“The Coming Pensions Crisis ”

[Asiantravel]

Last month the powerful US Teamsters union announced the shocking news that it will need to cut the pension allowance of its 270,000 members by 50% because their pension fund is simply not making any money! but I think its increasingly likely there will be many more pension fund disappointments as we move along.

now Citigroup Inc has released a report called, “The Coming Pensions Crisis,” in which it analyses government pension liabilities from 20 countries that are members of the Organisation for Economic Co-operation and Development .

DELETED

http://blogs.wsj.com/moneybeat/2016/03/17/global-government-debt-is-actually-triple-what-we-thought-thanks-to-pensions/

Edited March 20, 2016 by seedy
fair use

[Denim]

When it comes to pensions

You pay and pay to get by and

they pray and pray that you'll die.

[jpinx]

USA theme?

[uthaithanirules]

Somethings gotta give

[swissie]

Of course, unless Pension Funds start successfully trading commodities, where else should they invest the money to produce sufficient yield to cover their future liabilities?

Regular people, started to do some basic mathematics and concluded that it is more attractive to withdraw their pension funds today, instead of awaiting long term disaster.

- The Swiss- Government is currently contemplating to make early withdraws illegal. They know very well why they have to resort to such measures.

Today Switzerland, tomorrow the rest of Western Europe.

Cheers .

[Cloggie]

All pensions are nothing more than Ponzi Schemes as all the money you invest in your pension goes to other people and NOT to you and you must hope and pray enough people will join the pension so when you are old enough other people will pay for YOU.

[elgordo38]

When it comes to pensions

You pay and pay to get by and

they pray and pray that you'll die.

There is no investment left to put pension contributions in but the stock market. Countries are already telling their citizens be prepared to work into your eighties. Lets be thankful we are where we are at in life we should make it to the finish line. Our offspring and their offspring not so much so. The new mantra today is Arbeit macht frei. Its the sign hanging over the entrance to Dachau prison camp. Yes history will repeat itself we are after all prisoners of the system.

Edited March 20, 2016 by elgordo38

[DogNo1]

A natural result of the globalization of labor. If people somewhere are willing to work for peanuts with minimal benefits, it will affect us all sooner or later.

[CaptHaddock]

Not everyone is convinced by the anti-pension, anti-Social Security viewpoint espoused by big corporations like the NY Times and Wall St. Journal.

Here's Dean Baker at CEPR:

Most newspapers try to avoid the self-serving studies that industry groups put out to try to gain public support for their favored policies. But apparently the New York Times does not feel bound by such standards. It ran a major news story on a study by Citigroup that was designed to scare people about the state of public pensions and encourage them to trust more of their retirement savings to the financial industry.

Both the article and the study itself seem intended to scare more than inform. For example, the piece tells readers;

"Twenty countries of the

Organization for Economic Cooperation and Development

have promised their retirees a total $78 trillion, much of it unfunded, according to

the Citigroup report

.

"That is close to twice the $44 trillion total

national debt

of those 20 countries, and the pension obligations are 'not on government balance sheets,' Citigroup said."

Okay folks, how much is $78 trillion over the rest of the century for the 20 OECD countries mentioned? Is it bigger than a breadbox?

The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT's readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.

For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we're talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.

http://cepr.net/blogs/beat-the-press/new-york-times-hypes-financial-industry-scare-story-on-public-pensions?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

[rakman]

A large part of the problem is the initial actuarial assumptions made by the pensions and US Social Security.

Back in the 1930's, the life expectancy of a white male was 64, but payments started at 65 years of age. To collect on Social Security, one had to win life's lottery. As life expectancy has grown, the start of SS payments hasn't changed, but more people are living longer, and getting paid more than they put in.

One would expect the same situation with other pensions.

Net result, something has to change.

[Asiantravel]

When it comes to pensions

You pay and pay to get by and

they pray and pray that you'll die.

There is no investment left to put pension contributions in but the stock market. Countries are already telling their citizens be prepared to work into your eighties. Lets be thankful we are where we are at in life we should make it to the finish line. Our offspring and their offspring not so much so. The new mantra today is Arbeit macht frei. Its the sign hanging over the entrance to Dachau prison camp. Yes history will repeat itself we are after all prisoners of the system.

" Countries are already telling their citizens be prepared to work into your eighties "

while the average life expectancy is only 81.5 years

this article from just three weeks ago....................

Workers may need to retire as late as 81 to get a pension like their parents', report warns

http://www.independent.co.uk/news/business/news/pension-age-retire-royal-london-westminster-81-a6906676.html

[Asiantravel]

Not everyone is convinced by the anti-pension, anti-Social Security viewpoint espoused by big corporations like the NY Times and Wall St. Journal.

Here's Dean Baker at CEPR:

Most newspapers try to avoid the self-serving studies that industry groups put out to try to gain public support for their favored policies. But apparently the New York Times does not feel bound by such standards. It ran a major news story on a study by Citigroup that was designed to scare people about the state of public pensions and encourage them to trust more of their retirement savings to the financial industry.

Both the article and the study itself seem intended to scare more than inform. For example, the piece tells readers;

"Twenty countries of the

Organization for Economic Cooperation and Development

have promised their retirees a total $78 trillion, much of it unfunded, according to

the Citigroup report

.

"That is close to twice the $44 trillion total

national debt

of those 20 countries, and the pension obligations are 'not on government balance sheets,' Citigroup said."

Okay folks, how much is $78 trillion over the rest of the century for the 20 OECD countries mentioned? Is it bigger than a breadbox?

The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT's readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.

For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we're talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.

http://cepr.net/blogs/beat-the-press/new-york-times-hypes-financial-industry-scare-story-on-public-pensions?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

" GDP in these countries for the next 80 years will be around $2,000 trillion "

ha ha !! unicorns and fairies

and the way the trend is with artificial intelligence and robotics very many people will be lucky to even have a job to retire from

[laolover88]

My pension is a Noodle Stall run by my family . I do seem to pay a lot more in than what I get as a return!!. However even in Thailand I trust them more than any "financial adviser" or pension "provider". My UK State pension is about 550GBP or about 26000 Baht. That's less than the Noodles come up with. If you compare the NI and other things paid over 40+years with the investment in the noodles....Quite. As far as I can see the only benefit from the UK is the free NHS or what is left of it. And you have to go there. I would rather pay for my pension providers to work than give a bonus to some fat cat in Docklands.

[CaptHaddock]

A large part of the problem is the initial actuarial assumptions made by the pensions and US Social Security.

Back in the 1930's, the life expectancy of a white male was 64, but payments started at 65 years of age. To collect on Social Security, one had to win life's lottery. As life expectancy has grown, the start of SS payments hasn't changed, but more people are living longer, and getting paid more than they put in.

One would expect the same situation with other pensions.

Net result, something has to change.

Might seem reasonable on the face of it, but, nope, unexpected longevity is not actually the problem. At least, not most of the problem.

First, Full Retirement Age has indeed been pushed higher in recent years. For my cohort that is 66 years. For those younger it's now 67 years. Longevity has increased among those with more education and higher income, but not so much for the working class.

The largest component of the funding problem for Social Security, to the extent that there is indeed such a problem, is that less income is liable for the payroll tax than in the past. This change came about for several reasons:

1. the cap on payroll taxes currently at $118,500/year. Above that, income is payroll-tax free.

2. the increase in using stock options as employee compensation, also payroll-tax free.

3. the greater portion of income from capital gains, dividends, and interest than in the past, all of which is payroll-tax free.

In the past Americans' aggregate income subject to the payroll tax was around 90%. Currently, its' around 83% IIRC. This radical change accounts for about half of the shortfall for SS funding, under the most pessimistic assumptions about future payroll growth in the US.

As should be apparent, the benefits from the exclusions above fall almost entirely on the higher income groups. These features, along with tax cuts for the rich beginning with Reagan, are what have enabled the top 1% in America to claim nearly all of the productivity gains in the last 30 years.

Eliminating the cap on payroll taxes would go a long way to assuring SS funding into the future.

Edited March 21, 2016 by CaptHaddock

[CaptHaddock]

Not everyone is convinced by the anti-pension, anti-Social Security viewpoint espoused by big corporations like the NY Times and Wall St. Journal.

Here's Dean Baker at CEPR:

Most newspapers try to avoid the self-serving studies that industry groups put out to try to gain public support for their favored policies. But apparently the New York Times does not feel bound by such standards. It ran a major news story on a study by Citigroup that was designed to scare people about the state of public pensions and encourage them to trust more of their retirement savings to the financial industry.

Both the article and the study itself seem intended to scare more than inform. For example, the piece tells readers;

"Twenty countries of the

Organization for Economic Cooperation and Development

have promised their retirees a total $78 trillion, much of it unfunded, according to

the Citigroup report

.

"That is close to twice the $44 trillion total

national debt

of those 20 countries, and the pension obligations are 'not on government balance sheets,' Citigroup said."

Okay folks, how much is $78 trillion over the rest of the century for the 20 OECD countries mentioned? Is it bigger than a breadbox?

The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT's readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.

For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we're talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.

http://cepr.net/blogs/beat-the-press/new-york-times-hypes-financial-industry-scare-story-on-public-pensions?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

" GDP in these countries for the next 80 years will be around $2,000 trillion "

ha ha !! unicorns and fairies

and the way the trend is with artificial intelligence and robotics very many people will be lucky to even have a job to retire from

Even if the robots were to take over the factories eliminating a lot of jobs, that would not reduce GDP, which is economic output.

It helps to understand the basic concepts when discussing the economy.

Edited March 21, 2016 by CaptHaddock

[Asiantravel]

Not everyone is convinced by the anti-pension, anti-Social Security viewpoint espoused by big corporations like the NY Times and Wall St. Journal.

Here's Dean Baker at CEPR:

Most newspapers try to avoid the self-serving studies that industry groups put out to try to gain public support for their favored policies. But apparently the New York Times does not feel bound by such standards. It ran a major news story on a study by Citigroup that was designed to scare people about the state of public pensions and encourage them to trust more of their retirement savings to the financial industry.

Both the article and the study itself seem intended to scare more than inform. For example, the piece tells readers;

"Twenty countries of the

Organization for Economic Cooperation and Development

have promised their retirees a total $78 trillion, much of it unfunded, according to

the Citigroup report

.

"That is close to twice the $44 trillion total

national debt

of those 20 countries, and the pension obligations are 'not on government balance sheets,' Citigroup said."

Okay folks, how much is $78 trillion over the rest of the century for the 20 OECD countries mentioned? Is it bigger than a breadbox?

The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT's readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.

For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we're talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.

http://cepr.net/blogs/beat-the-press/new-york-times-hypes-financial-industry-scare-story-on-public-pensions?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

" GDP in these countries for the next 80 years will be around $2,000 trillion "

ha ha !! unicorns and fairies

and the way the trend is with artificial intelligence and robotics very many people will be lucky to even have a job to retire from

Even if the robots were to take over the factories eliminating a lot of jobs, that would not reduce GDP, which is economic output.

It helps to understand the basic concepts when discussing the economy.

“It helps to understand the basic concepts when discussing the economy. “

70% of USA’s GDP has been based on nothing more than personal consumption. The last I heard robots don’t consume very much

[CaptHaddock]

Not everyone is convinced by the anti-pension, anti-Social Security viewpoint espoused by big corporations like the NY Times and Wall St. Journal.

Here's Dean Baker at CEPR:

Most newspapers try to avoid the self-serving studies that industry groups put out to try to gain public support for their favored policies. But apparently the New York Times does not feel bound by such standards. It ran a major news story on a study by Citigroup that was designed to scare people about the state of public pensions and encourage them to trust more of their retirement savings to the financial industry.

Both the article and the study itself seem intended to scare more than inform. For example, the piece tells readers;

Okay folks, how much is $78 trillion over the rest of the century for the 20 OECD countries mentioned? Is it bigger than a breadbox?

"Twenty countries of the Organization for Economic Cooperation and Development have promised their retirees a total $78 trillion, much of it unfunded, according to the Citigroup report.

"That is close to twice the $44 trillion total national debt of those 20 countries, and the pension obligations are 'not on government balance sheets,' Citigroup said."

The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT's readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.

For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we're talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.

http://cepr.net/blogs/beat-the-press/new-york-times-hypes-financial-industry-scare-story-on-public-pensions?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

" GDP in these countries for the next 80 years will be around $2,000 trillion "

ha ha !! unicorns and fairies

and the way the trend is with artificial intelligence and robotics very many people will be lucky to even have a job to retire from

Even if the robots were to take over the factories eliminating a lot of jobs, that would not reduce GDP, which is economic output.

It helps to understand the basic concepts when discussing the economy.

“It helps to understand the basic concepts when discussing the economy. “

70% of USA’s GDP has been based on nothing more than personal consumption. The last I heard robots don’t consume very much

Once again, best to look up a definition. Gross Domestic Production does not count consumption. For both countries like the US which consumes 70% of its own consumption and Thailand which exports 70% of its production, the difference between export and local consumption does not affect GDP. It does show up in a comparison of standards of living, of course.

[Asiantravel]

" GDP in these countries for the next 80 years will be around $2,000 trillion "

ha ha !! unicorns and fairies

and the way the trend is with artificial intelligence and robotics very many people will be lucky to even have a job to retire from

Even if the robots were to take over the factories eliminating a lot of jobs, that would not reduce GDP, which is economic output.

It helps to understand the basic concepts when discussing the economy.

“It helps to understand the basic concepts when discussing the economy. “

70% of USA’s GDP has been based on nothing more than personal consumption. The last I heard robots don’t consume very much

Once again, best to look up a definition. Gross Domestic Production does not count consumption. For both countries like the US which consumes 70% of its own consumption and Thailand which exports 70% of its production, the difference between export and local consumption does not affect GDP. It does show up in a comparison of standards of living, of course.

" Gross Domestic Production does not count consumption " according to who?

What is 'Gross Domestic Product - GDP'

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exportsminus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s GDP)

http://www.investopedia.com/terms/g/gdp.asp

plus you are trying to defend someone who is purporting to forecast income generation over the next 80 years without a single shred of evidence to support his theory ? I think just seeing that the Teamsters union in USA is needing to cut its allowance by 50% now is far more indicative of the Ponzi -like nature of pensions and that they won't survive.

Edited March 21, 2016 by Asiantravel

[CaptHaddock]

GDP measures production of goods and services. There are two ways of tallying such economic output: you can count units coming out the factory doors or you can count units bought, added to inventory, or exported. But you can't count both. When GM makes a $30k car and sells it, GDP goes up by $30k, not $60k.

Here's the formula commonly used:

The formula to calculate the components of GDP is Y = C + I + G + X. That's stand for: Y (GDP) = Consumption + Investment + Government + X (net exports, or imports minus exports.)

http://useconomy.about.com/od/grossdomesticproduct/f/GDP_Components.htm

If it seems odd that there is no component called Output, it's because counting only Consumption, Investment, and Exports avoids the double-counting problem. But it's still production that we are measuring. The robots already at work in places like GM's factories are certainly contributing to GDP, even if they consume only a little electricity.

Prediction is hard, especially for the future, but if you are going to go out on a limb to predict future pension and retirement liabilities, if you don't then attempt to estimate what portion of the economies that dollar number represents then you are being dishonest, not modest.

[timber]

Unfortunately for some time the writing has been on the wall. Nobody is going to look after your future except you. If you want to have a secure

retirement you have to invest in retirement savings plans which are tax deductible, and for the average person doesn't take a lot of sacrifice.

The biggest problem is that it is best started when you are young, and want to buy the boy toys and keep up with the Jones's. One of the best

inheritances you can give to your children is to invest in a retirement saving plan, which can't be touched until they are in their sixties.

[Asiantravel]

GDP measures production of goods and services. There are two ways of tallying such economic output: you can count units coming out the factory doors or you can count units bought, added to inventory, or exported. But you can't count both. When GM makes a $30k car and sells it, GDP goes up by $30k, not $60k.

Here's the formula commonly used:

The formula to calculate the components of GDP is Y = C + I + G + X. That's stand for: Y (GDP) = Consumption + Investment + Government + X (net exports, or imports minus exports.)

http://useconomy.about.com/od/grossdomesticproduct/f/GDP_Components.htm

If it seems odd that there is no component called Output, it's because counting only Consumption, Investment, and Exports avoids the double-counting problem. But it's still production that we are measuring. The robots already at work in places like GM's factories are certainly contributing to GDP, even if they consume only a little electricity.

Prediction is hard, especially for the future, but if you are going to go out on a limb to predict future pension and retirement liabilities, if you don't then attempt to estimate what portion of the economies that dollar number represents then you are being dishonest, not modest.

" Prediction is hard, especially for the future, but if you are going to go out on a limb to predict future pension and retirement liabilities "

The totally unregulated global derivatives market is worth $700 trillion and if that blows up as many predict that will put a serious dent in his $2000 trillion prediction just for a start

[CaptHaddock]

GDP measures production of goods and services. There are two ways of tallying such economic output: you can count units coming out the factory doors or you can count units bought, added to inventory, or exported. But you can't count both. When GM makes a $30k car and sells it, GDP goes up by $30k, not $60k.

Here's the formula commonly used:

The formula to calculate the components of GDP is Y = C + I + G + X. That's stand for: Y (GDP) = Consumption + Investment + Government + X (net exports, or imports minus exports.)

http://useconomy.about.com/od/grossdomesticproduct/f/GDP_Components.htm

If it seems odd that there is no component called Output, it's because counting only Consumption, Investment, and Exports avoids the double-counting problem. But it's still production that we are measuring. The robots already at work in places like GM's factories are certainly contributing to GDP, even if they consume only a little electricity.

Prediction is hard, especially for the future, but if you are going to go out on a limb to predict future pension and retirement liabilities, if you don't then attempt to estimate what portion of the economies that dollar number represents then you are being dishonest, not modest.

" Prediction is hard, especially for the future, but if you are going to go out on a limb to predict future pension and retirement liabilities "

The totally unregulated global derivatives market is worth $700 trillion and if that blows up as many predict that will put a serious dent in his $2000 trillion prediction just for a start

I wouldn't begin to attempt to explain the difference between the notional value of a derivative versus its risk to someone who doesn't understand a concept as simple as GDP.

[JimGant]

Kinda an apples and oranges OP -- Teamster pensions in turmoil, then a referral to a WSJ article about government pensions. Yes, we know private defined benefit pensions, like that of the Teamsters, have been underfunded for years. But government pensions -- at least Federal pensions -- have the backing of taxation -- and, in extremis, the printing presses.

That Australia is the best amongst the OECD countries is probably not too surprising, since their means testing is enviable, from a solvency standpoint -- i.e., if your retirement earnings plus certain financial assets equal a given amount, you then get zip in a government pension. Ok, we're now to realize with this scenario that a government "pension" is nothing more than a social program for the less well off. But, even in the US, means testing is already built into Social Security, with the fat cat, paying max into Social Security taxes -- even with the $118k cap -- geting zero return on his FICA payments during his least years of payments. Contrast this with the individual who barely makes the cutoff for a payout, by paying into SS for only 10 years. The return on SS taxes paid is substantial -- only because the formula looks at him nearly the same as a janitor who paid in for 40 years. It is, indeed, a social -- not a retirement -- program.

Anyway, government pensions are easily handled, by raising taxes, or lowering payouts to the well-off, or both. Simpson-Bowles addressed this -- but politics got in the way. And it was only recently that SS payouts began to exceed SS taxes -- so that some wickering of pay ins vs pay outs now needs to be accomplished. Again, eliminating the tax cap -- or even taxing all income, not just earned income -- could eliminate the gap (and thus even lower the FICA tax rate as a bonus, at least to the lower strata). Add in increased means testing -- and, viola -- a completely solvent pay-as-you-go system.

Local governments, at least in the US, have a tougher problem. Deficit funding is restricted. And their unionized promises well exceed what's available for payout. So, like the Teamsters, your local cop, after 20 years, won't be able to retire on 80% of his last active paycheck. Welcome to reality.

[Asiantravel]

Kinda an apples and oranges OP -- Teamster pensions in turmoil, then a referral to a WSJ article about government pensions. Yes, we know private defined benefit pensions, like that of the Teamsters, have been underfunded for years. But government pensions -- at least Federal pensions -- have the backing of taxation -- and, in extremis, the printing presses.

That Australia is the best amongst the OECD countries is probably not too surprising, since their means testing is enviable, from a solvency standpoint -- i.e., if your retirement earnings plus certain financial assets equal a given amount, you then get zip in a government pension. Ok, we're now to realize with this scenario that a government "pension" is nothing more than a social program for the less well off. But, even in the US, means testing is already built into Social Security, with the fat cat, paying max into Social Security taxes -- even with the $118k cap -- geting zero return on his FICA payments during his least years of payments. Contrast this with the individual who barely makes the cutoff for a payout, by paying into SS for only 10 years. The return on SS taxes paid is substantial -- only because the formula looks at him nearly the same as a janitor who paid in for 40 years. It is, indeed, a social -- not a retirement -- program.

Anyway, government pensions are easily handled, by raising taxes, or lowering payouts to the well-off, or both. Simpson-Bowles addressed this -- but politics got in the way. And it was only recently that SS payouts began to exceed SS taxes -- so that some wickering of pay ins vs pay outs now needs to be accomplished. Again, eliminating the tax cap -- or even taxing all income, not just earned income -- could eliminate the gap (and thus even lower the FICA tax rate as a bonus, at least to the lower strata). Add in increased means testing -- and, viola -- a completely solvent pay-as-you-go system.

Local governments, at least in the US, have a tougher problem. Deficit funding is restricted. And their unionized promises well exceed what's available for payout. So, like the Teamsters, your local cop, after 20 years, won't be able to retire on 80% of his last active paycheck. Welcome to reality.

" Anyway, government pensions are easily handled, by raising taxes "

I wouldn't say easily handled? I mean how many tax increases can people realistically cope with levied against their ever dwindling real incomes?

Problems pile up for US public pensions

" Analysis of 56 US public pension schemes has found that their funding deficits are set to grow by hundreds of billions of dollars this year, forcing some of America’s biggest states and cities to cut spending and raise taxes."

http://www.ft.com/cms/s/0/66b6b70c-eba6-11e5-bb79-2303682345c8.html#axzz43YBBjRQ6

meanwhile over in Europe.......................

CLAIM: NEARLY 200 PENSION FUNDS IN FINANCIAL TROUBLE

http://www.nltimes.nl/2015/06/30/claim-nearly-200-pension-funds-in-financial-trouble/

Edited March 21, 2016 by Asiantravel

[rakman]

A large part of the problem is the initial actuarial assumptions made by the pensions and US Social Security.

Back in the 1930's, the life expectancy of a white male was 64, but payments started at 65 years of age. To collect on Social Security, one had to win life's lottery. As life expectancy has grown, the start of SS payments hasn't changed, but more people are living longer, and getting paid more than they put in.

One would expect the same situation with other pensions.

Net result, something has to change.

Might seem reasonable on the face of it, but, nope, unexpected longevity is not actually the problem. At least, not most of the problem.

First, Full Retirement Age has indeed been pushed higher in recent years. For my cohort that is 66 years. For those younger it's now 67 years. Longevity has increased among those with more education and higher income, but not so much for the working class.

The largest component of the funding problem for Social Security, to the extent that there is indeed such a problem, is that less income is liable for the payroll tax than in the past. This change came about for several reasons:

1. the cap on payroll taxes currently at $118,500/year. Above that, income is payroll-tax free.

2. the increase in using stock options as employee compensation, also payroll-tax free.

3. the greater portion of income from capital gains, dividends, and interest than in the past, all of which is payroll-tax free.

In the past Americans' aggregate income subject to the payroll tax was around 90%. Currently, its' around 83% IIRC. This radical change accounts for about half of the shortfall for SS funding, under the most pessimistic assumptions about future payroll growth in the US.

As should be apparent, the benefits from the exclusions above fall almost entirely on the higher income groups. These features, along with tax cuts for the rich beginning with Reagan, are what have enabled the top 1% in America to claim nearly all of the productivity gains in the last 30 years.

Eliminating the cap on payroll taxes would go a long way to assuring SS funding into the future.

The reason the payroll tax is limited to $116,500 is the max that one can receive back in payments is also limited, at early retirement (62) the benefit is $2,102/mo, if you wait for 66, full retirement benefit is $2,639 / month, but if you wait to a later age (70) the max amount is $3,576. Only 6 percent of workers earn more than the maximum taxable amount, but are still limited in how much their benefit will be.If you earn less, your benefit will be less.

Now if you paid in the full amount (12.5%x 116,500x 40 years) your fictional account has $577,840 and if you get the full benefit of $2639 per month, you will break even at 219 months or 18.2 years.

But that doesn't happen. The percentage and max taxable income has varied over time. If you go back 40 years, the max taxable income was $14,100 and the percentage of the tax was much lower, This means a lot less money in your fictional account, and your break even date is much, much shorter. Too complex to give an accurate amount without spending a huge amount of research.

In addition, Social Security also pay out much more in funds than just retirements, such as disability and child survivorship.

[CaptHaddock]

A large part of the problem is the initial actuarial assumptions made by the pensions and US Social Security.

Back in the 1930's, the life expectancy of a white male was 64, but payments started at 65 years of age. To collect on Social Security, one had to win life's lottery. As life expectancy has grown, the start of SS payments hasn't changed, but more people are living longer, and getting paid more than they put in.

One would expect the same situation with other pensions.

Net result, something has to change.

Might seem reasonable on the face of it, but, nope, unexpected longevity is not actually the problem. At least, not most of the problem.

First, Full Retirement Age has indeed been pushed higher in recent years. For my cohort that is 66 years. For those younger it's now 67 years. Longevity has increased among those with more education and higher income, but not so much for the working class.

The largest component of the funding problem for Social Security, to the extent that there is indeed such a problem, is that less income is liable for the payroll tax than in the past. This change came about for several reasons:

1. the cap on payroll taxes currently at $118,500/year. Above that, income is payroll-tax free.

2. the increase in using stock options as employee compensation, also payroll-tax free.

3. the greater portion of income from capital gains, dividends, and interest than in the past, all of which is payroll-tax free.

In the past Americans' aggregate income subject to the payroll tax was around 90%. Currently, its' around 83% IIRC. This radical change accounts for about half of the shortfall for SS funding, under the most pessimistic assumptions about future payroll growth in the US.

As should be apparent, the benefits from the exclusions above fall almost entirely on the higher income groups. These features, along with tax cuts for the rich beginning with Reagan, are what have enabled the top 1% in America to claim nearly all of the productivity gains in the last 30 years.

Eliminating the cap on payroll taxes would go a long way to assuring SS funding into the future.

The reason the payroll tax is limited to $116,500 is the max that one can receive back in payments is also limited, at early retirement (62) the benefit is $2,102/mo, if you wait for 66, full retirement benefit is $2,639 / month, but if you wait to a later age (70) the max amount is $3,576. Only 6 percent of workers earn more than the maximum taxable amount, but are still limited in how much their benefit will be.If you earn less, your benefit will be less.

Now if you paid in the full amount (12.5%x 116,500x 40 years) your fictional account has $577,840 and if you get the full benefit of $2639 per month, you will break even at 219 months or 18.2 years.

But that doesn't happen. The percentage and max taxable income has varied over time. If you go back 40 years, the max taxable income was $14,100 and the percentage of the tax was much lower, This means a lot less money in your fictional account, and your break even date is much, much shorter. Too complex to give an accurate amount without spending a huge amount of research.

In addition, Social Security also pay out much more in funds than just retirements, such as disability and child survivorship.

This is just nonsense with a calculator. The payroll tax, like sales taxes, is a regressive tax, i.e. the applicable rate does not increase as income goes up. There is only one rate for everyone, although the higher income people pay a lower reffective ate because the pay no payroll tax on income above the cap. Regressive taxes are inherently unfair, because they burden lower income people disproportionately more than high earners. That is why the income tax is a progressive tax, although not as progressive as it used to be.

Tax rates in the US have become move favorable to the rich, because they have had the political clout to demand steep reductions, beginning with Reagan. For instance, hedge fund managers pay a maximum 15% federal income tax rate. Of course, there is some bogus theory of "carried interest" to justify it, but the reality is the hedgies just bought off the politicians to lower their taxes.

A break-even analysis is used for investments, not insurance. SS is insurance, i.e. the transfer and pooling of risk in exchange for a payment. Specifically, in order even to calculate a break-even point you have to make an assumption about life span, but the risk you are trying to address is exactly the fact that life span is unknown. The biggest benefit of a life annuity like SS is that you can't outlive it, but that important fact is missing completely from your ham-handed break-even analysis.

[JimGant]

Regression by itself doesn't tell the whole story, and, in fact, is misleading. Social Security's benefits are weighted towards the less well off -- hence the "social" in its title. The poor dude who collects SS for x years has a rate of return on his SS taxes of nearly twice that of the fat cat who collects SS for x years.

Lower-income workers come out ahead. Low-income workers enjoy higher rates of return by design, because Social Security's benefit formula is weighted toward lower-earning beneficiaries and their payroll tax contributions will be relatively lower. A very low-income couple born in 1943 will receive a 6.79 percent annual return, compared with 3.92 percent for their high-earning counterparts.

http://www.reuters.com/article/us-column-miller-socialsecurity-idUSBRE89H0YG20121018

[elgordo38]

A Canadians response to a government Senator hope its not to long

ONE~REALLY~ANGRY~PISSED~OFF~CITIZEN !!!

It appears that this Senator hit a sour chord with this young lady!!

Let’s hope she did not have a heart attack on this!

Jeff Smith, a Senator from Quebec, calls senior citizens the "Greediest Generation" as he compared , Old Age Security to "a Milk Cow with over a million teats".

Here's a response in a letter from Patty Johnstone in Ontario..

I think she is a little ticked off! She also tells it like it is!

"Hey Jeff, let's get a few things straight!!

1. As a career politician, you have been on the public dole (tit) for FIFTY YEARS.

2. I have been paying CPP & OAS for 48 YEARS (since I was 15 years old. I am now 63). Being a Canadian citizen for over 20 years & paying my taxes, I am eligible at 65 to apply for Old Age Security - OAS (paid for through my taxes).

3. My Canada Pension payments, and those of millions of other Canadians, were safely tucked away in an interest bearing account for decades until you political pukes decided to raid the account and give OUR money to a bunch of zero losers in return for votes, thus bankrupting the system and turning OAS into a Ponzi scheme that would make Bernie Madoff proud!!

4. Recently, just like Lucy & Charlie Brown, you and "your ilk" pulled the proverbial football away from millions of Canadian seniors nearing retirement and moved the goalposts for full retirement from age 65 to age, 67. NOW, you and your "shill commission" are proposing to move the goalposts YET AGAIN.

5. I, and millions of other Canadians, have been paying into OAS & CPP from Day One, and now "you morons" propose to change the rules of the game. Why? Because "you idiots" mismanaged other parts of the economy to such an extent that you need to steal our money from OAS & CPP to pay the bills.

6. I, and millions of other Canadians, have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you "incompetent bastards" spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the Canadian taxpayers and say you need more to pay off YOUR debt.

To add insult to injury, you label us "greedy" for calling bullshit" to your incompetence.

Well, Captain Bullshit, I have a few questions for YOU:

1. How much money have you earned from the Canadian taxpayers during your pathetic 50-year political career?

2. At what age did you retire from your pathetic political career, and how much are you receiving in annual retirement benefits from the Canadian taxpayers?

3. How much do you pay for YOUR government provided health insurance?

4. What cuts in YOUR retirement and healthcare benefits are you proposing in your disgusting deficit reduction proposal, or as usual, have you exempted yourself and your political cronies?

It is you, Captain Bullshit, and your political co-conspirators called Parliament who are the "greedy" ones. It is you and your fellow nutcase thieves who have bankrupted the CPP & OAS and stolen the

Canadian dream from millions of loyal, patriotic taxpayers.

And for what? Votes and your job and retirement security at our expense, you lunk-headed leech.

That's right, sir. You and yours have bankrupted our benefits for the sole purpose of advancing your pathetic, political careers. You know it, we know it, and now you know that we know it.

And you can take that to the bank, you arrogant son of a bitch. And NO, I didn't stutter

P.S.

And stop calling CPP & OAS "entitlements". WHAT AN INSULT!!

I have been paying in to the CPP system for years. "It's my money - give it back to me the way the system was designed and stop patting yourself on the back like you are being generous by doling out these monthly checks.

EVERYONE!!!

If you like the way things are in Canada all you have to do is delete this.

If you agree with what this Ontario citizen says, please PASS IT ON!!!

[Gutenberg]

Germany will be hit in the next 5-10 years with additional billions in pension liabilities to their civil servants. Nowadays it's at 40 billion per year, in 5 years it is 100 billion and nobody to pay. Including millions of non-working non-educated Moslems.

In Europe there are different pensions, one for civil servants and one for the rest. The civil servants pensions are 50%-70% higher than the usual man gets, and they normally get off the work with 60 not like the rest with 65.

Cut the pensions for civil servants. Now. But of course it will not happen.

[Asiantravel]

Countdown to insolvency begins for Chicago pensions as state Supreme Court rejects reform bid

“While their contributions will diminish slightly, the condition of the funds will revert back to something that is totally unsustainable and in danger of being completely insolvent within 10 to 15 years. Hundreds of millions in savings from rationalized pension benefits will be lost that will either have to be made up from reductions in city services, increased taxes or by allowing these funds to further deteriorate."

http://chicago.suntimes.com/news/ill-supreme-court-strikes-down-rescue-plan-for-2-chicago-pension/

Edited March 25, 2016 by Asiantravel