Looks like the stock market's less than optimal performance has led to a pension crisis for Fairfax County Public Schools

http://www.fcta.org/fcta-news-feed/schoolboardurgeshighertaxestopayforpensions

"FCTA board members attended today's Fairfax County Public Schools budget forum, held at Marshall High School.

The FCTA asked why the school board is urging the supervisors to raise taxes by $81.9M although only $9M is needed to pay for next year's expected increase in student enrollment.

The school superintendent acknowledged that the reason is the increased cost in employee benefits, especially pensions. According to the schools' proposed FY2011 budget, employee benefits costs are increasing by $98M, of which $71M is for pensions and another $15M is for retiree medical benefits."

The artcle is a piece of shit anti-union propaganda. The majority of pensioned folks in this area are federal employees..and I bet the vast majority of those people were not members of any union.

The question is whether one of the wealthiest counties in the country will live up their promises.

Registered Voter...a Big talking coward..big man on FFXU...little man in life.

Typical tea-bag BS

Any group that advocates cutting teacher's salaries by 8% clearly does not give a damn about the competitiveness of FFX or the education of our children

This is not fair. Most people don't have pensions. Our 401K is at the mercy of Wall St. It's time to cut the pensions for federal employees and teachers.

Vince(1) Wrote:
-------------------------------------------------------
> The artcle is a piece of shit anti-union
> propaganda. The majority of pensioned folks in
> this area are federal employees..and I bet the
> vast majority of those people were not members of
> any union.
>
> The question is whether one of the wealthiest
> counties in the country will live up their
> promises.


What, exactly, are those promises and who made them?

It's the difference between defined benefit versus defined contribution. Under a defined benefit plan, such as pensions, the employer is obligated to pay out X-amount to retirees, regardless of what happens with the markets. This is why GM's plan is so underfunded. It's not realistic.

Defined contribution is the only realistic option. Of course, beneficiaries also theoretically receive less in the end. But it beats not getting anything at all, which you are going to see more and more from the defined benefit plans.

---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm

WashingTone-Locian Wrote:
-------------------------------------------------------
> It's the difference between defined benefit versus
> defined contribution. Under a defined benefit
> plan, such as pensions, the employer is obligated
> to pay out X-amount to retirees, regardless of
> what happens with the markets. This is why GM's
> plan is so underfunded. It's not realistic.
>
> Defined contribution is the only realistic option.
> Of course, beneficiaries also theoretically
> receive less in the end. But it beats not getting
> anything at all, which you are going to see more
> and more from the defined benefit plans.


You are slightly off base on this one WTL. If you have a defined benefit plan (DB) you will never end up with nothing should the plan be terminated after your retirement. Most pensioners recieve the full amount of the promissed pension up to a yealry maximum - around $45,000 per year or so. This is guanteed by the PBGC and is backed by the full faith and credit of the United States government.

Arline pilots being one of the few exceptions for reasons we can go into later.

I do not know of any municipality, county or state that has reneged on its promisses. The results would be catestrophic.

The average 401(k) plan has about $55,000 and is seriousely underfunded by the individual owner. When people start to retire with #150,000 or $200,000 in their 401(K) trust me, they are screwed.

Their are several problems with the defined benefit plans and the one that no one talks about is this. When you worked on a factory floor or a government job with a db plan - it was never actually designed to provide you with all or most of your income. You are supposed to have your own savings. But predicting the future is why they pay actuaries so much.

Inflation has been kept very low for the last 40-50years or so. So that promissed benefiot is much more than it was supposed to be. In other words, you were promissed say $1000 a month - but that money was supposed to be worth much much less. In reality that benefit is a decent chunk of change.

Pension funds invest in the maket and bonds and hope for a rate of return that will allow them to meet future obligations. This 5 or 6% return has not been happening as of late, hence the plan is underfunded. But should the market bounce back - the plan will be over funded and no employer contributions will have to be made. It all evens out in the end.

What is really scary is the state county and municipality had always been required to acount for the pension benefits and not the post retirement health benefits which were usually pay as you go. Now they have to account for those. Look up GASB 45 and you will see some scary stuff.

where is my pension Wrote:
-------------------------------------------------------
> This is not fair. Most people don't have pensions.
> Our 401K is at the mercy of Wall St. It's time to
> cut the pensions for federal employees and
> teachers.


This is the sort of foolish thinking which got us into this mess

"We allowed businesses, who are well placed to support long term financial investments for their people given strict government oversight and arms length trusts, to ditch pensions forcing individuals to rely on the vagaries of Wall St - now we're jealous, so now lets screw the teachers and firefighters that work for us"

Excellent

The reason big companies and local governments are having problems is that they never sustained the payments over the long haul required to meet their commitments and to ensure that their employees don't retire into poverty

Instead we allowed massive executive bonuses, pension holidays where companies stopped paying in during periods of growth and avoided looking at the well understood demographic changes which meant that we had to increase the investment over the long term.

Radiophile Wrote:
-------------------------------------------------------

> What is really scary is the state county and
> municipality had always been required to acount
> for the pension benefits and not the post
> retirement health benefits which were usually pay
> as you go. Now they have to account for those.
> Look up GASB 45 and you will see some scary stuff.

This is part of a more general problem.

I've been arguing for the best part of a decade that while we have tools/vehicles/policies/professionals that let people plan/save/invest for financial retirement - we don't have tools/vehicles/policies/professionals that let people plan/save/invest for healthcare retirement

Everyone's retirement is in trouble. The whole 401K thing was a scam. It was a way for corporations to jettison their pension plan costs onto their workers. I'd love to attend one of the introductory 401K seminars today. I imagine it goes something like this "If you had invested $100 in our fund in 1980, you'd have...ah...well, ah...looks like you'd have $98"

If pension plans (who have professional, full-time, highly educated fund managers) are losing money in the market, how is the average Joe supposed to win in the market when they can't spend 40 hours a week managing their account? Mutual funds? Hah...with their fees and performance, you'll still be working at 85. The entire country faces a retirement crisis.

And if you are counting on the market saving us all, just wait until Wall Street finds out that the Fed has been purchasing billions of $$'s worth of publicly traded stock in an attempt the DJIA & NASDAQ up. Why do you think they're trying to keep their ballance sheet secret? http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a4PnUdySIink

When that day comes, I hope you've cashed out of the ponzi scheme.

trogdor is exactly right. The trouble is companies are moving away from defined benefit retirements going instead to defined contributions or matching 401 plans.
Sadly no matter how smart people think they are they are just not smart enough to manage a retirement plan over the long term. The up and down market and user fees will eat you alive.

Case in point is Enron. The employees had no idea what was going on and some invested 100% in Enron not knowing the company was cooking the books.

Timing is everything and you cannot expect an everyday worker to be able to do their job and also keep an eye on the world financial markets.

All I am saying is that a defined benefit plan is unrealistic. It is designed to result in deficit spending from the government agency or bankruptcy from the corporation that offers it. As for the PBGC, it is seriously underfunded. PBGC does not have an obligation to honor anyone's pension at 100%. There are set limits. If a company goes Chapter 7, PBGC will only fund the pension up to what can be recovered from the company. This means retirees might see 10, 20 or 30 percent of what they were promised. Or, in the worst case scenario, nothing at all.

Yes, 401Ks are a scam because they rely on individuals' saving money. But the fact is, no employer can buck fiscal reality when funding retirements.

---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm

WashingTone-Locian Wrote:
-------------------------------------------------------

>
> Yes, 401Ks are a scam because they rely on
> individuals' saving money. But the fact is, no
> employer can buck fiscal reality when funding
> retirements.


Exactly - they have to live up to the commitments made in the contract with their employees

-> Fully fund employer pension commitments even if it means cutting board bonuses and restricting dividends.


- The funds should be paid into protected funds as the commitments are accrued.
- The funds should be managed by independent executives responsible to the employees
- The funds should be aggressively over-seen by regulators with enforcement powers
- The funds should not be able to invest in the company concerned and should have a balanced portfolio which does not expose employees to excessive risk e.g. should not be weighted towards the company's industry
- The companies should not be able to 'do a Maxwell' and just dip into the funds when it suits them
- The companies should not be allowed to take handy pension holidays when the markets are booming, spend the money on expensive acquisitions/big bonuses and then complain and short change employees when the markets fall
- The companies should be expected to make up any shortfall due to earlier under-investment

Its not hard - if you can't treat your employees like real people and live upto the commitments in your contracts, you shouldn't be allowed to have employees

I never understand why the US wants to be Mexico when it grows up and not Germany

TheNextCrisis Wrote:
-------------------------------------------------------
> Looks like the stock market's less than optimal
> performance has led to a pension crisis for
> Fairfax County Public Schools
>
> http://www.fcta.org/fcta-news-feed/schoolboardurge
> shighertaxestopayforpensions
>
> "FCTA board members attended today's Fairfax
> County Public Schools budget forum, held at
> Marshall High School.
>
> The FCTA asked why the school board is urging the
> supervisors to raise taxes by $81.9M although only
> $9M is needed to pay for next year's expected
> increase in student enrollment.
>
> The school superintendent acknowledged that the
> reason is the increased cost in employee benefits,
> especially pensions. According to the schools'
> proposed FY2011 budget, employee benefits costs
> are increasing by $98M, of which $71M is for
> pensions and another $15M is for retiree medical
> benefits."


Let me break it down to its simplest terms.... Civil service employees historically trade higher pay in exchange for more job security and a pension and benefits compared to the private sector. Where conversely the private sector historically gets higher pay but with less benefits and overall job security.

In regards to the pensions and health benefits, the local government agreed to fund part of the pensions and health benefits in order to attract and retain qualified personnel for LONG term employment.

The County BOS has been fortunate in the past because instead of fulfilling their fiduciary obligations in the past, they invested in the stock market which high returns offset how much money they had to front for years.They then could then put the "surplus" back into that black hole called the general fund. Now that there has been a market correction the Politicians are whining because they have to honor their commitments and much like the proverbial story of the grasshopper and the Ant did not put the money aside for this eventuality. Why should they? put off today what could be someone's else's headache tomorrow? Besides they'll just get the taxpayers A. raise taxes or B. cut down all those benefits for those "overpaid' teachers. In all likelihood they'll orchestrate some nonsense provision thereby providing the same level of benefits for the current employees and drastically cutting the benefits package for any new employees. Up North its called, "selling out the unborn". Ultimately, the Politicians will skate and the quality of instruction will further erode.

The accounting rules allowed organizations to systemically underfund pension plans. When the market was generating returns in excess needed for anticipated retirement costs, they didn't have to contribute to the plans. When the market turned south, the accounting rules allowed the organizations to assume that the portfolios were still achieving returns in line with historical assumptions (7-8%) and ignore shortfalls in performance, thereby allowing the shortfalls to keep growing through a combination of poor performance and underfunding.

You might say that the executives and the current employees systematically cheated the pension plans. They could pretend that the funds would recover and the budgets would repair themselves, thereby sparing themselves layoffs and keep paying themselves lavish salaries.

Exactly! 401K is a big ponzi scheme, and there is no guarantee that you are going to get back 100% of your contribution. Why are we having a guaranteed benefit for government employees and teachers, while most of us struggle on our own? PBGC is 40 billion in the red. The only way to keep the guaranteed benefits is a bailout from taxpayers.

trogdor! Wrote:
-------------------------------------------------------
> Everyone's retirement is in trouble. The whole
> 401K thing was a scam. It was a way for
> corporations to jettison their pension plan costs
> onto their workers. I'd love to attend one of the
> introductory 401K seminars today. I imagine it
> goes something like this "If you had invested $100
> in our fund in 1980, you'd have...ah...well,
> ah...looks like you'd have $98"
>
> If pension plans (who have professional,
> full-time, highly educated fund managers) are
> losing money in the market, how is the average Joe
> supposed to win in the market when they can't
> spend 40 hours a week managing their account?
> Mutual funds? Hah...with their fees and
> performance, you'll still be working at 85. The
> entire country faces a retirement crisis.
>
> And if you are counting on the market saving us
> all, just wait until Wall Street finds out that
> the Fed has been purchasing billions of $$'s worth
> of publicly traded stock in an attempt the DJIA &
> NASDAQ up. Why do you think they're trying to keep
> their ballance sheet secret?
> http://www.bloomberg.com/apps/news?pid=newsarchive
> &sid=a4PnUdySIink
>
> When that day comes, I hope you've cashed out of
> the ponzi scheme.

where is my pension Wrote:
-------------------------------------------------------
> Exactly! 401K is a big ponzi scheme, and there is
> no guarantee that you are going to get back 100%
> of your contribution. Why are we having a
> guaranteed benefit for government employees and
> teachers, while most of us struggle on our own?
> PBGC is 40 billion in the red. The only way to
> keep the guaranteed benefits is a bailout from
> taxpayers.
>

Because those are the terms of their employment..dont like it..vote for people who promise to change it. But the fact is every teacher has contributed to their retirement..it's not as if it is a bennefit being given to anyone. The fact that staes and counties have stolen this money to pay for current expenses and to not have to rraise taxes...isnt the fault of any teacher. If changed in anyway teachers should be given back their contributions with interest.

Registered Voter...a Big talking coward..big man on FFXU...little man in life.

I am not saying this is the fault of teachers. It's the same arguments that Wall St. bankers used to get their bonuses even in bankruptcy. The contracts need to be reworked to reflect the reality. Most companies got rid of their pension plans. Unfortunately this is the sad reality of this country. The Math doesn't add up. It's not sustainable to raise taxes on people with only 401k to pay for pensions of government employees.




Vince(1) Wrote:
-------------------------------------------------------
> where is my pension Wrote:
> --------------------------------------------------
> -----
> > Exactly! 401K is a big ponzi scheme, and there
> is
> > no guarantee that you are going to get back
> 100%
> > of your contribution. Why are we having a
> > guaranteed benefit for government employees and
> > teachers, while most of us struggle on our own?
> > PBGC is 40 billion in the red. The only way to
> > keep the guaranteed benefits is a bailout from
> > taxpayers.
> >
>
> Because those are the terms of their
> employment..dont like it..vote for people who
> promise to change it. But the fact is every
> teacher has contributed to their retirement..it's
> not as if it is a bennefit being given to anyone.
> The fact that staes and counties have stolen this
> money to pay for current expenses and to not have
> to rraise taxes...isnt the fault of any teacher.
> If changed in anyway teachers should be given back
> their contributions with interest.