Teachers—They’re Coming After Your Pensions

[Modern School]

The majority of states are facing enormous budget deficits. Approximately half of them also have large unfunded liabilities in their public employee pension plans (due in part to their refusal to make the recommended annual payments), including those covering teachers. Currently, teacher pensions are protected by state constitutions and payments guaranteed to pensioners.


However, there is now some movement in Congress toward allowing states to declare bankruptcy, which would allow them to nullify existing contracts, including those between states and public employee unions that had protected their pensions. If successful, it could consign the majority of public employees to a lifetime of toil or a retirement living in poverty.

The wealthy, of course, would continue to enjoy their large tax breaks, miniscule capital gains taxes, record corporate profits) and a retirement living in luxury.

Modern School
http://modeducation.blogspot.com/2011/01/teacherstheyre-coming-after-your.html

[no_hypocrisy]

1. Patently wrong. That's the money belonging to THE TEACHERS.

Instead of receiving that money as part of their take-home pay, it was supposed to be invested and protected for their retirement. It was never money belonging to the state once received from the taxpayers. The state acted as a fiduciary, having the highest responsibility to take care of that money.

I hope the courts don't allow states to declare bankruptcy to avoid paying the pensions already earned.

[roguevalley]

6. they take my pension, I'm dead. I work two part time jobs as it is.

i guess they want old people to die. Well, I will. probably

[proud2BlibKansan]

7. Teachers also pay into their pensions

Part of this great pension fund is the money the teachers themselves contributed.

[no_hypocrisy]

10. The State can't be allowed to steal that money. It literally belongs to the teachers.

[LostinNY]

16. Firefighter's too

NY has spent a lot of their pension money that was not supposed to be touched. My husband has worked for 20 years as a NY firefighter (so far) and the talk is he may not have a pension when it comes time to retire.

[no_hypocrisy]

19. Welcome to DU.

I sincerely hope it doesn't come down to that.

[customerserviceguy]

2. Its doubtful that state-level bankruptcy would be approved

Even open discussion of it would drive up state bond interest rates, and some states would not be able to float any bond issues at all.

Still, the unfunded liabilities of state employee pensions needs to be dealt with somehow. Simply raising taxes serves to drive people (especially retired ones) from states with high unfunded liabilities to states with low liabilities. That's not a complete solution.

[FBaggins]

3. Not all forms of "bankruptcy" are equal.

They could easily develop a plan that retains the state's credit rating (by guaranteeing all bonds) while giving the states the power to back out of other contracts (pensions and other union contracts being the intended targets).

[customerserviceguy]

13. Perhaps

but it would be roundly denounced as a sellout of workers to the rich. Only the very most Republicon of states would even think of doing such a thing, and chances are, such a place doesn't have very strong unions, anyway.

[FBaggins]

14. I'd like to think so, but no. Sorry.

Take a look at the states most likely to default and it's a pretty blue mix.

[customerserviceguy]

15. You're right about the states being most likely to default being blue

but those states are the least likely to put bondholders over public employee unions. The unions have enough clout in those states to keep it from happening, generally.

Just having Congress talk out loud about states being able to go bankrupt would scare the pants off of investors, and would dry up state bond issues overnight.

[Hannah Bell]

17. maybe you haven't noticed the anti-public-worker vitriol lately. people don't pay attention to the

details -- like, teachers contributed a lot of the money.

they just "know" teachers make too much & have too many benefits & they never get fired.

those are common comments even at du.

[FBaggins]

21. Teachers don't "contribute a lot of the money"

they contribute all of the money.

It really doesn't matter whether an employer pays you more and you fund your own pension, or they pay you less and fund it themselves... it's all part of the total compensation package. If I consider switching to another employer and they pay 5% more but offer no pension... I'm smart enough to recognize that it isn't really a raise.

Teachers agrees (in most cases, collectively) to work under certain conditions and with certain salary and benefits. You can change them going forward, but not retroactively. Lost of employers have gotten rid of pension plans to save money in the future, but they can't take away an already-vested benefit. They have to calculate the current value of that future benefit and pay it out.

[Hannah Bell]

22. agreed.

[The Backlash Cometh]

4. Florida teachers are familiar with this ruse.

Jeb Bush's pal tried to use the Teacher's Pension by buying Enron stocks.

It's a scam worse that Bernie Madoff. These Republicans have no conscience.

[Still a Democrat]

5. How about raising the retirement age to 65 for full benefits?

That would save a lot and reduce the appetite for more cuts.

[adnelson60087]

8. 65 for full benefits? As a teacher who began his career at 23

that would put me in a classroom for 42 years. Those last 10 years would be very trying, physically and emotionally.

[Still a Democrat]

9. Most folks are working by 23

and continue to do so for those same 42 years. They find them tiring, I'm sure.

[Hannah Bell]

18. most people don't continue doing the same job for 42 years. very few do, in fact.

[Still a Democrat]

20. A new career then?

For those feeling too burned out, it's an alternative.

[adnelson60087]

23. How many second career options exist for most 55 y/o teachers?

Not to mention wage cuts that would be murder to deal with. I don't see lots of employers rushing out to hire 55 y/o's do you?

[proud2BlibKansan]

11. Don't most pension programs top you out at 30 years?

[FBaggins]

12. Yes, but you usually still have to wait for 62/65 for full benefits.

If you retire earlier, you get a reduced payout (much like Social Security).

The military went through a similar change in (IIRC) the late 80s. It used to be that you could retire with full benefits at any age after 20 years of service (so plenty of people "retired" in their early 40s and moved on to second careers while still drawing half pay plus full medical). Now you get a reduced benefit until you're at least 62.

[tortoise1956]

24. Not exactly...

Yes, there was a period in the 80's when the military tried to change the retirement plan by limiting it to 40% of the service member's base pay over the last 3 (I think) years of his career. However, it was still paid immediately upon retirement.

That plan was nixed after several years, and currently military retirement from active duty is a minimum of 20 years active service and is figured at 2.5% for each year of service, usually based on the member's base pay at time of retirement.

Benefits start immediately.