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Old 12-01-2016, 10:42 PM   #1
leistb
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Default Dallas Mayor Demands Halt Of Pension Fund Withdrawals Until "Solvency Restored"

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We've written several times over the past couple of months about the epic meltdown of the the Dallas Police and Firefighters Pension (DPFP) (see here, here and here for background). It all started when the Pension Board discovered that one of their real estate managers had been consistently overmarking illiquid real estate investments. That discovery resulted in an FBI investigation of the manager and a $1BN write down for the DPFP. In the wake of the writedowns, Dallas policemen and firefighters rushed for the exits and withdrew over $500mm in assets.

Fearing a "run on the bank" that could push the whole city of Dallas into bankruptcy, Mayor Mike Rawlings has just sent a scathing letter to the DPFP Pension Board demanded that withdrawals be halted immediately until the "solvency and actuarial soundness of the Pension System is restored."
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Old 12-01-2016, 11:26 PM   #2
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Ouch! I can't help but wonder how many more funds are hiding sludge.
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Old 12-01-2016, 11:32 PM   #3
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Ouch! I can't help but wonder how many more funds are hiding sludge.
I heard an educated guess the other day that put the number in the neighborhood of around $1.5 trillion in the hole for pension funds nationwide.
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Old 12-01-2016, 11:36 PM   #4
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I'd "heard" similar numbers - that's staggering, terrifying if true.
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Old 12-01-2016, 11:39 PM   #5
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Houston Police, Fire and Municipal pensions aren't much better.

Firefighters are worse off because some deal in the past or something they made they don't get Social Security. (Exempted from paying, so they don't get it at retirement or something like that.)

Because the Firefighters pensions are in trouble some are only getting US$1k/month.

Some of the "reforms" are to assume a 7% return on investment instead of 8-8.5%

Ha! 7% consistently. Muse be nice. No way they are going to make that.

Gory details here: http://www.houstonchronicle.com/news...n-10004203.php
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Old 12-02-2016, 01:30 AM   #6
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A 7% ROI would be a pretty decent year but is unrealistic year after year.
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Old 12-02-2016, 09:13 AM   #7
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My brother retired at 3/4 salary and full benefits. But there was a trick to it. They didn't base 3/4 salary on your average salary over the course of employment, they based it on what was earned during the last year of service. The department would promote those soon to retire and then load them with overtime. In my brother's case he was not only promoted he slept in his office "on call" 5 days a week, earning well over 200k that last year. That's right, he has been getting $150k per year, plus 100% of medical, dental, and prescription costs covered for the last 10 years. He brags that he has over two million dollars in the bank. So does his wife, who is a nurse who was employed by the same system. They're in their late 50's so the city can expect to continue paying them for the next 20-30 years.

Unions demand high salaries, good working conditions, top of the line benefits, they want 4 to 8 weeks of annual vacation and sick days to accrue, etc. (Plus, public service unions are VERY active politically, if you don't get their support in most cities you can forget about being elected.) The cities can't afford what the unions want. So they defer payout by offering better retirement benefits. Now it is time to pay the piper, and it is simply unsustainable.
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Old 12-02-2016, 09:20 AM   #8
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Originally Posted by flourbug View Post
My brother retired at 3/4 salary and full benefits. But there was a trick to it. They didn't base 3/4 salary on your average salary over the course of employment, they based it on what was earned during the last year of service. The department would promote those soon to retire and then load them with overtime. In my brother's case he was not only promoted he slept in his office "on call" 5 days a week, earning well over 200k that last year. That's right, he has been getting $150k per year, plus 100% of medical, dental, and prescription costs covered for the last 10 years. He brags that he has over two million dollars in the bank. So does his wife, who is a nurse who was employed by the same system. They're in their late 50's so the city can expect to continue paying them for the next 20-30 years.

Unions demand high salaries, good working conditions, top of the line benefits, they want 4 to 8 weeks of annual vacation and sick days to accrue, etc. (Plus, public service unions are VERY active politically, if you don't get their support in most cities you can forget about being elected.) The cities can't afford what the unions want. So they defer payout by offering better retirement benefits. Now it is time to pay the piper, and it is simply unsustainable.
Still happening all over America today..Disturbing to say the least especially with public pensions where the taxpayer gets reamed.
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Old 12-02-2016, 10:01 AM   #9
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Still happening all over America today..Disturbing to say the least especially with public pensions where the taxpayer gets reamed.
Yes.... there will be bail-outs.
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Old 12-02-2016, 03:31 PM   #10
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I find it highly ironic that public employee union bosses think it is absolutely fine for private sector workers who do not have pensions and in many cases cannot even afford to set aside money for their own retirements to dig into their pockets and fund outsized pension benefits for public sector workers. As I have been saying again, and again, and again, this won't end until we do the right thing and ban public employee unions and their members from all political activities. It is utter madness. FWIW, I think the same should apply to corporations that do substantial amounts of business with the government.

It has gotten to the point with many public sector agencies that you have to "know someone" to get a job because the benefits are so cushy that insiders make sure that only their friends and family members (and the politically connected) get the best pickings. We are descending into a third world patronage system which would put Tammany Hall to shame.
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Old 12-03-2016, 03:03 AM   #11
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The very first line of every union contract states .....

"The company/employer shall have the right to manage"

When all these union contracts were being negotiated, where were the civil service managers? .... the employer (the voters) trusted these managers and politicians to properly manage their departments, and to oversee proper negotiations.

I think the managers just loved it when union employees were given huge benefits because it justified salary increases and benefits for all the non-union and salaried employees or the managers themselves. There was a conflict of interest between the non-union/salaried and those within the unionized workforce. The managers knew full well that what ever the union got, the managers would get that and more.
----
The State Pension Funding Gap: 2014
New accounting rules help provide a clearer picture
After years of not setting aside enough money, state pension funds are looking at a $1 trillion shortfall in what they owe workers in benefits, according to a new analysis from The Pew Charitable Trusts.
Pew Research
August 24, 2016
http://www.pewtrusts.org/en/research...nding-gap-2014

----

On August 27, 2016, it was claimed that the S&P 500's largest corporate pension funds are stealing a staggering $376 billion from their workers by underfunding their pension funds, new figures from Citibank reveal.

The top 25 of these plans accounted for $225bn of that underfunding.

Only 30 companies in the S&P 500 were fully funded as of year end 2015, with almost half of the overfunded companies coming from the financial sector.
http://www.wsj.com/articles/pensions...ion-1471777202

Last edited by Calm; 12-03-2016 at 03:25 AM.
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Old 12-03-2016, 01:00 PM   #12
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Calm - If you are trying to analogize the public and private sectors in terms of how they deal with unions, it is completely apples and oranges.
  • With the public sector the top "managers" as you call them (actually, the politicians) have to run for office every few years. They aren't exactly going to negotiate very hard against public employee unions, when those same unions are funding their political campaigns.
  • This is in stark contrast to the public sector where corporate executives are appointed by the directors who, in turn, are selected by the shareholders. If private sector unions want to go out and buy a bunch of company stock and have a seat or two at the board table, there is nothing to stop them from doing that. As long as they understand that directors have fiduciary duties to the shareholders as a whole, and not particular constituencies.
  • Also, many senior managers in the public sectors are actually union members themselves, which is very different from the private sector. This is another massive conflict of interest.
  • If a company gives ridiculous benefits to its union, then they are not going to be competitive and will ultimately go out of business. But there is no such pressure in the public sector.
  • Sure, private sector pension plans are underfunded and abused too (just look at Enron). But, that doesn't let the public sector (which is much, much worse) off the hook. This is particularly irrelevant because private sector pensions (particularly defined benefit plans) are rapidly becoming an anachronism. This is why it is so ironic that public sector employees get the full kit and caboodle.
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Old 12-03-2016, 01:23 PM   #13
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I intentionally placed " ---- " between the private and pubic sector comments.

Sorry if I did not make my views more clear.

The public sector department managers, (not elected officials) have a conflict of interest when negotiating with unions. The public sector managers know full well that whatever is given to the union will be given to many of the non-unionized managers (including department negotiating team members) at the next salary review.

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Old 12-03-2016, 07:11 PM   #14
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Quote:
Originally Posted by Sysiphus View Post
I find it highly ironic that public employee union bosses think it is absolutely fine for private sector workers who do not have pensions and in many cases cannot even afford to set aside money for their own retirements to dig into their pockets and fund outsized pension benefits for public sector workers. As I have been saying again, and again, and again, this won't end until we do the right thing and ban public employee unions and their members from all political activities. It is utter madness. FWIW, I think the same should apply to corporations that do substantial amounts of business with the government.

It has gotten to the point with many public sector agencies that you have to "know someone" to get a job because the benefits are so cushy that insiders make sure that only their friends and family members (and the politically connected) get the best pickings. We are descending into a third world patronage system which would put Tammany Hall to shame.
Didn't I read this morning that there was a $93,000 per California family shortfall for the public pension system?

Ah. Good old zero hedge

http://www.zerohedge.com/news/2016-1...-93k-household
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Old 12-04-2016, 12:26 AM   #15
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Ah. Good old zero hedge
Don't you mean Russian propaganda? :

j/k I think they're better than the fake news at CNN.
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Old 12-08-2016, 09:07 PM   #16
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Dallas Police and Fire Pension Board ends run on the bank, stops $154M in withdrawals

http://www.dallasnews.com/news/dalla...4m-withdrawals
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