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Old 11-09-2018, 06:08 PM   #53
Bigstan
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Join Date: Apr 2008
Location: Waltham, MA / Gilford NH
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Quote:
Originally Posted by 8gv View Post
Since we have drifted into a discussion of government pensions...

Each state has a statistic called “unfunded pension obligations”.

Simply put, this number represents what is promised to retired state employees but is not in the state’s hands.

The numbers are very low with many states below 50% and others below 40%.

States cannot print money like the federal government can.

The only way to meet these obligations is to increase revenue.

That often means higher state income taxes.

The problem with that is income portability.

Many high income tax payers can choose to relocate to states with lower taxes.

When the exodus begins the tax payers who remain will need to pay more.

Citizens who pay little or no taxes and receivers of other state support, stay in their state.

The result is an acceleration of the problem until critical mass occurs.

Watch CT over the next decade.
It's the next Detroit. Which is to say bankrupt and with pensions to be worth fractions of what they once were.

Pension plans will fail for the same reason as SS will eventually - when you live 30-40+ years collecting on a plan that was designed to kick in a couple years before your estimated death the system breaks.

Anyone can look up the unfunded liability on their plan, and it's overall breakdown - 80% of the MA teachers plan goes to service debt. They should all beg to be on 401k type plans, as teachers who quit in under 10 years lose all contributions, and as the avg teacher doesn't last ten years they plan gets all those contributions free (yes, been there, done that). Unless things changed MA teachers dont even get SS benefits. They should want to trade a pension in for a standard retirement plan and SS benefits / Medicare/Caid.
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