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Ilargi: Still Feel Confident About Collecting Your Pension After This?

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By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth, Cross posted from Automatic Earth

If your answer to that question is affirmative, I suggest you take a good hard look at what’s coming out of Detroit these days. Why don’t we just call it a bail-in model, not unlike Cyprus, where the waters are tested for forcing parties who historically thought they were safe from cuts, find they no longer are.

And if you think Detroit is the only American city that has these kinds of problems, think again. It’s merely the first, count on it. It’s not just an American issue either, of course, and although retirements plans are set up in myriad different ways, they have one thing in common: they are in essence pyramid schemes, eat your heart out Charles Ponzi, and it’s just a matter of time before the walls start crumbling.

But it’s not just that. The game is stacked and fixed in favor of certain parties at the cost of others. We can all grasp how, without even knowing any details, because we should know how America, and the world at large, works these days. All games are fixed.

If you still have trouble understanding what is going on here, please do read Nicole Foss’ Promises, Promises … Detroit, Pensions, Bondholders And Super-Priority Derivatives  from early September. Here’s one quote from that article:

Promises that cannot be kept will not be kept. It is as simple as that. To complicate matters, however, the architecture of the financial system prioritizes promises, in a perhaps counter-intuitive, and certainly self-serving, manner. This will make the task of allocating extremely scarce resources to stakeholders lower down the financial food chain very much more difficult. It is time for a good look at the range of promises made, the competing needs of the recipients, the leverage enjoyed by powerful players in shoring up their own position, and the real world implications for municipalities far beyond Detroit.

And here’s another one:

Both pensioners and general obligation bond holders argue that they should have priority in claiming from the city’s inadequate assets in bankruptcy. However, a different class of creditor has legally senior status. Holders of financial derivatives enjoy super-priority in bankruptcy. Thanks to changes to bankruptcy law in 2005, they are not subject to the ‘automatic stay’ provision intended to prevent a disorderly grab for collateral by competing creditors. As such, they are able to press their claim immediately, prior to bankruptcy proceedings and therefore before claims by competing creditors are considered. This may potentially leave nothing for other creditors to divide during subsequent proceedings.

The piece below is from Fox of all sources, but in this case that doesn’t make much difference: it is abundantly clear what’s going on. Still, it’s curious to say the least that this comes out only now there’s a trial going on to determine whether or not Detroit is indeed bankrupt, and is eligible to file for it.

Detroit bankruptcy proposal would leave pensioners with 16 cents on the dollar

It was the politicians, and not longtime city workers like Olivia Gillon, who brought Detroit to the brink of insolvency, but now Gillon can only watch as lawyers negotiating the Motor City’s bankruptcy bid place a new value on her hard-earned pension: 16 cents on the dollar.

The beleaguered city, facing debt of as much as $20 billion and led by a state-appointed manager, tried nearly a year ago to renegotiate with creditors. When those talks broke down, the city filed for bankruptcy last July, but the filing was ruled unconstitutional by a judge. A series of state and federal rulings followed, culminating in a trial that began last week in which the city must show it is eligible to enter bankruptcy. That’s when the frightening magnitude of the “haircut” being sought for some 21,000 retirees emerged.

“It’s wrong on every possible level,” Gillon, 68, told FoxNews.com. “I earned my pension. I retired expecting it and I feel that I should have it.”

The retirees include police officers, firefighters and other municipal workers, but not teachers, who are covered by a state-administered system. The affected workers have been promised some $3.5 billion in pension payments and another $6 billion in health care benefits, money most agree the city can’t pay. But for a retiree counting on a modest annual pension of, say $30,000, the proposed cut would leave him or her with $4,800. Of all the once-proud city’s creditors, including banks, vendors and bondholders, retired workers are the least able to take the hit, said Gillon.

“Some people are going to be hit hard,” Gillon told FoxNews.com. “I’ll have to change the way I live.”

Gillon is a member of the Detroit Retired City Employees Association, which, together with the Retired Detroit Police & Fire Fighters Association, represent about 70% of the city’s approximately 21,000 retirees. Along with the Michigan chapter of the American Federation of State, County & Municipal Employees, they are fighting the bid by claiming the city of Detroit has not proven it is insolvent, has not negotiated in good faith with its creditors and the bankruptcy filing violates the state constitution protecting retirement benefits for public workers.

Bob Gordon, who represents the two pension funds, argued in court last week that the city can restructure without cutting pensions, which are protected by the state in a manner that he said is “binding” and “impermeable.” The Michigan state constitution does contain a provision that bans any action that threatens to cut the pension benefits of public employees, but several experts have said the federal bankruptcy code would trump the state statute, especially if the city can demonstrate it has no way of making an estimated 100,000 creditors whole.

The Michigan-based Mackinac Center for Public Policy, which sounded a warning about Detroit’s fiscal problems more than a decade ago, said the old-style defined benefits pensions that have long been a centerpiece of civil service leave pensioners at the mercy of politicians.

“It’s just another example of the flaws of a defined pension system,” said Ted O’Neil, a Mackinac analyst. “The problem with putting trust in government to invest and save your money is that they don’t always make the best choices.”People who worked hard for their pension many end up being scapegoats,” he added.

Indeed, the Mackinac 2000 study looks prophetic now: “If Detroit’s future expenditures were relatively stable, this financial snapshot still would be cause for concern. But the city is looking at two new outlays of monstrous proportions: funding the pension obligations of current and future city employees, which could cost up to $3 billion, and fulfilling requirements under several federal environmental acts, which will cost billions more,” read the report.

The 16 cents on the dollar estimate could be a message to unions, which previously refused to negotiate cuts.

Reading this reminded me of a very old song, I can’t remember the name or artist, it goes something like this:

“They’re coming to take it away, hi hi, ha ha.”

Yves here. In the interest of accuracy, the song is actually “There’re coming to take me away” due to madness resulting from a lover leaving. However, the loss of one’s retirement savings is devastating, and not just in psychological terms….

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44 comments

  1. HotFlash

    “Indeed, the Mackinac 2000 study looks prophetic now: “If Detroit’s future expenditures were relatively stable, this financial snapshot still would be cause for concern. But the city is looking at two new outlays of monstrous proportions: funding the pension obligations of current and future city employees, which could cost up to $3 billion, and fulfilling requirements under several federal environmental acts, which will cost billions more,” read the report.

    I shouldn’t wonder, the Mackinac Centre is largely an architect of MI’s demise. http://www.sourcewatch.org/index.php/Mackinac_Center_for_Public_Policy

    The Mackinac Centre was one of the first of the think tanks set up as per Lewis Powell’s recommendation. More here: http://mackinaccentertruth.com/ and here: http://miworkerfreedom.org/16278 (this one is a Mack Ctr spin-off).

    As for my pension, I knew back in 1977 that there wouldn’t be anything by the time I needed it and made my own plans. That has not worked out as well as I would like, I srsly did not foresee the erosion of recompense for skilled services due to the gutting of the middle class. Oh well, I suppose it’s just population control, after all.

    1. Don Levit

      Getting 16 cents on the dollar is pretty good, considering there are assets actually set aside to provide the benefits.
      Their unfortunate luck stems from the fact they are state employees, rather than federal employees. Even when assets are not set aside for federal employees, benefits are 100% – guaranteed!

      From a paper entitled “Fiscal Exposures Improving Cost Recognition in the Federal Budget, published by the GAO
      http://www.gao.gov/assets/660/658620.pdf
      Page 34 “All Civil Service Retirement and Disability Fund investments are in U.S. Treasury and Federal Financing Bank securities. The government does not set aside asets to pay future benefits or other expenditures associated with designated funds.”
      Page 36 “As of Sept. 30, 2012 the CSRS accrued liability is $1.2 trillion and the FERS accrued liability is $484 billion. Because of the way in which CSRS costs are determined and funded, the system has a sizeable unfunded liability. The unfunded liability is dealt with by the FERS Act, which provides for annual credits to the CSRDF out of any money in the Treasury general fund not otherwise appropriated to amortize any supplemental liability of the CSRDF for current or former federal employees.”
      “The term unfunded liability refers to gaps between the projected financial commitment to a program and the earmarked revenues available to fund that commitment. However, no federal obligation can be truly considered ‘unfunded’ because of the government’s sovereign power to tax to meet its obligations.”
      Don Levit

    1. Shane536

      No, I think it`s by Napoleon IV or someone. I had an album with it on as a kid. Loony Tunes (not related to the cartoons)….It had “Kooky, Lend me your comb”, “The Monster Mash”, “The Streak”….a whole bunch of stuff. That song wasn`t by Dr Demento though.

  2. Charles

    I have a question, does the ZIRP have an affect on the business model of pensions and insurance companies? A pension is of course a Ponzi scheme if it takes in less than its future obligations. Pensions and insurance companies offset this by investment and expect some return. ZIRP would require pensions and insurance companies to just hold your money and return it to you when you retire with no cost of living increases, etc. If, as they have, pensions assumed that bond markets would have a return then they would be and are insolvent. No one speaks about this clearly. It appears to me that we are bailing out the banks at the expense of retirees and pensioners.

    1. Moneta

      It is just now starting to have a significant impact.

      While rates were dropping, bonds were benefitting from nice capital gains so the fixed income side of the plans have been generating good returns until last year..

      Going forward with yields around 2.5%, you can’t expect more than 2.5% if rates stay flat. Most actuarial calculations are still based on a 4.5%+ discount rate, so if rates don’t increase soon, we can see how reality will hit hard. But a rise in rates might not help much…

      Appallingly, a significant number of pension plans have gone into portfolio immunization mode where they match assets and liabilities. This strategy is pushing them into long term bonds at the worst imaginable time possible. The reason why many are doing this is to control pension costs by reducing volatility. Here in Canada, the rules say pension deficits should be amortized within 5 years but DBs are asking for 10 year exemptions.

      Many plan sponsors want to convert their DBs into DCs but the law says you can’t unless it is funded… so my guess is that they are biding their time, waiting for either magic markets or a shoe to drop…

    2. Moneta

      Over the last 3 decades, a large percentage of insurance returns came from capital gains thanks to dropping yields.

      To compete, they would cut underwriting margins. However, with low yielding portfolios, they will surely need to increase insurance costs.

      Falling rates have had a huge impact that most can not begin to appreciate. Instead of a tailwind, we’re about to be faced with a nasty headwind.

  3. Saddam Smith

    This is the drum I beat: the global or systemic nature of this issue:

    “It’s not just an American issue either, of course, and although retirements plans are set up in myriad different ways, they have one thing in common: they are in essence pyramid schemes, eat your heart out Charles Ponzi, and it’s just a matter of time before the walls start crumbling.

    As I understand it, the primary characteristic of a Ponzi scheme is that it collapses when it is not growing. In that Perpetual Growth is a must, a veritable god, and seeing as Obama calls growth an “imperative”, isn’t it obvious, then, that the entire global economy is a Ponzi scheme, with the planet’s finite resources as its fuel?

    If so, this presents us with a stark binary: either the economy can grow exponentially (i.e. at some percentage) forever, or it cannot. If it cannot, we need a very new – a radically new – economics. Sadly, this is something virtually no one ‘out there’ is even remotely prepared to acknowledge.

  4. dearieme

    “It was the politicians, and not longtime city workers like Olivia Gillon, who brought Detroit to the brink of insolvency” You mean “It was a conspiracy of politicians and public sector trade unions that brought Detroit to the brink of insolvency.” If she voted for the first, and belonged to the second, then in a democracy it was her fault too.

    1. Bridget

      It is my impression as well that political influence exercised by public unions drove the city pension obligations off the rails, but to date have not been able to find good data on the subject. I would love to see a compilation of all pension formulas for all classes of city workers approved by the Detroit politicians through the years, sorted by date. Also a list of the highest payees.

      An across the board 16 cents on the dollar pension cut to all retired city workers sounds like a very blunt instrument. Surely the means exist to reexamine the history of the pension formulas and start the cutting with those that, in hindsight, are clearly egregious and overreaching.

      Obligations that can’t be paid won’t be, but it makes no sense to throw people like Olivia Gillon into poverty if there are other pensioners who are collecting large payments based on predatory formula calculations, double dippers, etc. It requires a lot more effort to analyze the data and come up with a rationing system tailored to leave the greatest number of people with the basic means of support, but it would not be difficult at all to improve on 16 cents on the dollar for everybody.

  5. Ep3

    CouPle things yves.
    First, we should all note that ms gillon, due to being a municipal worker, does not get SS. For whatever stupid reason, municipal workers are exempt from paying SS taxes because of their pension.
    Second, in the wider pension discussion yves, it was not long ago that the steel & railroad workers lost everything. At one time in this country’s history, if you worked and retired from either industry, you were a proud and well retired American. But Reagan destroyed those pensions in the 80s.
    Finally yves, the buck stops here. WHERES OBAMA?

    1. Jim A.

      I’m not sure that’s the case. Many municipal and state workers DO qualify for SS. It just varies from locality to locality. Local governments are not FORCED to enroll their employees in Social Security but many do.

  6. Moneta

    Had we opted for a pay-as-you-go pension system decades ago, the average Joe would not have lost touch with reality. He would have realized that his pension would depend on the productivity of HIS kids AND their peers.

    This would have changed EVERYTHING. Houses and material lives would have stayed smaller, people would have made sure that their kids and other people’s kids did well because their own well-being in retirement would have depended on the younger cohort, not on emerging marker slave labor and output of kids 2 generations down the line.

    Our developed world model was built on the principle that we would ALL be rentiers… but no one ever wondered who the worker bees would be

    1. Bill the Psychologist

      That was my question. Given this quote:

      “But the city is looking at two new outlays of monstrous proportions: funding the pension obligations of current and future city employees, which could cost up to $3 billion…”

      I remembered another “outlay of monstrous proportions” of ~$800 Billion payed out in ’08 to all the world’s big banks by Hank Paulson as SecTreas.

      An easy solution is for the Feds to bail out only Detroit’s retirees, and let the vultures feast on the rest, if there is anything.

      1. Moneta

        Had there been no bailouts, a significant percentage of bonds would have defaulted, equities probably would have collapsed and pension funds would have lost a lot of money.

        Therefore, without bailouts, the entire pension system would have gone down much faster.

        1. Ilargi

          Had there been no bailouts, a significant percentage of the banks would have collapsed, let alone bonds. But if governments would have used the bailout cash to backstop everyone’s bank accounts, they would have saved a lot of money (which they for instance could have used to backstop pension plans) and be rid of lots of questionable (in both moral and practical sense) institutions in one fell swoop. Too big to fail is about systemic importance, but nobody ever asks if we should really want to save – or want, period – the system these things are so important for.

          1. Moneta

            The pension system is so unfair and out of whack, I believe it should somehow be collapsed into a pay-as-you-go scheme. Step one could be to convert all DBs into DCs. Step 2 could be to recalibrate SS according to past work and needs.

            Instead of recalibrating, they are propping up DBs in an ad hoc fashion and talking about cutting SS. The whole thing is a total farce.

            Frankly, I can’t see light at the end of the tunnel. And as a Canadian, it is quite frustrating because we have no say in the matter, yet your policies always end up making it up here a decade later!

  7. Watt4Bob

    The changes to bankruptcy law in 2005 are, in hindsight, obviously a set up to back-stop losses on the obviously irrational derivatives-based financing sold to crooked pols by crooked banks.

    (Leaving discussion of ever-lasting credit card debt for another day)

    My question then, is why in the world do we allow this law to stand?

    If ‘they’ can impose a law, after the fact that robs us of our economic rights in contract law, in deference to unethical, scheming bankers, why don’t we hear any demands that that law be repealed on the grounds that it represents a now obvious conspiracy to defraud?

    In a world where the law conforms to anything like common sense, holders of derivatives who force their way to the front of the line, claiming super-priority in bankruptcy proceedings would be laughed out of court.

  8. DakotabornKansan

    Once, the majority of America’s seniors could look forward to at least a modestly middle-class retirement. Now that dream is fading quickly. For millions upon millions of senior citizens the only future they have to look forward to is one filled with debt and poverty.

    America’s retirement system is said to be a three-legged stool made up of private savings, pension plans, and Social Security. But each leg of the stool is eroding. A fourth leg – asset accumulation from home equity – has also taken a huge hit.

    The Retirement Research Center at Boston College calculates the figure that represents our current retirement income deficit – that is, the gap between the pensions and retirement savings that American households have today and what they should have today to maintain their standard of living, to be at $6.6 trillion.

    Two-thirds of all retirees depended on Social Security for more than half their income and one in five for all their income. In 2010, Social Security only replaced 37% of the average worker’s pre-retirement income at 65. More than 95% got less than $2,000 per month. Half had a total yearly income of less than $16,140, only a fraction more than the federal minimum wage. Women averaged less than $12,000 a year in benefits.

    http://crr.bc.edu/special-projects/national-retirement-risk-index/

    “An entitlement society is a fundamental corruption of the American spirit.” – Mitt Romney

    According to the report Financial Security of Elderly Americans at Risk:

    • Nearly half (48 percent) of the elderly population in the United States is “economically vulnerable,” defined as having an income that is less than two times the supplemental poverty threshold (a poverty line more comprehensive than the traditional federal poverty line). This equates to roughly 19.9 million economically vulnerable seniors.
    • The older elderly—people age 80 and older—have a far higher rate of economic vulnerability (58.1 percent) than people age 65 to 79 (44.4 percent).

    • A majority of elderly women are precariously close to poverty. Women are 10.7 percentage points more likely to fall below two times the supplemental poverty threshold than men (52.6 versus 41.9 percent)

    • The majority of elderly blacks and Hispanics are economically vulnerable: 63.5 percent of blacks and 70.1 percent of Hispanics, age 65 and older, have incomes less than two times the supplemental poverty threshold. In comparison, 43.8 percent of whites are economically vulnerable.

    http://www.epi.org/publication/economic-security-elderly-americans-risk/

    More elderly Americans will be poor and destitute, and many more will be working, often in low-wage jobs, because they can’t afford to retire.

    “The lifespan of any civilization can be measured by the respect and care that is given to its elderly citizens and those societies which treat their elderly with contempt have the seeds of their own destruction within them.” – Arnold J. Toynbee

    1. JTFaraday

      “Half had a total yearly income of less than $16,140, only a fraction more than the federal minimum wage. Women averaged less than $12,000 a year in benefits.”

      Hoocoodanode?

      At some point, I think we have to consider the possibility that all the attention is thrown onto SS and the New Deal because obsessing over their undermining leads us to ignore the real scale of problems that SS and the New Deal never did address.

  9. Paul Tioxon

    Philadelphia is burning as much of the furniture as possible to stay warm this winter, but may have to rip up the flooring and unhinge the doors and burn them next winter. 3 winters from now? Who cares? Maybe we will have set all of America on fire by then, and can stay warm from the fires from sea to burning sea.

    …………………………………………………….

    SCHOOL DISTRICT SELLING OFF SHUTTERED, EMPTY SCHOOL BUILDINGS

    “Mayor Nutter agreed Wednesday to a Philadelphia school funding plan that hinges on selling millions of dollars worth of empty school buildings, despite having expressed skepticism about the idea for months.

    The School District plans to post its inventory of more than 30 shuttered buildings on its website next week and start seeking bids on the properties, Nutter said.

    The district would have to sell $61 million worth of buildings by the end of the fiscal year in June. That would cover the $50 million the city promised the district at the beginning of the school year, as well as $11 million that the district had already budgeted from building sales.

    In the meantime, the city plans to give the district $60 million that normally would have been sent in May or June from tax collections earmarked for the schools.

    Read more at http://www.philly.com/philly/education/20131031_Nutter_buys_in__Schools_to_raise__61_million_by_selling_buildings.html#CI0Gt82S4KXURPxE.99

    CITY SELLING MUNICIPAL GAS WORKS, PGW

    “The bankers Philadelphia hired to try to sell the Philadelphia Gas Works have put out an analysis that makes the deal look good. Can we believe them?

    They say the works could sell for at least $1.5 billion, based on the bills a new owner can expect to wring from Philadelphians, and the prices other utilities have fetched.

    But the city doesn’t get to keep all that. About three-fifths of the total would be spent paying back PGW’s past borrowings and interest-rate swaps.

    An additional $128 million is supposed to bail out PGW workers’ underfunded retirement plan. (That’s less than the $150 million plan deficit PGW reported last year.)

    And $20 million could go to JPMorgan, Loop Capital, Lazard Freres, and other banks managing the sale.

    On the other side of the books, the city would stop collecting an annual PGW fee – usually $18 million – that is the chief remaining tangible benefit the city enjoys from running the Gas Works, which Mayor Frank Rizzo took over from UGI Corp. in 1970.

    Read more at http://www.philly.com/philly/business/20131027_PhillyDeals__How_good_a_deal_for_city_if_PGW_sold_.html#B7I2fdB4c3dUo1KA.99

    1. Moneta

      These underfunded DB plans NEED to find good returns… that’s why they’re licking their chops and can’t wait for the privatization of state assets, for dimes on the dollar, which can’t come fast enough.

      These underfunded DB plans, skimmed by Wall Street every step of the way, are bankrupting the developed world.

  10. Brooklin Bridge

    It’s surprising that the Police are getting the shaft like everyone else. Is this supposed to make other police forces meaner, like attack dogs, since they have been trained to be too stupid to figure out their masters are kicking them, or is it a tactical mistake?

    1. Moneta

      The city can’t fund its current working police force properly because too much money is going to retirees.

  11. Wayne Harris

    Generous pension promises in lieu of better pay have always been municipal officials’ tool of choice to help keep taxes low. But 30 years of asset inflation and wage suppression have resulted in public-sector employees being both better paid and the last remaining labor class with defined retirement benefits. So now the beneficiaries of the asset-inflation/wage-suppression regime (Druckenmiller and Peterson being only a few of the most egregious examples) and their ubiquitous think tanks are busy deflecting public resentment away from themselves and toward the regime’s last available pool of victims: government workers and the elderly. The TBTFs bought-and-paid-for superpriority status in bankruptcy virtually assures Detroit’s pensioners will be screwed as thoroughly as MF Global’s clients. Another nail in the (so far?) zombified body politic of the middle class.

  12. SubjectivObject

    On the topic of this Detroit pensions issue, someone elsewhere confidently made the comment that the 16% applies for “unvested” liabilities; e.g.: future payments into the fund, and the 16% does not apply to the vested assets of the fund. They further say that the pension is 70% vested, and this is not affected or at issue, so, ostensibly, the 84% cut applies to unvested 30% which nets to about 25% of the total; an, in the context, not excessively onerous haircut.

    I am not expert, nor even competantly dilettante about these things, but can this be challenged or corroborated?

  13. Ilargi

    I think Jay Hanson said it better than anyone (paraphrased):

    “Democracy only works until people figure out they can vote themselves an ever bigger piece of the pie.”

    1. jrs

      We can vote ourselves a bigger piece of the pie? How do I get that, seems I only get a austerity no matter who I vote for. Oh you meant the elite, could buy themselves a bigger piece of the pie for only a small investment, oh of course.

    2. Mcmike

      Democracy stopped working when the elite bought themselves the entire pie… as jrs said above, for a fraction of a penny on the dollar.

  14. Jess

    While most of the comments here are valid, I’m surprised that nobody has brought up the primary underlying reason Detroit went broke: the outsourcing of auto industry jobs. If Detroit was still the car-making center it was up through the mid-1980′s, the tax base would have been able to sustain the city’s pension contributions and its current operations.

    Look at hedge fund Ratner’s solution for the GM bailout: close more domestic plants and increase the importation of foreign-made GM models by 765,000 cars a year. Insane. Unless you’re a banker rentier.

  15. Yancey Ward

    Eventually, probably through hard experience, people will realize you have to pay for your own pension, and if you don’t, you are left with 16 cents on the dollar, which, in the case of Detroit, will be pretty much what the pensioners had actually paid for it in the first place.

    1. McMike

      um, no. That 16% is supposed to be invested, over 30 years or so, that adds up, even at tbill rates.

      1. Yancey Ward

        The problem is that they never really paid. The politicians offered promises, and the employees accepted promises, not cash in the hand or cash in the plan. Thus the plans are hugely underfunded- what is left is what they paid along with the funds earnings.

        Though, to more accurate than I was earlier, it is the 16 cents on the dollar of promises that they get. In addition, they get what is left in the plan itself.

  16. dw

    heres a question. why is that we think 401k (and other saving methods) will work for the majority? or is that wall street and company have so changed the view, that it matters not that they wont work too. if pensions will fail, why wont the other too? since both are based on investments (stock and bonds). and one can has more ‘investment’ options than the other. and one is worked by ‘professionals’ full time. the other isn’t why do we think the amatuers working part time will be able to do a better job? and just how do you save for your retirement if you have no idea how long you will live and no idea hom much it will cost you to live that long? its like saving up to buy a car, and not having any idea what the car looks like, or how much it costs.

    1. Mcmike

      well, my first reply seems to have got caught in admin limbo or worse. so let’s try this:

      401ks are in fact NOT working for most people. And exist mainly as a means to extract fees from “investors.”

  17. Podargus

    You can argue the toss all you like about private pension funds and why they can and will go bust.
    The single important fact is that the federal government,as the sole issuer of the currency,can pay all retirees a sufficient income to live a decent life.
    What individuals do to supplement that guaranteed income is their own business.

  18. sierra7

    This whole mess is just the direct derivative of the Reagan legacy:
    “American Labor must be crushed to a world level playing field in order for American corporations to compete in the global marketplace”
    There is no “solution”
    Enjoy the ride to the bottom.

    1. psychohistorian

      You are quite correct in that the surbordination of pension debt has been going on since Reagan and Greenspan coordinated to screw SS.

      When enough people are hurting, this class based hierarchical competitive insanity will stop. I suppose this is how evolution works, our social system needs to be pushed to the edge for evolutionary social change to occur. The problem is watching this happen in real time is a bit daunting.

  19. Paul P

    Our society cannot afford pensions and those we have are Ponzi schemes.

    What nonsense! What the Fed has done for the banks can be done for the pensions. What New Deal programs did for jobs with direct government job creation, we can do for jobs, now.
    The New Deal created 11 million jobs within an eyeblink. Adjusted for population growth, that 11 million would put all U6 unemployed, the unemployed, the underemployed, and the “I give ups” back to work.
    We can retire the featherbedding, private, for profit health insurance industry with Medicare for All and we can repatriate untaxed offshore profits and tax them. And, we can get rid of the stupid, pickpocketing derivatives exemption to the bankruptcy laws. Oh, and we can have a student debt jubilee and fund free higher education.

    1. anon y'mouse

      except….that the elites don’t want that.

      they have more control over us this way than the other.

      we might get uppity and start demanding more of a say in things.

      we might tell our bosses, when they try to insist that we discriminate by race -over the telephone- for apartment/job applicants, to shove it up their arse.

      can’t have slaves thinking they own themselves, now.

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