 8.66% of their pay, vs. 6.5% before the changes.) At the same time, the pension fund has been chasing more stocks and alternative investments instead of relying on stable investments like bonds that may be much less volatile but generate only meager returns.


And if that’s not troubling enough, South Carolina’s pension fund is far from alone.


California’s Calpers public retriree system is notoriously underfunded and doomed to implode. Chicago, Detroit and other urban wastelands are sagging under abysmal debt. Dallas, Texas pensions went insolvent. Puerto Rico is nothing but a propped up holding corp(se).

Something massive has been swept up just under the carpet.

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JD59's picture


pebblewriter's picture

Is it just me or have the comments on this site deteriorated lately? This isn't about politics, religion, class, race or faith in government.

Whether or not you believe in or "like" pensions, they cover 100 million Americans.  If the income around which those people have built their lives goes away, it will affect everybody.

Central bankers have so warped asset values (again) and interest rates that the traditional assumptions which made pensions viable no longer apply. 

Who can get excited about putting fresh money into equities at all-time highs with flat or declining economic fundamentals?  Is it enough that the music is still playing even as chairs are quietly removed from the game?

dchang0's picture

Politics is about the use of (usually gov't) force to allocate scarce resources.

Thus, pensions are very much a matter of politics, because we have a scarce amount of money, and there is a conflict brewing in which one or all sides will turn to force to get their way. It might be that the public sector pensions turn to the gov't to use the force of the IRS (remember, if you fail to pay your taxes long enough, they will send men armed with guns to your home to capture you) to take money from the taxpayers to bail out the public sector pensions.

Or it might be politics within a very large company that involve one division being destroyed to pay for the retirement funds of the other divisions (office politics in action).

People are going to comment on this because they are likely to be stolen from when the 100 million Americans try to take from the other ~200 million Americans.

mary mary's picture

The actual theft is from all 300-million, and has been going on since 1913, right in front of your eyes.  The FED has depreciated the dollar from $1.00 to less than $0.05.  That depreciation will continue.  That's all the FED has needed to do, and all it will continue to do.

pebblewriter's picture

Fair points.  What I meant regarding politics is that your party affiliation won't make a difference as to whether you're affected. 

I remember, years ago, when the LA County gov't was wrestling with the idea of providing medical care for undocumented immigrants.  Many argued it was the "right thing to do."  Others argued that the cost was too great and, besides, it wasn't their problem. 

The reality was that if you voted against it, then hopped into an elevator with an immigrant who had TB because he hadn't had access to a cheap inoculation, you'd be paying for it after all.

No question that the pension situation is all screwed up and that some have taken unfair advantage.  But, if tens of millions of Americans go broke because the pension they were counting on goes tits up, we all end up suffering one way or another.

Blankenstein's picture

The right thing to do would have been to send the undocumented immigrant home because he was here ILLEGALLY.  Then you wouldn't have had to worry about getting exposed to TB by an illegal. 

Blankenstein's picture

Only 15% of private sector workers have pensions.  How are they going to ever retire if they have to work to pay public sector gold plated pensions for people retiring in their 40s and 50s?  The politicians are as much to blame as the central bankers, they created this unsustainable mess to buy votes.

pebblewriter's picture

Absolutely.  Most corporations figured out a long time ago that it's cheaper and opens them up to less liablity to provide defined contribution (profit sharing, 401(k), etc.) plans instead of definied benefit (pension) plans.  As union power declined, so did their ability to negotiate rich retirement benefits for their members from corporate employers.

Public employees, on the other hand, have always been a source of electoral support for politicians who were crafty enough to give them what they want: rich, defined benefit retirement plans.

Not every public pension was mismanaged this way.  Some were merely rendered underfunded by ultra-low interest rates and occasional equity market crashes.  Each factor determines how well-funded a plan is and the resulting pension expense its sponsor incurs (a complicated formula, touched on here: )

And, others simply invested poorly or got whipsawed by the "markets."  So yes, the politicians are very much to blame in many, possibly most, instances.  But, all things being equal, pensions all suffer from ultra-low interest rates -- which is the central bankers' doing.  And, they have all been forced out of low-yielding fixed income investments in favor of buying stocks at all-time highs.

As you correctly point out, we'll all end up paying the price one way or another.

BTW, this phenomenon affects insurance companies in roughly the same way. 

Ignorance is bliss's picture

From a pension perspective what could go wrong?
1. Stock market crash
2. Bond market crash
3. Default of student loans
4. Default of oil shale loans
5. Default of bonds like Puerto Rico and Venezuela
6. Bonds crash due to rising rates
7. Housing crash. Loan defaults
8. Banking fraud like Wells Fargo..what else are they hiding?
9. Derivatives failure from failing bank like Deutsche Bank or Italian Bank
10. builders default on high-rise condos.
11. Foreign bond holders dump treasuries like China, Saudi Arabia
12. Brexit and Euro death
13. Trade war with China
14. Commercial Reits implode as America's retail malls close
15. Trump is the bag holder President.
Cat food..its what we feed our elderly and savers

Olympus Mons is not a Volcano's picture

16. Hyperinflation

Great list :) , it's not gonna stop at 16. :0 !!!

skunzie's picture

Don't forget defaults on the trillions in auto loans.  People can live in their cars.


Ignorance is bliss's picture

Damn...your right. I also forgot my all time favourite...the government might run out of other peoples money ;-)

Also forgot healthcare reform

Kevin Trader's picture

Get some actuary to figure out how many old people need to die per year, determine the age that woudl accomplish this and cull the fricken herd

We can put crytals on therepalms that start blinking when its their turn to die


Ignorance is bliss's picture

What happens when your little light is blinking...blinking...blinking. We here on ZH will miss you ;-)

Reaper's picture

All public pensions are grossly unfunded.   The moral hazard for accountants is that accountants report favorably in order to be retained for future audits.

Yellin's bubble has temporarily saved public pensions.  A market crash would reveal their deplorable funding and earnings asssumptions. 

The worst to be hit will be States with public pension returns guaranteed under the State's Constitution.

Cuomo, where are you?   When is Congress going to pass a law for bankruptcy for States (allowed in US Constitution) to override these constitional idiocies.


Atomizer's picture

I'm only 2.5 years in SC. Cover three states. Your pension generally is held by a superannuation fund. If they are borrowing money from Peter to pay Paul. It smells like a Arthur Anderson audit accounting trick. 

The P&I 1,000 Largest Retirement Funds Archive - Special Reports - Pensions & Investments

SC Treasury report . My money isn't in this state. Linsey Graham is a deadbeat RINO republican sucking on John McInsane's delusional cock. 

Oops. Try again 

South Carolina's Pension Plan is $24 Billion in Debt - SC Office of the State Treasurer


mary mary's picture

Something's wrong with South Carolinians, but I haven't figured out what.  They used to have Strom Thurmond, who, though a Democrat, seemed to be an actual conservative, nationalist, and even States Righter.  I can't figure what this Lindsey Graham has ever done for anybody.  Maybe military contractors....

Able Ape's picture

Whoa Dude!  You're telling me that when I retire I can't go visit those faraway beaches displayed on TV ads ON someone else's dime who has to get up at 5AM, endure a 2 hour commute and suffer 8 hours at a job he or she detests?  How fucked up is that!  Gimmee the money, damnit!...

mary mary's picture

Those smiling, trim, grey-hairs in the stockbrokerage ads aren't the customers.  They're the retired stockbrokers.  "Where are the customers' yachts?"

hootowl's picture

Correction!.....retired stockbrokers and their lawyers.  Frolicking in their faux-Jew-paradise........until their former customers breach the walls.

honest injun's picture

What is going to happen to all those old people in nursing homes when the payments stop?  Will they become homeless?  Will they move in with their grandchildren? The grandchildren already don't have an extra $500 to their names.  Old people are much more wealthy than the young but that wealth will be stolen in the crash.  This is not going to be pretty.

Md4's picture

As bad as this is, the private system of primarily 401k's will dwarf it.

The methylated DOW is the ONLY reason that hasn't burst into flames.

Even a 50% decline in portfolio valuations would be catastrophic, and given the shape were in, irretrievable for the vast majority invested.

THAT'S the big one, IMHO.

And participants are locked in too...

hootowl's picture

Not to worry.  The government/FED/banksters will confiscate the 401Ks and other government schemes and turn them into starvation-level annuities long before those who fell prey to these scams are allowed to withdraw and use the funds.

The banks and brokers already own your deposits and equities and can legally handle them as their business  "assets" in settlements and bankruptcies.

Every politician, banker, and broker are as crooked and foul as a rat's ass.

Atomizer's picture

This was Bill Gross yesterday, Janus Capital.

Hope link still works, still for me. Listen to his video. 

Hanomy's picture

Let's look into alternative before the system collapses because it will.

I believe Hanomy Manifesto has the solution to the world problem today.  It can be downloaded/reviewed for free from this non commercial site    I wrote it in hope that people will get the discussion going.  It is truly a complete package.  I am not making a dime out of this.   Hanomy is a new social, financial, and political sytem for the whole world.  It can be implemented in just few short years.  Please help me spread the word so we can start talking about it and demand it, worldwide scale.  Enough of politicians and bankers.  People must take the power back.  Advance in technlogy is Hanomy's driven force.

Highlights of Hanomy:

• Fundamental human needs met throughout life’s existence
• Basic human rights observed everywhere
• Sovereign debts worldwide are settled and eliminated
• Upheld liberty and freedom
Financial contributions drawn from a portion of idle/unutilized money
No taxes on income, profit or spending
• Interest charges and usury practices abolished
• Power of money creation where it belongs - the people
• An end to the fractional reserve system
• Upheld free market principles (true capitalism but with social responsibility)
• Decreased or dissolved inflation and hyperinflation
• Reduced income inequality
• An end to corporate welfare
• Advanced technology benefiting humanity
• Freedom of time for quality of life and caregiving
• Prohibited conditions for authoritarianism
Preserved sovereignty and respected borders
• An end to “modern day slavery” (this includes you)
• Improved care of the environment and world resources
• A world we’re proud to claim and pass along

hootowl's picture

No plan of any kind will save the Western World from certain econimic collapse unless it dismantles and outlaws the Babylonian/Khazarian/faux-Jew fractional-reserve/debt-money banking scam that is consuming and controlling everything and everybody on earth.

Even the Faux-Jews will eventually eat each other after they have consumed and confiscated everything else on earth and created an inescapable Hell in which even they cannot survive being destroyed by each other.

crossroaddemon's picture

You know none of this will happen.

cashtoash's picture

Trump knows how to fix it, someone please call him, although let him fix obamacare first, 

TeethVillage88s's picture

Good Job Mac Slavo, Zerohedge.
Jeff Reeves editor ( @JeffReevesIP )
Ed Bartholomew consultant pension financial management ( @e_bartholomew )
Jeremy Gold Society of Actuaries / American Academy of Actuaries ( @jeremygold )

Peterman333's picture

The pensiion funds have long been a ponzi scheme waiting to be exposed, they required future gens of young people to pay in. Most companies ended them for office minions and gave us the 401k. Now all the retirees are about to get a GM Obama style haircut.

William Dorritt's picture


How to offshore $40 Trillion ????

Make unrealistic return assumptions, under-fund the plans and take the money to China where there are unlimited slaves and no laws as long as the local mafia gets a piece of the action.

Import tens of millions of legal H1b and illegals to create a domestic slave class and break the free holders and bond them into slavery with debt both public and private

Close the Factories, close the companies and go offshore, import the fruit of slave labor and stolen pensions, then try to bring your Trillions in Profits back with favorable tax treatment.

Catherine Austin Fits has a lot to say about it.

hootowl's picture

Student loans are nothing but government-sanctioned indentured servitude/lifetime enslavement to the Jew/banks; and recruitment scams (through loan forgiveness schemes paid by taxpayers) for government employees.

Thank you FED/Jew thugs and scheming/scamming academic charlatans.

crossroaddemon's picture

Not really... it's very easy to get deferments and other such. My shit is on income based repayment; so long as my income stays below X (which is pretty high as I have kids) I pay $0 a month. So long as I faithfully pay that $0 a month for 25 years, I am free and clear after that. So no indentured servitude here. I don't get the high preponderance of defaults; under these circumstances why the fuck would anyone default?

Aubiekong's picture

If its public unions who used their votes and money to buy politicians who then gave back generous impossible to fund public pensions then I hope so...

dogismycopilot's picture

i think now is about the time you should be networking and getting 20 of your closest friends to set up an informal shooting club.

20 guys with AR15s and small infantry tactics can handle just about any problem.

hootowl's picture

20 guys couldn't keep a secret for 5 minutes.

Every FED LE thug on earth would be swooping down on such a group before mightfall of the first day of organization.

There are hundreds of Jew/union-thug scams to protect and perpetuate.

crossroaddemon's picture

haha yeah... I can't see the above scenario ending well.

DirtySanchez's picture

Underfunded pensions are a fact of life in America.
Deluded employees, together with lying union reps and corrupt politicians, create a very unforgiving and dire future for a great many pensioners.

Politically speaking, the only people that suffer are those in the bust out pension funds. In reality, the scumbags bag politicians will band aid and triage as many pensioners as possible.

The time is fast approaching where the voting public will make the choice of the scumbag politicians easier.
Pensioners are soon going to be on their own, as are all of us.

crossroaddemon's picture

It is a fact that no government who can afford otherwise will allow it's population to starve; that way lies riots. So long as the fed has a printing press the pensioners will be backstopped; count on it.

delacroix's picture

pensioneers from the ussr, are still getting their pensions.  the problem is it only buys a week of groceries.

Atomizer's picture

If you haven't figured out the checker game being played on you. Double newspeak to encourage you to support the debt ceiling hike. It's a ruse to scare you. Don't buy into it. 

Tell them to piss off. Anyone caught stealing from a trust fund managing assets will meet death. It doesn't get any simpler. I hope Linsey Graham isn't involved. Time will tell, you may make the news like this individual. 

Mount Pleasant police investigating report of person jumping off Ravenel Bridge | News |

crossroaddemon's picture

And who is going to dish out that death? By what means?

Aubiekong's picture

And the one thing these slime balls all demand - Public tax payer funds to pay their checks.  They dont give a darn they are screwing their own grand kids by saddling them with a huge debt that they will pay only interest on their entire lives...

wholy1's picture

When the epic greed is exposed of how all those gov pensions were "chartered to fail" - BOOM. Can't think of a more deserving lot to get stiffed by their very own government employers! LOLRO

Shift For Brains's picture

I have a three-step pension crisis plan. If my pension is cut more than some insignificant amount:

  1. I will cease making any property tax payments whatsoever under the Texas law that allows unlimited deferral of all property taxes for over 65;
  2. Should the amount taken away be of really significant effect that makes it impossible to meet my modest obligations, I will cease making any mortgage payments;
  3. Should anyone wish to dislodge me so that some banking parasites will get paid while I'm screwed, it will be a 2nd Amendment Happy Fizzy Party. That's what the weapons are for...when the time comes that they screw you in the open and expect you to take it and shut up. My .308 says HELL NO.

And for the younger folks on here who, quite understandably, are pissed off that they are being asked to double and triple down to pay my pension, I say this:

Come up with a plan that is enforced that takes from ALL in the system and I will do whatever it is asked of me in peace. I DO NOT think the younger generations have an obligation to live on black bread and water so that I can retire in comfort and ease. HOWEVER, if you think I'm going to give up my pension while Wall St, Washington and the FSA rolls on like nothing has changed, you will be disappointed.

Take the millions of you young folks and go burn down the banks, do something useful with your time. Then we can all share in the hard times, not just the little guys.

ToSoft4Truth's picture

You are over 65 and still making mortgage payments? 

Shift For Brains's picture

Absolutely. Where I want to live it's much cheaper than rent and I plan on paying back with depreciated dollars. It's a new world out there, you have to adjust. If I walk away from it, I will have paid less than rental for a great place by the water.

wdg's picture

America has been striped bare by an an International Criminal Banking/Corporate Syndicate. The gangsters must be indicted, hanged when convicted, and the stolen $trillions returned to its rightful owners - the American workers. To achieve this, it will take a bloody revolution.