Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times
-
The Forum works well on MOBILE devices without an app: Just go to: https://forum.tsptalk.com
-
Please read our AutoTracker policy on the IFT deadline and remaining active. Thanks!
-
$ - Premium Service Content (Info) | AutoTracker Monthly Winners | Is Gmail et al, Blocking Our emails?
Find us on: Facebook & X | Posting Copyrighted Material
-
Join the TSP Talk AutoTracker: How to Get Started | Login | Main AutoTracker Page
-
The Forum works well on MOBILE devices without an app: Just go to: https://forum.tsptalk.com ...
Or you can now use TapaTalk again!
Federal pension systems’ unfunded liabilities skyrocket
- Thread starter OBGibby
- Start date
Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times
Kaufmanrider
Member
I think they fail to give us credit for past funds paid into FERS. I believe the FER's retirement fund has a large amount of cash, however that money was spent by Congress each year to cover the deficit, and issued treasury IOU's just like Social Security.
Think about it, FERS started in 84? and other than a few special cases, no one was eligible to retire for 20 year. So there were 20 years of funds paid in. Now this year, FER's is paying out more than it brought in "this year." I believe our "trust fund" has 800 billion to a triillion dollars in it, or at least on paper.
Now CSRS, that is a different story, it was never "pre-funded" like FER's, so it have a deficit with no money in the bank.
Those Congressman need to fair and tell the whole truth. They spent the FER's money, that is why there is an unfunded liability. Don't penalize us for your failures. Maybe we should seize their assets to pay back Social Security and FERS?
Here is a quote from an article on Business Insider in Oct 2012, they feel FER's is a drag on the budget, however, they admit is has a surplus, albeit on a piece of paper
-FERS has a trust fund. Currently there is $775b of Special Issue Treasury securities in the fund. This is equivalent to 6% of our total debt and is therefore a very big deal. FERS holds as much of our paper as do the Chinese and the Federal Reserve.
WARNING: The Federal Employees Pension System Is Running An Even Bigger Deficit Than Social Security - Business Insider
Think about it, FERS started in 84? and other than a few special cases, no one was eligible to retire for 20 year. So there were 20 years of funds paid in. Now this year, FER's is paying out more than it brought in "this year." I believe our "trust fund" has 800 billion to a triillion dollars in it, or at least on paper.
Now CSRS, that is a different story, it was never "pre-funded" like FER's, so it have a deficit with no money in the bank.
Those Congressman need to fair and tell the whole truth. They spent the FER's money, that is why there is an unfunded liability. Don't penalize us for your failures. Maybe we should seize their assets to pay back Social Security and FERS?
Here is a quote from an article on Business Insider in Oct 2012, they feel FER's is a drag on the budget, however, they admit is has a surplus, albeit on a piece of paper
-FERS has a trust fund. Currently there is $775b of Special Issue Treasury securities in the fund. This is equivalent to 6% of our total debt and is therefore a very big deal. FERS holds as much of our paper as do the Chinese and the Federal Reserve.
WARNING: The Federal Employees Pension System Is Running An Even Bigger Deficit Than Social Security - Business Insider
James48843
Well-known member
Did you read the article?
Federal pension systems’ unfunded liabilities skyrocket - Stephen Losey, Federal Times
They didn't spend the money. The ONLY thing that changed was that they lowered the expected earnings on the fund by 0.5%. That changed it from a FERS surplus to a slight deficient. The FERS program is fundementally sound. There is nothing wrong with FERS that a slight tweak would not fix.
Kaufmanrider
Member
Yes I read it, and it doesn't mention the Retirement Trust Fund, and the amount of money with interest in it. FER's would be solvent for years, even with a change in the formula. Wonder why? They are trying to blame Federal Employees for their waste of our money, again. They act like it does exist. But it is counted as part of the 16 trillion dollar debt. It is simply IOU's like Social Security. Republicans tend to forget about the Soc Sec Trust Fund and FERS Pension Trust Fund. Probably, because it only exists on paper.
"The Federal Employees Retirement System slipped back into the red. FERS held a projected $12.2 billion surplus at the end of fiscal 2010 — its first in four years. But one year later, FERS reported a $20.1 billion unfunded liability."
This makes the general public believe FERS is draining the budget, when it is not.
http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm
Intragovernmental Holdings - Just under one-third of the Federal debt is owed to about 230 other Federal agencies. How does this happen? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need right now. Rather than stick this cash under a giant mattress, these agencies buy U.S. Treasuries with it.
Which agencies own the most Treasuries? Social Security, by a long shot. Here's the detailed breakdown:
- Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.72 trillion
- Office of Personnel Management (Federal Employees Retirement, Life Insurance, Hospital Insurance Trust Funds, including Postal Service Fund) - $1.12 trillion
- Dept. of Health and Human Services (Federal Supplementary Medical Insurance Trust Fund) - $69 billion
- Federal Deposit Insurance Corporation - $35 billion
- Department of Transportation (Airport and Highway Trust Fund) - $20 billion
- Department of the Treasury (Exchange Stabilization Fund) - $23 billion
- Department of Labor (Unemployment Trust Fund) - $21 billion
- Other Programs and Funds - $933 billion. (As of September 2012. Source: Treasury Bulletin, Monthly Treasury Statement, Table FD-3:Government Account Series)
JimmyJoe
Member
Congress, senate is lying, stealing from FERS and posturing. The son of FERS will be only TSP and social security. I think the youth will have to prepare for this if they wish for a job in gov't.
Boghie
Well-known member
I don't think the fine Illinois state employees ever saw this coming:
But, then again, when unions demand higher compensation from politicians unwilling to pay them - and, then accept promises of future compensation from future politicians - I begin to wonder. Can anyone say Ponzi Scheme. Apparently the music stopped in Illinois and the late blooming state employees are rushing to the remaining chairs. They knew it was coming. We know our time is coming. Is the FERS pension funded? If so, can we look at our lock box? Or is it a funding line?
Just asking...
But, then again, when unions demand higher compensation from politicians unwilling to pay them - and, then accept promises of future compensation from future politicians - I begin to wonder. Can anyone say Ponzi Scheme. Apparently the music stopped in Illinois and the late blooming state employees are rushing to the remaining chairs. They knew it was coming. We know our time is coming. Is the FERS pension funded? If so, can we look at our lock box? Or is it a funding line?
Just asking...
PessOptimist
Well-known member
Great idea nnuut! Send 50 percent of your annuity to me and I promise to get it back in to the economy.
PO
Show-me
Well-known member
FERS has already been changed last year. New hires and employee's under so many years service pay more and get less. We current old guys have been grandfathered in just like the CSRS guys were or else you would have had a massive revolt. State workers in Illinois knew this was coming and it is the only solution without a bailout from the Feds. They are fighting the battle but it is more a act than anything of substance. Same for the Postal Service, Dick Durbin told Quincy, IL that their processing plant would never shut down, guaranteed, until they shut down the old plant in the State capital and then Quincy was under the bus. They stroked Columbia, Mo too and now they are on the block. It is what it is and they are doing what they have to do, so it seems. Good luck and don't put all your eggs in one basket.
Bullitt
Well-known member
I love how this topic always seems to bring surprise to decision makers and outrage to investors.
Pension funds thought the rising tide that began with 401k plans around 1980 would take them right into the sunset with minimal contributions. They never factored in the idea that stocks might not return 8% a year (or that housing would collapse).
Pension funds thought the rising tide that began with 401k plans around 1980 would take them right into the sunset with minimal contributions. They never factored in the idea that stocks might not return 8% a year (or that housing would collapse).
alevin
Well-known member
Yes, and by the TSP telling us in our annual statements that 8% was reasonable return, they led us early FERS (young, not market-savvy) folk in the late 80s-through the 90s to believe we'd be doing ok by the time retirement age arrived. Not til the mid-late 00s did I begin seeing articles about underfunded fed retirement liabilities, both CSRS and FERS. 20 years slipped by with TSP putting forward erroneous overestimates of expected returns in our annual statements. Wish I could look some of those people in the eye, but they probably wouldn't have the guts to look me back.
The housing bubble only had relevance to me at the time because it made it too expensive for me as lower-end existing homeowner from before the bubble (and one who only deals in 15 or 30-year fixed rate mortgages) to jobhunt/relocate to communities with homes similar to current one-from 2003 onward til now. Right about now is finally when I could find something similar elsewhere (elsewhere that I'd want to be) that would be near in price to what I have now. I don't want another mortgage when I move again if can help it, I'm socking those funds away these days to max out TSP and Roth to extent I can each year from here forward. Retirement date is a siren calling me. no intention of ending up on the rocks.
Boghie
Well-known member
Bullitt,
Occam's Razor buddy, Occam's Razor...
The politicians (and, thus the voters) simply did not want to pay their labor force. In effect, we thought they were not worth it. Others viewed it as a gravy train they could jump off of in time. Then there is pure graft and corruption. Not to mention ignorance and incompetence. Anyone around here want to take financial advice from their Senator, CongressCritter, or Mayor? Just asking. They are almost always lawyers. Mayors may have some useful skillset, but those in Illinois, New York, and Kalefornea likely believe in the Blue Model. Oh well.
Current politicians have to pay the continuance 'fees' promised by the last set of promisers. And, the Gravy Train fell off the rails. Kalefornea is still in the denial phase that Illinois was in last year. When my politicians take another kick in the gut and come begging for more mullah I will vote No. I lost with Prop 30, but it is becoming known that the Prop 30 'Widows and Orphans Fund' is being routed to pay pension benefits - nothing is being sent to the classroom. And the rich are pouring out of the state. My guess is that Kalefornea will see the dark as early as June when the promised revenues fail to materialize. Starve the Beast
.When something can't go on forever, it doesn't.
Bullitt
Well-known member
Alevin. You're doing the right thing although that's not what decision makers would like. They'd much rather you follow in their footsteps by maxing out your debt albeit on material things. The only thing you can control as far as investing goes is what you pay in fees and what you save. TSP is already giving us low fees.
Boghie. I'm in NY, another state underwater in financial troubles and rising taxes. I feel your frustration. Decision makers made long term decisions for short term gain without doing the long term maths.
In the 1980's two one-offs contributed to a rising stock market and created a rising tide to lift bad decisions.
1. 401k plans let the dumb money (us) put their hard earned cash to the hyenas on wall street.
2. Women entered the work force. Despite low paying jobs, spending power of the household was increased when both spouses worked.
Boghie. I'm in NY, another state underwater in financial troubles and rising taxes. I feel your frustration. Decision makers made long term decisions for short term gain without doing the long term maths.
In the 1980's two one-offs contributed to a rising stock market and created a rising tide to lift bad decisions.
1. 401k plans let the dumb money (us) put their hard earned cash to the hyenas on wall street.
2. Women entered the work force. Despite low paying jobs, spending power of the household was increased when both spouses worked.
Boghie
Well-known member
Not to mention that:
- Those Baby Boomer investors that where saving are starting to run to safety and withdrawing their assets.
- There seems to be a trend back toward one-income families. That will reduce spending and investing.
Boghie
Well-known member
Re(1): 'An Ugly Example of the Dangers of Defined Benefit Pensions', Via Meadia,
Would you rather have a pension, or a 401(k):
Yowser...
Would you rather have a pension, or a 401(k):
Yowser...
Bullitt
Well-known member
Investing large amounts of savings in company stock after the lessons of Enron, et al., is doing nothing more than playing slots.
You were promised a ride. You weren't promised a ride in a Cadillac. Too many believe that when they pull the plug they're going to be that guy in the Cialis commercial.
I see way too many older (55+) piling into aggressive funds because of savings shortfalls. Don't confuse this with playing aggressive football or aggressive hockey.
Everyone said Greece was a 'one-off'.
You were promised a ride. You weren't promised a ride in a Cadillac. Too many believe that when they pull the plug they're going to be that guy in the Cialis commercial.
I see way too many older (55+) piling into aggressive funds because of savings shortfalls. Don't confuse this with playing aggressive football or aggressive hockey.
Everyone said Greece was a 'one-off'.
Boghie
Well-known member
Concur...
And, by the way, can anyone find any reasonably competent financial adviser who would recommend socking nearly 30% of your salary (and benefits) into a single entity. Our FERS pension (our contribution and the rather huge amount 'funded' by the Feds) go straight into Social Security bonds. Obviously, so does our (and the Fed match) Social Security 'contributions.
And, our benefits will be paid out by political fiat.
Fix It Again Tony.:nuts:
