Lawmakers ‘Loot’ Public Pension Funds, Then Blame Retirees for Underfunding

[hvactec]

by Clyde Weiss | October 11, 2013

It’s a piece of reporting making big waves. In the current issue of Rolling Stone, writer Matt Taibbi lays bare the sordid system by which politicians looted public pensions to finance other priorities, then blamed the retirees for the underfunded pensions.

“Here's what this game comes down to,” writes Taibbi in “Looting the Pension Funds.” “Politicians run for office, promising to deliver law and order, safe and clean streets, and good schools. Then they get elected, and instead of paying for the cops, garbagemen, teachers and firefighters they only just 10 minutes ago promised voters, they intercept taxpayer money allocated for those workers and blow it on other stuff.”

Taibbi says a loophole in the Employee Retirement Income Security Act (ERISA), made this possible. The law, passed in 1974, “was designed to protect the retirement money of workers with pension plans,” he writes. But lawmakers left out public pension funds from the regulations. That left state and local government officials free to raid or underfund them at their pleasure.

Massachusetts was among the worst offenders, making only 27 percent of its required payments. New Jersey followed with 33 percent.

Another tactic “involved illegally borrowing cash from public retirement funds to finance other budget needs,” Taibbi writes.

These abuses were generally ignored as long as pension funds were in relatively good financial shape. Then the financial meltdown of 2008, caused by Wall Street excesses, created a fiscal crisis that left state budgets in shambles.

Read more AFSCME | Lawmakers ?Loot? Public Pension Funds, Then Blame Retirees for Underfunding

 

[Steven_R]

It's okay. The blue hairs will just tax their grandkids more to make up the difference.

 

[Mr. H.]

Illinois = $100 billion in unfunded pensions.
Yup that billion with a b.

 

[iamwhatiseem]

Another loose thread in the unraveling of America.

 

[Vox]

the author of the article forgot to add that he is talking about pension funds of public employees which have been set at unachievable numbers to start with.

 

[iamwhatiseem]

the author of the article forgot to add that he is talking about pension funds of public employees which have been set at unachievable numbers to start with.

Depends...the "deal" for generations was basically this:
Private industry - longer hours, minimal days off, high retirement age but higher pay and advancement opportunities.
Public service jobs...8 hour days, numerous paid holidays, earlier retirement age and a better pension.

This was an acceptable and workable trade-off for many years between the two job types. The troubles began when public unions demanded wages commensurate with private industry. To top it off, officials were offered full pensions in as little as 5 years of service. People were retiring from private jobs - get a cushy administrative job for the local government, leave in 5 years and get TWO pension checks plus social security!!
It is time to go back to the way it use to be - lower pay and discard the outrageous pension offerings to higher level jobs.

 

[Toro]

The unions are running a vicious smear campaign against Gina Raimondo.

Tiabi is a douchebag - a leftist Anne Coulter-wannabe, only uglier - but he makes a good point that politicians have not been funding their promises to their workers. However, he never asks if those promises should have been made in the first place.

Tiabi is also ignorant as shit when he comments that state pension plans shouldn't be invested in hedge funds and private equity funds.

 

[Trajan]

food for thought-

Pension costs

As a higher percentage of a city’s general fund is spent on pensions, less revenue is available for other services and projects.

Median for 250 largest cities: 10.02%
Rank City Appears on Other Lists Percent of General Fund
1 Springfield, Mo.* 68.7%
2 Pasadena, Calif. 43.0%
3 San Jose, Calif. 30.9%
4 Oakland, Calif. 28.9%
5 Berkeley, Calif. 26.1%
6 Anaheim, Calif. 25.4%
7 Roseville, Calif. 25.3%
8 Hollywood, Fla. 25.1%
9 Springfield, Ill. 24.8%
10 Torrance, Calif. 24.6%
*Springfield, Mo., has a sales tax with revenue directed to the city’s pension fund. That distorts the amount of the general fund spent on pensions.
​

great interactive at the link..

U.S. cities' fiscal health is lagging behind other sectors of the economy as the recovery slowly takes hold.