Pension Debts: The Next Financial Mess?

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ycjgnsz msudfyg of AL @ Jun 14, 2008 03:30:45 AM

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zrsnay ohvatc of AL @ Jun 14, 2008 03:30:12 AM

myth of Social Security problems

Of course everyone knows that despite the hype, Social Security is perfectly solvent and well for many many decades. Worst cases forecast deficits 50 years from now, not insolvency, deficits, that can easily be fixed by minor adjustments, if they materialize.

The real secret is that people want to simply rob Social Security by ruining its reputation and then changing the program by threatening to dishonor the debt.

Frank Jackson of GA @ May 06, 2008 20:08:07 PM

The Madness of Government Pensions

Journalist Lowenstein wants all of America's pension plans to operate like the biggest Ponzi scheme of them all -- social security. Promise today lifelong guaranteed benefits that don't have to be actually funded until years later.

Reality check: Almost EVERY such government defined benefit plan in America -- indeed the world -- is underfunded. Usually badly underfunded.

It's the fatal flaw of all such plans. Politicians get reelected by legislating huge public employee pensions for which they don't have to provide adequate funding -- funding that future politicians will have to deal with. Few elected officials can resist that temptation.

We are trillions of dollars in debt for public and (taxpayer guaranteed) private defined benefit retirement plans that simply don't have adequate funding to deliver on the promises. Since the Tooth Fairy has retired, the burden falls entirely on taxpayers to make up the shortfall.

And we're not talking chump change here. Every city, county, special district, state and federal pension plan will require taxpayer bailouts. And that assumes the stock market grows at a robust rate forever.

The federal government can meet their obligations if they suspend COL increases and devalue their pension payouts through hyper-inflation. Fortunately our state and local governments have no such option. But, of course, such inflation is a tax on us all, with disastrous consequences.

Already massive fiscal meltdown is all but guaranteed. And yet Lowenstein wants to expand such folly to provide such underfunded pension benefits to all Americans. Sheer madness.

Richard Rider, Chair, San Diego Tax Fighters of CA @ May 06, 2008 12:30:59 PM

America's Retirement System

The Defined Benefit Pension system can not be sustained in a world of constant change and globalization.

However a portable 401(k) plan starting at an early age like social security taxes could. Had I had a matching 401(k) with portability starting at age 16 like my first payments into Social Security, there would be a reasonable chance for a retirement with sufficient income. One could convert the 401(k) into annuity like payments.

A major mistake from a tax standpoint was the elimination of fhe deductability of the first $2000 of IRA contributions from ordinary income in 1984.

Everyone understood the benefit of deducting $2000 from ordinary income and tax free growth.

Richard VandenBrul of MI @ May 01, 2008 15:45:59 PM