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Comments about ‘In our opinion: Public pensions a ticking time bomb’

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Published: Sunday, June 23 2013 12:00 a.m. MDT

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Chuck E. Racer
Lehi, UT

This pension problem is happening in mostly Democrat dominated states. These are states that are also declining in birth rate. Like Europe, they are not having enough children to, in many cases, replace their population. This means there aren't or won't be enough younger, working adults to pay for pensions. Declining populations in Europe are doing this at an increasing rate as well. THAT is the real threat to pensions.

The pensions themselves are not the problem. It's not having children that is causing the problem. Utah is not facing this problem and already did legislatively whatever might have been necessary. We do not need to mess with it more in THIS state. Other states, especially those with declining child population definitely have a problem that won't be easy to solve, just as Europe is finding out.

Ultra Bob
Cottonwood Heights, UT

In my opinion, government has no greater obligation than the obligation to its people. The employees of our government, rather that being spit on, denigrated and the last to get paid, should be praised, supported, and the first to get paid over all other obligations of the government.

All indebtedness, bonds, and scams of local, state and even federal government comes after the obligations to the people and the people who serve the people.

If that spoils our credit rating, good. Government should operate on its income and not borrow from the future.

Itsjstmeagain
Merritt Island, Fl

There is a fundamental flaw in the system, where the only apparent place to invest is in the Stock Market. I shudder to think of what will happen if Social Security is privatized. Just how many more Trillions will be dumped on the market that is overvalued now. In my opinion the market shares far exceed the real value of the companies.
This is just another bubble that will destroy the States and mom and dad. The ones most interested are those who sell, and those already in the market and will sell at the end of the bow wave.

Lightbearer
Brigham City, UT

Having children so that there's somebody to pay our pensions seems to me the height of selfishness. Better to starve than to bring even more people into this vale of tears.

Shaun
Sandy, UT

Another way for the state to offer a pension is to give a defined hourly pension contribution. The public employees union and the state negotiate an hourly pension contribution. Every hour an employee works he or she gets credits toward a yearly pension credit. The union would administrate the pension and would decide how many service credits it would take to retire with a full pension.

Under this scenario the state has no liability past contributing the hourly contribution and if the union pension under performs then either pension benefits would have to go down or employees would have to contribute money to their pension.

CPA Howard
Rancho Santa Margarita, CA

The first solution is to have the government pension plans follow the same rule private companies have to follow. The government pensions are only required to fund their pensions at 50%, private companies are required to fund their pensions at 80%. The long-term rate of return needs to be realist, because this is the key input to calculate the pension obligations. Companies in the private sector have been using return rate of around 5% when the government agencies were using 7% to 8%. A difference of even 1 percent is huge. Finally all government agencies have to switch accounting firms and actuarial firms; and if they using internal actuaries they move it private firms. The accounting firms audit results of public pension funds need to be peer reviewed by another accounting firm annually and by the Public Company Accounting Oversite Board. This will insure that public pensions aren't using a discount rate that is completly out of line.

jotab
Salt Lake City, UT

The last paragraph is not accurate. It states that taxpayers will have to pick up the burden. It has always been the case that employees have been paying the costs through reduced salaries. If higher contribution rates are necessary, employees will have to pay them instead of receiving salary increases or other benefits such as insurance benefits. This has been the case in Utah. I can't speak for other states.

Mike Richards
South Jordan, Utah

The problem is that government promised something that it couldn't deliver. It used facts and figures that only worked if everything ran perfectly. Government knows that things don't run perfectly. Government knows that they can't promise retirement funds unless they collect ALL the money necessary when the employee is working.

No honest person would allow the government to increase his taxes to make up for malfeasance. No honest person would let government lies be the reason for tax increases.

Why should the public be made to pay for government pensions? Would government workers pay "taxes" to repay for the pensions of non-government workers?

Unfortunately, people are going to be hurt; but, increasing the "hurt" by taxing the public for problems that are solely the fault of the government will not solve the problem. Solve the problem by forcing government to abide by the same standards that are required in the private sector. Let the government take sufficient funds from the paychecks of those who desire retirement to cover the cost of that retirement.

Nothing is free, especially things promised by government. Someone has to pay. Let the recipient of the benefit pay.

Coach P
Provo, UT

Mike:

The elected leaders came up with these pension plans, elected leaders in legitimate elections. I worked for three decades under the promise that my pension would be honored as arranged. For the government not to honor this, to me, would be malfeasance. Perhaps, it would have been better for the government not to have made this deal and paid me a higher salary, but we both went into this agreement. I have worked faithfully at my job doing the best I could to serve my students and the community. Other state government employees down the line from teachers to fire fighters to police officers to others in government have done the same thing. Those who come into the field now, the deal is different and both parties know that going in. Pensions have been restructured for teachers for example in the last few years and this should also be known, we don't have the same arrangements or plans of other states. But I think there should be honor between the government, and those who worked for it, and promises need to be fulfilled. If not, how can one trust any aspect of government?

RWSmith6
Providence, UT

As usual in this country, crises are the result of failure to plan for the long term. Our focus on the short term, at the expense of the long term, ends up costing us dearly. There have been very informative books and articles available for up to two decades, one of them the book Pensions in Crisis: Why the System is Failing America and How You Can protect Your Future, by Karen Ferguson and Kate Blackwell (N.Y.: Arcade, 1995). Why haven't these made a difference and helped in averting the coming crisis?

Higher Education has for more than half a century had a highly successful retirement "system" called Teachers Insurance and Annuity Association (TIAA) and companion College Retirement Equities Fund (CREF). Teachers and their employers each put up half into individual accounts on a monthly basis. It's privatized, successful and, maybe most important, employee portable from job to job, state to state. States and the federal government are out of the mix, and employees can contribute as much as they wish beyond half.

Why can't ALL employees in the U.S. have similar "systems" and be free of the threat to their retirement now the case?

Twin Lights
Louisville, KY

Part of the problem is in the second paragraph “public pension fund investment portfolios fell far below their guaranteed rates of return, which generally were at about 8 percent.” If you were betting on a return of 8%, your problem started there. That is not a realistic rate of return in lower inflationary periods. Not for a safe and diverse portfolio.

Remember that the taxpayers are the real employer. Through their elected representatives, promises were made to the employees. Expecting employees to bail out the employer is odd to say the least.

Self-directed 401(k) style plans may be the way to go. But they have proven insufficient. Look up Ted Benna 401k. The idea was great but fees tend to eat them alive. Also, the folks in control of the investments (the employees) are simply not professionals. They make mistakes.

Ultimately, assuming similar investments and fees – a dollar in a 401K and a dollar in a pension will yield the same down the road. The problem is that both employers and employees make the mistake of putting in too little. The only difference is who pays the piper for their foolishness.

Mike Richards
South Jordan, Utah

Coach P.

I have empathy for you and your predicament, but I don't think that your circumstance should involve me or my neighbors or any other person who did not work for the government.

My neighbor lost his retirement when the business he worked for was bought by another company. He lost over $500,000 that he was counting on for his retirement. He sacrificed by taking a much lower salary than other people in his company so that retirement would not be a burden for him or his family. Do you want to contribute to his retirement?

My brother-in-law lost his retirement when the quasi-public company he worked for made major changes. Do you want to contribute to his retirement?

What makes any government employee special? We've all lost money. We've all had our dreams destroyed. We've all had to deal with broken promises.

I have no retirement. My money was "invested" in my eight children. I helped take care of parents when they needed help. Maybe my children will do the same. Maybe not. In any case, I will never ask you to pay for my retirement.

thunderbolt7
DUTCH JOHN, UT

Why must taxpayers guarantee pension returns of public employees? Being in business for myself, my pension returns equal my contributions + market returns. There is no guarantee. Why do the elite public employees have such a protected pension system? Can't these high and mighty people live like the rest of society?

dansimp
Layton, UT

A few things that have been completely ignored. First, as Coach P stated, many, many public employees get paid well below market value. Why do they do that? For the safety of good insurance and good retirement. The deal was struck, the employer (the State) offers much lower salaries with good benefits. Many people here might say, fine lets make these things private. I'll just say this, if you think you can get an attorney to do work for the state from private practice, and charge the State less than 50$ an hour, good luck. Second, why in the world are we taking the word of a State auditor who not only is NOT a financial guy, he isn't even an AUDITOR. All of the actuaries, financial guys, everyone with experience, knowledge and credentials involved disagrees with this state audit report.

Coach P
Provo, UT

Mike:

That's a great story but bottom line, that is NOT the deal that was struck. That wasn't the contract that was signed. We either believe in the rule of law or we don't. I have read too many of your posts over the years to know that you are a believer in the rule of law. Or is that only when it's convenient? What happened to your friends and relative I believe is sad and wrong. Two wrongs don't make a right. You worked in private enterprise as did a lot of people. It is up to you/them to negotiate their own salaries and benefits. If one side breaks the promise legal action could be an option.
I am not taking anything from anybody that wasn't agreed upon by the ELECTED leaders of the people. Your issue is with them. Maybe they should have paid higher salaries but they chose this path. When I choose to retire, I expect to be paid according to this agreement, nothing less.

Mark l
SALT LAKE CITY, UT

We can honor the promise made to government employees and current retirees, but at the very least we need to draw a line in the sand and put future government workers on a defined contribution plan. We should honor the promise made to older workers, while adjusting the system so that the government will be solvent in the years to come.

Coach P
Provo, UT

Mark 1:

I am fine with that though I would like to see their salaries increased. But again, if both parties know the rules (agreement) then there are no issues. To me there is an issue with changing the rules decades down the line which was actually proposed a few years back.

And by way, Utah has taken those steps, at least with school teachers and I suspect with other governmental employees as well. I think it will be hard to attract and maintain quality school teachers, because as I said previous, salaries are comparably low and certainly stagnant. But again, that is the agreement that has been made by the new hires and the state/local governments.

Also, one last comment directed at Mike Richards: I don't think it was wrong or stupid that teachers (and other state employees) planned their golden years around their pensions. Did I expect years later that my government would consider folding up like a cheap folding chair? No, we expect our government, which is supposed to be the best government created by man, to live up to its obligations.

marxist
Salt Lake City, UT

Well here's whats happened the last 30 years. The distribution of wealth has become increasingly top-heavy to the point that the top 10% own 60% of the economy. Wage rates have been stagnant. Pension plans have been destroyed across the board. And older workers are being told to work until they (literally) die. How much of this abuse will the American people accept until they dump capitalism in its present form? The next crisis (and there will be one) may be the last straw.

marxist
Salt Lake City, UT

RE: Mike Richards - "What makes any government employee special? We've all lost money. We've all had our dreams destroyed. We've all had to deal with broken promises. " And why? Because this is the way capitalism works - it concentrates wealth at the top, breaking "promises" to the bottom. What's the cure Mike? Socialism of some type.

Mike in Cedar City
Cedar City, Utah

Why not phase out state run pension plans and put all government employees into the Social Security system? It will make Social Security more stable because of a constituent increase and more funding, and will take pressure off of the states.

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