Comments on: Pension politics http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: walstir http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49225 Sat, 15 Feb 2014 20:23:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49225 “poorest members of society, who might take out more than they put in”

It is dishonest to use a word like “might” in a sentence like this. You “might” be hit by lightening; or you “might” win $100 million in the lottery; or John Arnolds “might” go and sell all his possessions and give the money to the poor (Matthew 19:21) – ie highly unlikely possibilities compared to the almost certainty that the poorest members of society will take out more than they put in. And then there is this: “the United States: although we do put a lot of government bonds into the Social Security trust fund”.
Here is what Social Security says about the SS trust funds that receive SS taxes:

http://www.ssa.gov/oact/progdata/fundFAQ .html

“How are the trust funds invested?”

“By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are “special issues” of the United States Treasury. Such securities are available only to the trust funds.”

“What happens to the taxes that go into the trust funds?”

“Tax income is deposited on a daily basis and is invested in “special-issue” securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.”

In other words, SS Trust money is treated just like ordinary tax revenue except that the government promises to repay these monies plus interest to the SS as needed. These trust funds are government debt obligations and can only be repaid by raising taxes (unlikely) or increasing overall government deficits.

http://www.salon.com/life/life_stories/i ndex.html?story=/mwt/feature/2011/04/02/ late_in_life_excerpt

“the first recipient of Social Security, a bookkeeper named Ida May Fuller, started to collect her checks in 1940. She proceeded to live another thirty-five years, long enough to witness the ascent and disbanding of the Beatles and the landing of the man on the moon. For her total $24.75 contribution, she received $22,888.92 in benefits”

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By: TFF http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49220 Fri, 14 Feb 2014 02:24:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49220 “People trust butchers (meat) for financial advice.”

Not surprising. You can’t trust your typical financial advisor for financial advice, as the only thing they care about is churning your assets to generate commissions. There may be a few honest (fee-for-service) advisors around, but the dishonest ones are far more aggressive and give the business a bad name.

Pay somebody for selling you overpriced financial products and he will sell you overpriced financial products. Pay somebody for meat and he might give you good advice for free.

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By: pereubu77 http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49219 Fri, 14 Feb 2014 00:42:16 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49219 As long term rates (and so the discount rate) rise, much of the appearance of underfunding will go away. You are already seeing this with corporate pension funds. Yes, some public pension funds are in trouble, but the situation is not as dire as it appears.

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By: dtc http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49218 Thu, 13 Feb 2014 23:42:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49218 401k’s and retirement planning in general in the US is a ticking time bomb – which benefits financial companies.

If you want to read some super scary and super hilarious retirement findings, check out this paper:

http://wolfweb.unr.edu/homepage/pingle/T eaching/BADM%20791/Week%209%20Behavioral %20Microeconomics/Benartzi-Thaler%20Bias ed%20Savings%20Behavior.pdf

Things you might learn:
1. People trust butchers (meat) for financial advice.
2. Companies love to match 401k in company stock. Which sounds awful until you learn that…
3. People think stock in their own company is a great idea. (Enron? What’s that?)
4. Financial education does not help.

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By: apatakiright http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49217 Thu, 13 Feb 2014 20:54:26 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49217 Felix,

Please review the salaries of typical California city and county workers and then get back to me how they are working for “relatively low salaries”:

http://transparentcalifornia.com

It may be instructive for you to then review typical pensions for workers that have retired in the last few years are receiving (same website as above).

Then you should study how cities and counties throughout the state are increasingly moving money from their general funds to pay for these 6 figure pensions and are thus forced to cut library hours, road maintenance, and safety personnel.

You may not like the messenger here in Mr. Arnold. But, please educate yourself on what is really going on with public workers’ salaries and pensions. After many years of public unions attempting to keep this information secret it is now in the public domain.

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By: Barrelrider http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49216 Thu, 13 Feb 2014 20:03:19 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49216 Felix, please review the salaries of your typical California police officer or firefighter and then get back to me about how they are working for “relatively lower salaries”. Feel free to pick any city or county at random:

http://transparentcalifornia.com

Our cities and counties are being sucked dry by diverting city and county general funds to pay for the 100K plus retirements of public workers. 100K plus annual payout, with inflation protection, is a TYPICAL police or fire pension for someone retiring today in California. But, please, do not take my work for it. Look it up for yourself.

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By: QCIC http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49214 Thu, 13 Feb 2014 17:50:29 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49214 “Sometimes the answer to the problem of a pension AuM shortfall is to allow/encourage pensions to invest more aggressively. If a pension’s managers are working within politically set guidelines, with rules that for example block them from investing in various forms of ‘vice,’ then THAT is the problem.”

Freeing up vice restrictions isn’t going to get you an extra 1% much less and extra 4%.

Pensions as currently operated in America are incredibly stupid and the people relying on them fools.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49213 Thu, 13 Feb 2014 17:29:16 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49213 Sometimes the answer to the problem of a pension AuM shortfall is to allow/encourage pensions to invest more aggressively. If a pension’s managers are working within politically set guidelines, with rules that for example block them from investing in various forms of ‘vice,’ then THAT is the problem.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49212 Thu, 13 Feb 2014 17:29:11 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49212 Sometimes the answer to the problem of a pension AuM shortfall is to allow/encourage pensions to invest more aggressively. If a pension’s managers are working within politically set guidelines, with rules that for example block them from investing in various forms of ‘vice,’ then THAT is the problem.

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By: DavidMerkel http://blogs.reuters.com/felix-salmon/2014/02/12/pension-politics/comment-page-1/#comment-49211 Thu, 13 Feb 2014 16:28:38 +0000 https://blogs.reuters.com/felix-salmon/?p=23114#comment-49211 Two more notes:

9) Highly paid workers lose out in bankruptcy. Multi-employer trusts r prone to a run on the pension plan if a major employer goes BK.

10) the average person is at best a budgeter, and not an investor. That said, buying inflation insurance is very expensive, if you can achieve it at all.

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