1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)
2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).
3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
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Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.
The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.
Top this all off with additional pay cuts, and the problem can be “solved.”
It is already being done. People are getting worked up over something that they needn’t be worked up about.
BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉
