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Thread: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

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    Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Detroit

    Coincidence that another liberal paradise of oversized promises and good intentions is going awry? I think the solution is to *obviously* give the political class more power so they can legislate Detroit back to prosperity!

    No Refuge

    Union battles have played a role in three of the four biggest municipal bankruptcies filed since 2008. That year, Vallejo sought court protection after unions rejected wage cuts.
    The onetime U.S. Navy town of about 120,000 on San Francisco Bay imposed new contracts on workers, cut its police force and eliminated medical benefits for retirees.
    Last year, Stockton and San Bernardino in California filed bankruptcy, citing pension and other labor costs. Both cities have demanded that workers pay more toward their pensions.
    “Bankruptcy has not been a panacea for labor unions,” Ron M. Oliner, a lawyer who represented the police union in Vallejo. “It is hard to fathom a circumstance where Detroit’s unions would not want to negotiate in an effort to avoid a filing if possible.”
    Milewski, the firefighter, said the city should take care of those who sacrificed for it.
    “For years we kept saying they can’t, they can’t, there’s no way they can cut us as retirees, and take away money these guys earned in a career,” Milewski said. “It’s so disheartening, and not just in my situation, where I lost the use of my legs in the line of duty.”

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Well pension plans need to be replaced with IRA's everywhere. They have proven themselves repeatedly to be the bane of our existence from the USPS down.

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Quote Originally Posted by Fisher View Post
    Well pension plans need to be replaced with IRA's everywhere. They have proven themselves repeatedly to be the bane of our existence from the USPS down.
    Except for the fact that they're already paid for by the workers.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Quote Originally Posted by American View Post
    Except for the fact that they're already paid for by the workers.
    No they are not--not until the person has actually retired. IRA's are paid for by the workers as they go. Pension plans require additional and unending contributions by the employer which is why they fail and end up being put in the hands of some place like State Street that pays them out based upon existing contributions, shafting people who have yet to retire.

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Quote Originally Posted by Fisher View Post
    Well pension plans need to be replaced with IRA's everywhere. They have proven themselves repeatedly to be the bane of our existence from the USPS down.
    Obama wants those, too. It seems only the wealthier people are contributing to them. Imagine that.

    That's unfair in Obama's eyes, so he wants to tax it heavier.

    Review & Outlook: Now He's After Your 401(k) - WSJ.com

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Quote Originally Posted by American View Post
    Except for the fact that they're already paid for by the workers.
    Detroit's pension plan allows for 0-7% contribution which is actually maintained separately from the normal retirement benefit plan. Would be interesting to see what the average employee contribution is.

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Governments simply need to stop making promises without funding them in advance. They are like a spendthrift with a wallet full of credit cards.

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    Re: Detroit's Recovery Plan Dips into Pensions to Keep City Afloat

    Quote Originally Posted by American View Post
    Except for the fact that they're already paid for by the workers.
    Nope, in many cases not. They were promised a certain level of benefits, and the money they paid in often didn't even come close to covering the cost of the benefits. In other cases the company or union, whoever was managing the pension fund, screwed that up or the economy just went south and nobody could help it. In any case, those benefits were not covered by the funds available. Ipso facto, somebody ends up holding the bag, and the cities don't have the money either, nor can they expect to get it from their declining tax base. This is often exacerbated by the fact that the benefits were way too generous to begin with, often at levels that no one could reasonably expect to be able to pay.

    No matter which way you cut it, defined benefit plans are often untenable. Defined contribution plans are the way to go from now on.

    "The urge to save humanity is almost always a false front for the urge to rule." --HL Mencken

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