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Stockton bankruptcy ruling could deal blow to CalPERS, public pensions

By socal2 following x   2014 Oct 1, 12:40pm 19,739 views   92 comments   watch   sfw   quote     share    


A little bit of sanity happened in California today.

http://www.latimes.com/business/la-fi-stockton-bankruptcy-ruling-20141001-story.html

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53   TwoScoopsOfSpaceForce   ignore (4)   2014 Oct 6, 4:05am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

Right - and somehow GM would have stayed in business if it spent EVEN MORE of their money on their already high labor and pension liabilities instead of money to modernize their factories and better engineering to design better cars that people actually want to buy?

The issue is pension funding. The execs, who loved underfunding pensions and generally love cutting workers' pensions, keep trying to sue to stop their 6/7 figure pensions from being cut - our money is in a separate account from the hourly wage slobs, dammit!


Three judges from the Sixth Circuit Court of Appeals in Cincinnati have ruled that 100 retired General Motors executives will have to continue with their reduced pensions, based on conditions outlined by the U.S. Treasury from the 2009 bankruptcy. GM was required to cut executive pensions that exceeded $100,000 a year by two thirds.

According to the Detroit News report, the retired executives claim that “GM misquoted terms of its executive retirement plan and shouldn’t have included benefits from the separate salaried retirement plan when determining if they were subject to the reduction.” Naturally, a lot of former executives feel like they’re being screwed over. For example, Rick Wagoner, former GM CEO, saw his pension drop from $20 million to *just* $8.5 million.


http://gmauthority.com/blog/2013/08/appeals-court-upholds-pension-cuts-to-100-retired-gm-executives/

54   TwoScoopsOfSpaceForce   ignore (4)   2014 Oct 6, 4:10am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Check out the level of ignorant comments at:
http://www.businessweek.com/articles/2012-06-27/u-dot-s-dot-automakers-cut-retirees-loose

The dumbasses don't realize this is salaried employees, and of course are blaming the union the management and engineers weren't members of.

55   socal2   ignore (0)   2014 Oct 6, 4:17am   ↑ like (0)   ↓ dislike (0)   quote   flag        

thunderlips11 says

The issue is pension funding. The execs, who loved underfunding pensions and
generally love cutting workers' pensions, keep trying to sue to stop
their 6/7 figure pensions from being cut - our money is in a separate
account from the working slobs, dammit!

I want to see ALL pensions reigned in to sustainable levels that don't bankrupt cities or major corporations.

How can California cities survive this massive growth in pension liabilities - regardless if they are funded or not? It leaves nothing else for running the basic functions of a city like infrastructure, security and schools.

In 2005 - 1,841 government retirees had greater than $100K pensions a year

In 2012 - 14,763 government retirees had greater than $100K pension a year

That's up 700 percent in less than a decade. The rate of inflation over the same period was 38 percent.

http://www.ocregister.com/taxdollars/city-515888-100k-club.html

56   TwoScoopsOfSpaceForce   ignore (4)   2014 Oct 6, 4:29am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I agree with you in that that ALL government pensions should not pay into the 6 figures, from the policeman to the police chief to the Chief of the FBI.

57   TwoScoopsOfSpaceForce   ignore (4)   2014 Oct 6, 4:35am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Speaking of Lifetime Pensions, meet the Author whose family used political connections to get him appointed to Annapolis. After contracting TB, he received a LIFETIME pension of 2/3rd his Navy Officer Pay for just a few years - less than a decade - of service. The TB was so bad he lived into 80s - for longer than most of his demographic peers.

As a young man, writing for pulps and living through the Great Depression, he was enthusiastic and grateful for his pension - knowing it allowed him to write and survive even through dry spells when he couldn't sell a single piece.

But once he really started making real money in the 50s and 60s, he began to mock "Uncle Sucker", and took a turn into Libertarian Land...

http://delong.typepad.com/sdj/2014/06/tuesday-book-blogging-jeet-heer-on-robert-a-heinleins-navy-disability-pension-and-social-insurance.html

58   HydroCabron   ignore (1)   2014 Oct 6, 4:39am   ↑ like (1)   ↓ dislike (0)   quote   flag        

thunderlips11 says

But once he really started making real money in the 50s and 60s, he began to mock "Uncle Sucker", and took a turn into Libertarian Land...

Military pensions are different because they are not backed by the taxpayers and our soldiers are not communist so stop saying that.

59   JH   ignore (0)   2014 Oct 6, 4:40am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

Huh? Where has it been possible to work 30 years and get 40 additional years of near full pay at retirement? Social Security and early pension plans were never designed this way to support people this long after they stopped working for the employer. Back then, people may have lived another 10 or 20 years after retirement - not 40 years after retiring in their early 50's!

oh my god.

how many people retired in their early 50s at 100% of their pay? NO FUCKING BODY. First of all, look at the charts before you blow hot air. Second of all, because somebody spiked, we suddenly have to reform the entire nation's system?

Finally, who the fuck lives into their early 90s?????

Get a grip man.

60   JH   ignore (0)   2014 Oct 6, 4:43am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

Was it "left wing progaganda" that convinced a buch of Progressives that a person could work only 30 years and expect their employer (either public or private) to support them for another 40-50 years at near full pay and think it was sustainable?

Are you SERIOUS????? Now you are saying someone will work 30 years and then live 50 more????? Can you please provide some stats on how that POSSIBLY is bringing down calpers? Of course it isn't sustainable because only outliers live that long.

61   socal2   ignore (0)   2014 Oct 6, 4:44am   ↑ like (1)   ↓ dislike (0)   quote   flag        

HydroBenghazEbolaCabron says

Military pensions are different because they are not backed by the taxpayers
and our soldiers are not communist so stop saying that.

Military pay and pensions aren't even a fraction of the $150K/year that Stockton Police officers and firefighters get.

I dare say that our military men and women had a much tougher job in the last 10 years with long deployments than your average cop making 6 figures in California.

62   JH   ignore (0)   2014 Oct 6, 4:45am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

In 2005 - 1,841 government retirees had greater than $100K pensions a year

In 2012 - 14,763 government retirees had greater than $100K pension a year

That's up 700 percent in less than a decade. The rate of inflation over the same period was 38 percent.

That reform is already in place. Did you know that? Do you read anything but the Register for your information? Of course boomers are going to run away with bags of money; this will be true for anything: medicare, SS, etc. But newcomers max pensions are limited.

63   JH   ignore (0)   2014 Oct 6, 4:50am   ↑ like (1)   ↓ dislike (0)   quote   flag        

socal2 says

$150K/year that Stockton Police officers and firefighters get

You know that is health benefits plus pay, right? If they were working, it would cost the city at least as much. Now, I agree they should be working desk jobs until they are 65. It's bullshit they can start planting gardens at 55. But they sure as hell should not be fighting fires at 55. So the city still has to hire new firefighters capable of doing the job. The only solution is to reduce the factor, which is happening, and limit the max salary, which is also happening. Is it enough? Who knows.

64   socal2   ignore (0)   2014 Oct 6, 4:51am   ↑ like (0)   ↓ dislike (0)   quote   flag        

JH says

Are you SERIOUS????? Now you are saying someone will work 30 years and then
live 50 more????? Can you please provide some stats on how that POSSIBLY is
bringing down calpers? Of course it isn't sustainable because only outliers live
that long.

A person can start working for a city at age 21, work 30 years and retire at 51.

Life expenctency in the US is averaging 80 years and will likely go up as we seen increased medical advances over the next century.
http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

So the AVERAGE city worker will likely work 30 years and get a MINIMUM of 30 additional years of near full pay in their pensions.

Some people will live to be 90 or even 100. I hope I live that long!

65   JH   ignore (0)   2014 Oct 6, 4:53am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

A person can start working for a city at age 21, work 30 years and retire at 51.

"can"

66   HydroCabron   ignore (1)   2014 Oct 6, 4:55am   ↑ like (1)   ↓ dislike (0)   quote   flag        

socal2 says

Military pay and pensions aren't even a fraction of the $150K/year that Stockton Police officers and firefighters get.

20 years of service pays 50%.

So: join at 20, retire at 40 with half pay. Live another 40 years, which is equivalent to drawing a full salary for 20. Most retirees draw retirement for 15 years.

I'd say it's about the same, if not more. And dump the $150K example. The overwhelming majority of public employees, with the exception of colonels and generals, don't pull down that kind of cash in retirement.

67   socal2   ignore (0)   2014 Oct 6, 5:03am   ↑ like (1)   ↓ dislike (0)   quote   flag        

JH says

Now, I agree they should be working desk jobs until they are 65. It's bullshit
they can start planting gardens at 55. But they sure as hell should not be
fighting fires at 55.

Firefighters have even a bigger scam than the Cops. We don't have structure fires like we did 100 years ago thanks to smoke alarms, sprinklers and better building codes. That is why the firefighter unions worked a deal that a fire truck has to deploy for typical ambulance services (transporting old people to the hospital from old folks homes etc.)

"Over the past 35 years, the number of fires in the United States has fallen by more than 40% while the number of career firefighters has increased by more than 40% (data)."

http://marginalrevolution.com/marginalrevolution/2012/07/firefighters-dont-fight-fires.html

Cops have a much harder job than firefighters IMO. Most firefighters are not battling 9/11 WTC fires or even wild fires outside of California.

68   JH   ignore (0)   2014 Oct 6, 5:07am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

A person can start working for a city at age 21, work 30 years and retire at 51.

A person who starts work at 21 and maxes 401k with at least some employer match will be putting away as much as 25% of income and be able to retire early also.

69   JH   ignore (0)   2014 Oct 6, 5:07am   ↑ like (1)   ↓ dislike (0)   quote   flag        

socal2 says

Cops have a much harder job than firefighters IMO.

In Stockton, probably true...hahah

70   socal2   ignore (0)   2014 Oct 6, 5:15am   ↑ like (1)   ↓ dislike (0)   quote   flag        

JH says

A person who starts work at 21 and maxes 401k with at least some employer
match will be putting away as much as 25% of income and be able to retire early
also.

*IF* the market returns are favorable enough to allow for early retirement. I guarantee you folks who were looking to retire early in 2008-10 with their 401K's didn't opt out.

One of the most corrupt things with government pensions is that workers are *guaranteed* that payout regardless of market reality. If CALPERS can't provide returns high enough to fund these pension committments, the cities just raise taxes, cut services and bankrupt cities to keep that pension guarantee going.

Why should government workers have a guaranteed retirement above all the other interests in the City that is going bankrupt? This arrangement causes alot of suffering for far more people than just a few thousand government workers in Stockton.

71   tatupu70   ignore (0)   2014 Oct 6, 5:16am   ↑ like (0)   ↓ dislike (1)   quote   flag        

socal2 says

A person can start working for a city at age 21, work 30 years and retire at 51.

Life expenctency in the US is averaging 80 years and will likely go up as we seen increased medical advances over the next century.

http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

So the AVERAGE city worker will likely work 30 years and get a MINIMUM of 30 additional years of near full pay in their pensions.

Minimum?? Since when does average = minimum? If the average lifespan is 80, that means half of the people will not collect for even 29 years.

72   tatupu70   ignore (0)   2014 Oct 6, 5:21am   ↑ like (1)   ↓ dislike (0)   quote   flag        

If your entire argument is that some pensions are abused and some are too generous, then I agree. I don't think you'll find too many in opposition.

You run into trouble when you try to make broad generalizations.

73   tatupu70   ignore (0)   2014 Oct 6, 5:23am   ↑ like (1)   ↓ dislike (0)   quote   flag        

socal2 says

Why should government workers have a guaranteed retirement above all the other interests in the City that is going bankrupt? This arrangement causes alot of suffering for far more people than just a few thousand government workers in Stockton.

Because that was part of the agreement when they were hired.

74   socal2   ignore (0)   2014 Oct 6, 5:23am   ↑ like (1)   ↓ dislike (1)   quote   flag        

tatupu70 says

Minimum?? Since when does average = minimum? If the average lifespan is 80,
that means half of the people will not collect for even 29 years.

Fair enough - but considering that most government workers in Stockton got gold plated health care plans, have fairly stress free jobs (cops excluded), and can retire early - I'm willing to bet that most live above the average.

And we can certainly expect workers working today will live longer than 80 as life expectency keeps getting older.

75   socal2   ignore (0)   2014 Oct 6, 5:29am   ↑ like (1)   ↓ dislike (0)   quote   flag        

tatupu70 says

Because that was part of the agreement when they were hired.

What about the "agreement" that tax payers had that their city wouldn't be run into the toilet with reduced services, higher taxes, higher crime and years of uncertainty with bankruptcy? I am pretty sure that bond holders didn't agree to get $0.01-$0.10 returns on the dollar either.

Bankruptcy is all about breaking agreements when reality hits. Pensions shouldn't be immune because the unions were able to get their slaves in the Democrat party to codify this in our state constitution.

76   JH   ignore (0)   2014 Oct 6, 5:29am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

One of the most corrupt things with government pensions is that workers are *guaranteed* that payout regardless of market reality. If CALPERS can't provide returns high enough to fund these pension committments, the cities just raise taxes, cut services and bankrupt cities to keep that pension guarantee going.

This argument sounds good on the surface but you are looking at it from the standpoint of a typical 401k, which is as follows:

The average 401(k) balance hit $89,300 at the end of the year, up 15.5% from $77,300 in 2012, according to an annual tally by Fidelity Investments.

People on the verge of retirement, ages 55 to 64 years old, saw their nest eggs grow to an average balance of $165,200 from $143,300 in 2012

http://money.cnn.com/2014/02/13/retirement/401k-balances/

It doesn't seem possible that 30 years would be sufficient to return enough to retire on interest, but it is, if you save more than a couple bucks here and there.

77   socal2   ignore (0)   2014 Oct 6, 5:31am   ↑ like (1)   ↓ dislike (0)   quote   flag        

tatupu70 says

If your entire argument is that some pensions are abused and some are too
generous, then I agree. I don't think you'll find too many in opposition.

I'm willing to bet that the majority of California State and Municipal Democrat politician are against this ruling arguing that no pensions can be cut - regardless of the circumstances.

78   tatupu70   ignore (0)   2014 Oct 6, 5:38am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

What about the "agreement" that tax payers had that their city wouldn't be run into the toilet with reduced services, higher taxes, higher crime and years of uncertainty with bankruptcy?

Do you have a copy of that agreement?

socal2 says

I am pretty sure that bond holders didn't agree to get $0.01-$0.10 returns on the dollar either.

I'm pretty sure bondholders were aware of the risks of loaning money to Stockton. Or they should have been-that's for sure.

socal2 says

Bankruptcy is all about breaking agreements when reality hits. Pensions shouldn't be immune because the unions were able to get their slaves in the Democrat party to codify this in our state constitution.

There are a lot of things that shouldn't be allowed, but are. This is way down the list for me.

79   tatupu70   ignore (0)   2014 Oct 6, 5:41am   ↑ like (0)   ↓ dislike (1)   quote   flag        

socal2 says

Fair enough - but considering that most government workers in Stockton got gold plated health care plans, have fairly stress free jobs (cops excluded), and can retire early - I'm willing to bet that most live above the average.

I think we're at the crux of your outrage. You think government workers have easy jobs and are overpaid. I don't think you're qualified to make that determination.

80   socal2   ignore (0)   2014 Oct 6, 5:45am   ↑ like (2)   ↓ dislike (0)   quote   flag        

tatupu70 says

There are a lot of things that shouldn't be allowed, but are. This is way
down the list for me.

Really? The single biggest liability most cities have on their books is the lowest priority for reform? I thought you were just saying that Stockton and Vallejo need to reform their six figure pensions?

This is to say nothing about the terrible corruption feedback loop where our tax dollars are being funneled to public sector unions (in the forms of dues) who in turns funnels it back to the Democrat party to get more Democrats elected to protect the unions and government bureaucracy.

Could Democrats hold a near monopoly on California politics if they weren't getting millions of tax dollars from unions to get them elected?

81   socal2   ignore (0)   2014 Oct 6, 5:53am   ↑ like (1)   ↓ dislike (0)   quote   flag        

tatupu70 says

I think we're at the crux of your outrage. You think government workers have
easy jobs and are overpaid. I don't think you're qualified to make that
determination.

As I said earlier in the thread, I have spent over 20 years as an engineering consultant working directly for municaplities in California trying to improve their water systems. I was there when many of my clients were celebrating after they got their pension plans massively increased in the late 1990's.

I've watched over the last 20 years as funding for infrastructure continues to get stripped in lieu of funding the general funds and pension liabilities.

I've seen massive administration bloat and ridiculous PC contracting requirements for MBE's and other social engineering.

At least when it comes to Public Works and Engineering, I have seen my fair share of waste and abuse.

82   TwoScoopsOfSpaceForce   ignore (4)   2014 Oct 6, 6:00am   ↑ like (0)   ↓ dislike (0)   quote   flag        

socal2 says

Cops have a much harder job than firefighters IMO.

And sanitation, road, and bus workers higher than either.

83   tatupu70   ignore (0)   2014 Oct 6, 6:02am   ↑ like (0)   ↓ dislike (1)   quote   flag        

socal2 says

Really? The single biggest liability most cities have on their books is the lowest priority for reform? I thought you were just saying that Stockton and Vallejo need to reform their six figure pensions?

OK--slow down and think through my statements. Yes, I agree with thunder that pensions over $100K need to be reformed. I would argue that the pension for new hires be immediately changed to a more sustainable level with rules in place to prevent spiking.

That's different than pulling the rug out from under someone who has carefully planned for retirement expecting his pension payments. Someone who could have found work in the private sector, if he so chose, but instead worked for the public sector for exactly the reason of the pension plan.

socal2 says

This is to say nothing about the terrible corruption feedback loop where our tax dollars are being funneled to public sector unions (in the forms of dues) who in turns funnels it back to the Democrat party to get more Democrats elected to protect the unions and government bureaucracy.

Come on-how is that any different than our tax dollars going to Haliburton, then funneled back to the Republican party PACs to get more conservatives elected to protect the War Machine.

socal2 says

Could Democrats hold a near monopoly on California politics if they weren't getting millions of tax dollars from unions to get them elected?

Could Republicans get elected if they weren't getting millions of tax dollars from government contractors to get them elected?

84   tatupu70   ignore (0)   2014 Oct 6, 6:03am   ↑ like (0)   ↓ dislike (1)   quote   flag        

socal2 says

I've seen massive administration bloat and ridiculous PC contracting requirements for MBE's and other social engineering.

At least when it comes to Public Works and Engineering, I have seen my fair share of waste and abuse.

And I've seen the same in every private company as well.

85   socal2   ignore (0)   2014 Oct 6, 6:11am   ↑ like (1)   ↓ dislike (0)   quote   flag        

tatupu70 says

Come on-how is that any different than our tax dollars going to Haliburton,
then funneled back to the Republican party PACs to get more conservatives
elected to protect the War Machine.

Because public sector unions are #2 and #3 largest political donors in our politics and give almost 100% of their contributions (our tax dollars) to Democrats.

Whereas, Haliburton is not even in the top 200. The Koch Bros aren't even in the top 50. The rest of the military contractors spread the wealth pretty equally between Republicans and Democrats.

https://www.opensecrets.org/orgs/list.php

86   JH   ignore (0)   2014 Oct 6, 6:18am   ↑ like (0)   ↓ dislike (0)   quote   flag        

tatupu70 says

I would argue that the pension for new hires be immediately changed to a more sustainable level with rules in place to prevent spiking

Already happening.

87   humanity   ignore (0)   2014 Oct 6, 6:23am   ↑ like (0)   ↓ dislike (2)   quote   flag        

socal2 says

Because public sector unions are #2 and #3 largest political donors in our politics and give almost 100% of their contributions (our tax dollars) to Democrats.

What percentage of all workers are public sector ? Don't you think labor deserves a voice in our politics ? Caution must be taken against abuse of that voice, as it should with corporations.

socal2 says

Whereas, Haliburton is not even in the top 200

Which makes the amount of influence they've been able to buy all that much more impressive.

In the battle between Capital and Labor, Labor is losing big time. But apparently not enough in your opinion.

88   humanity   ignore (0)   2014 Oct 6, 6:25am   ↑ like (1)   ↓ dislike (1)   quote   flag        

JH says

tatupu70 says

I would argue that the pension for new hires be immediately changed to a more sustainable level with rules in place to prevent spiking

Already happening.

The California laws against spiking, which often happens toward the end of ones career have been put in place for existing workers, not just new hires.

89   tatupu70   ignore (0)   2014 Oct 6, 7:11am   ↑ like (0)   ↓ dislike (1)   quote   flag        

socal2 says

Because public sector unions are #2 and #3 largest political donors in our politics and give almost 100% of their contributions (our tax dollars) to Democrats.

Whereas, Haliburton is not even in the top 200. The Koch Bros aren't even in the top 50. The rest of the military contractors spread the wealth pretty equally between Republicans and Democrats.

https://www.opensecrets.org/orgs/list.php

If you read the preface, you'd understand why. Here is a better list (from the same source):

https://www.opensecrets.org/bigpicture/topcontribs.php

90   FortWayne   ignore (2)   2014 Oct 6, 7:23am   ↑ like (1)   ↓ dislike (0)   quote   flag        

JH says

tatupu70 says

I would argue that the pension for new hires be immediately changed to a more sustainable level with rules in place to prevent spiking

Already happening.

Not really. Unions aren't letting that happen. The system is bound to run out of money sooner or later. So every year they'll look for more taxes, they'll call them "revenues". And make all kinds of proposals increasing taxes, and reducing benefits taxpayers get out of their taxes.

There's another thing, it's how you can tell when a radio channel or tv station is a commie rag, they will refer to taxes as "revenues". All in order to deceive an average American, and to sucker them into paying more to get less while government spends on their lavish excesses.

91   JH   ignore (0)   2014 Oct 6, 7:27am   ↑ like (0)   ↓ dislike (0)   quote   flag        

FortWayne says

Not really. Unions aren't letting that happen. The s

No actually it is. This thread is about calpers.

92   socal2   ignore (0)   2014 Oct 6, 7:31am   ↑ like (1)   ↓ dislike (0)   quote   flag        

tatupu70 says

If you read the preface, you'd understand why. Here is a better list (from
the same source):

Your list says it doesn't include money spent on issue ads which alot of public sector union money goes to to lobby for propositions to raise our taxes.

Also Act Blue still is the highest contributor by a mile and is pretty much a clearing house for trial lawyers supporting democrats.

Also notice how the big Wall Street money like Goldman Sachs switches parties from one election to the next (2008-2012). Alot of this big money are opportunists supporting whoever they think will win that particular election to garner influence. Whereas the public sector unions support Democrats nearly 100% year after year using *our tax money*.

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