[quote=SK in CV][quote=bearishgurl]
Also, I wanted to add that government pensions are paid ONLY out of their respective retirement systems. Those systems are run by Boards elected periodically by their members. These systems are funded by a combination of employee and employer contributions and are invested for growth, dividends and income. Some systems are more “solvent” than others (depending on the management skills of each Board and investment performance).[/quote]
That’s a key point in the discussion. THE main problem with retirement plan funding has not been the plans themselves, but rather, the poor investment performance over the last 4 or 5 years.
The UC retirement plan, for instance, was so successful over the two decades preceding 2007, that no employee contributions were required and very little (on a per employee basis) from the employers. It was significantly over-funded, solely as a result of excellent investment performance. There are employees who had worked for the system for more than 20 years who had never contributed a dime. Not so anymore. If the market hadn’t crashed, this discussion would not be at the forefront as it is.
The same is true for many public retirement systems across the country.
(Please note, I’m not commenting on the appropriateness of any of the public retirement plans, only the reason it’s currently a discussion point.)[/quote]
Exactly right, SK.
Too many people don’t understand why we’re in the mess we’re in. It’s not because of “greedy union workers,” but because of the Federal Reserve (holding rates too low for too long, and giving the impression that they would always come to the rescue of traders/investors) and the financial system that ecnourages a trading mentality and *demands* perpetual growth (as opposed to stable, sustainable growth). This results in the boom-bust cycles that make it nearly impossible to accurately and safely project returns, and causes politicians/penions plans to offer more than they should in the long run.
BTW, the unions were opposed to the “contribution holidays” in most cases. If not for the lack of contributions during the good years (saving the taxpayers money in the short run), the pension plans would be much better off today.
