Pensions

The Next Genius Idea About Private Pensions: Let's Hand 'em Over to the States!

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This oughtta end well

Just when you thought they couldn't think up anything worse:

As growing numbers of baby boomers face retirement with inadequate savings, some state officials are considering a novel proposal to rebuild America's ailing retirement system — having state pension funds run retirement plans for companies.

Because more companies are ditching their own pension plans or not offering retirement benefits at all, the idea would be to give companies an easy way to offer a firm pension without having to run the plan themselves.

On Monday, the labor economist Teresa Ghilarducci, who developed the proposal, held a public forum at the New School for Social Research with New York City's comptroller, John Liu. […]

[Liu] said that more elderly people were turning up in the city's homeless shelters and that a program to make it easy for employers to offer better retirement benefits might reduce future strain. Lawmakers in Connecticut and California have introduced bills to either study or create such a program and the Pennsylvania state Treasurer has expressed interest[.]

Hi KMW!

In paragraph 7 of the New York Times story, we get the first hint that this might not be such a swell idea. You will especially enjoy the scare-quotes:

But the idea could be controversial, because the role of managing the money would fall to state pension systems, now under fire in many places for their handling of city and state workers' pensions. Republicans have tended to see the idea as one more manifestation of "big government."

State pensions are underperforming, over-promising, and catastrophically under-funded. Read all about it in our February 2009 cover story "The Next Catastrophe," and in columnist Veronique de Rugy's April 2011 piece on "The State Pension Time Bomb."

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  1. There is no fraud that Americans won’t eagerly embrace!

    1. I just pinched myself to see if I was dreaming about states who can’t support pension plans for state workers running pension plans for non-state workers.

  2. …a novel proposal to rebuild America’s ailing retirement system ? having state pension funds run retirement plans for companies.

    Novel != Good

    In what world are public pension funds not in even worse condition?

  3. is Mary Stack stupid!

  4. This idea shows the mentality of the left… “Ooooo! Big shiny piles of privately-held money! We want!!!”

    1. No, that’s silly. Concerns about handing private money over for public management are just indicators of an irrational fear of “big government”, nothing more.

      1. You think your money is actually “your” money??? Why do you hate children???????????

  5. I’ve been working for about 10 months and I already have over $5k in a retirement account. It’s not that hard.

    1. Yeah, I started working in October and I managed to fully fund my IRA for 2011. People just choose to spend their money on other shit.

  6. Why no posting on the A.M. Links?

    1. Mary Stack went crazy and ruined the thread. They had to shut it down.

      1. Yeah, so suck it, west coasters! Get up earlier if you want to get your comments in before the screws initiate lockdown.

    2. Stack shat the thread.

      1. My comments are still there. Must be some other Mary Stack. The one in John’s head who is making him insane.

    3. They should probably just post a disclaimer so we don’t keep getting this question every 15 minutes.

  7. Of course the states would never take that money and use it to fund union pensions at everyone else expense. Never. Trust them.

  8. It’s just too damn hard living within your means and saving 10%+ each month of take home pay.

  9. But the idea could be controversial, because the role of managing the money would fall to state pension systems, now under fire in many places for their handling of city and state workers’ pensions.

    PISS POOR HANDLING. That’s crucial to that argument against. If they were handling them well, then alright, we can move on to the discussion of whether or not it’s proper that they manage private sector pensions.

  10. Pension plan? What (private) employee still has a pension plan? I know my old man got one, but he started working at his company in the 1960s.

    I have a 401K, but I’m expecting to work in some fashion until a heart attack carries me away.

    1. When they say “pension plan”, they really mean your 401K. Do you really think they are going to be able to keep their greedy paws off of your 401K?

      1. They better. I’m gonna have a shitload in it when I retire, and I’ve already paid their damn taxes on it (I’m young so I have a Roth).

        1. My money is on them stealing it. That is what they have done with everything else. And as the whole thing implodes they are going to get just that much more desperate and greedy.

          1. I’m expecting that to happen with Social Security. I expect to get $0 out of that program.

            1. Yup. The fact that you actually bothered to save something, will give them an excuse to zero out your social security.

              1. Ugh. I could totally see that happening. Some kind of “means-testing” based on how much savings you have to determine how much SS you can receive, if any. Because the solution to all problems is to punish responsible behavior and reward irresponsible behavior.

                1. I’d be fine with means-testing Social Security. Support for it would crater among those who actually vote for that nonsense. And the means-tested people could scream about their SS “investments” being stolen, and get a taste of what it’s like for a change.

                  1. Hey, if I can divert my Social Security taxes to retirement savings, let’s do it.

                  2. But a means-test based on what you’ve saved is stupid compared to a means-test based on what you’ve earned.

                2. Got that already in Canada. If you earn over $69,000/year, they begin to “Claw Back” your Canada Pension Plan and Old Age Pension: You lose 15 cents on every dollar over $69K that you earn until the CPP and OAP hit zero.

                  1. Got that already in Canada. If you earn over $69,000/year, they begin to “Claw Back” your Canada Pension Plan and Old Age Pension: You lose 15 cents on every dollar over $69K that you earn until the CPP and OAP hit zero.

                    Someone has to pay for that free healthcare.

          2. They’ll steal in dribs and drabs. They’ll start by dropping the “pre-tax” part of the contribution. Then they’ll play with the taxation of withdrawals based on how much is in your account… I’m sure 535 thieves can think of better ideas than I can.

            1. Ali Baba ain’t got shit on them.

            2. They’ll start by dropping the “pre-tax” part of the contribution.

              Once 401k contributions are no longer pre-tax, there’s no reason to put money in a 401k vs. just a regular investment account.

          3. When they try to steal my 401k, the shooting will start.

            1. When they try to steal my 401k, the shooting will start.

              That’s the SWAT team coming through your door to dispatch any unnecessary pets or family members.

        2. They better. I’m gonna have a shitload in it when I retire, and I’ve already paid their damn taxes on it (I’m young so I have a Roth).

          Tell us about this “shitload” you’re going to have… And explain to us how your having a shitload is fair to those that don’t?

          Please step into Mr. Buffett’s office and answer a few questions for him…

      2. Hmm… leave it with Vanguard or let the government run it. Hmmm…

        No, fuck you, Teresa.

      3. ah, of course.

    2. I have a pension plan. And unlike the state, my company’s plan is fully funded. (Which is the real reason for rolling private pensions into the state pensions: most private pensions are far closer to being fully funded, so private pensions can be raided to bail out state workers).

      1. ^^This. The Pension Protection Act of 2006 forced corporations to write big checks to make their pension plans healthy. Now it’s time to put the healthy (corporate) plans into the same insurance pool as the sick (public) plans.

        Seems familiar, somehow.

  11. The Pew Center for the States has a study this reporter should read. Something about massive unfunded liabilities.

    1. Those state pensions are going to go bust. And the unions will use the politicians they have been buying for decades to make good on them with your money.

      1. Good. The sooner the defined benefit scheme collapses, the better.

    2. Reporters don’t understand simple financial concepts like “unfunded” or “liabilities”. And checking definitions on Investopedia is hard. This article quickly reverts to emotional pleas about elderly homeless people, followed by how meanie Republicans don’t like the plan.

      The whole point of this article seems to be to gently float the idea of socializing more private funds. Using the same old (failed) arguments of administrative saving through economies of scale, government as non-profit fiduciary, long-term stability of government, etc. Bogus arguments.

      The government will try to take every last penny of yours, to feed their insane agenda.

  12. Please, God, no.

    1. You must pray to the One True Obama.

  13. On Monday, the labor economist Teresa Ghilarducci, who developed the proposal, held a public forum at the New School for Social Research

    I knew I had already seen this. She excreted this scam on the NYT op-ed page a while ago. It was a fabulously dopey idea then, and has not improved with age.

  14. But if you’re a “labor economist” at the New School, you incessantly fetishize about consolidation and central control.

  15. the idea could be controversial

    Poppycock!

  16. I’m guessing we could save a few trillion just giving every old person that shows up at a homeless shelter 100k over this boondoogle

  17. Is Argentina the country we really want to emulate?

    1. You’re heading there.

      In the late 1950s, Argentina had the world’s 3rd highest per capita GDP. Between them the Peronistas and the generalismos destroyed that.

    2. FREE THE MALVINAS~!

  18. State pensions are underperforming, over-promising, and catastrophically under-funded

    So how long will it take them to raid the retirements funds to make up the shortfalls in their state employees’s pention funds? About 5 seconds?

  19. You’re heading there.

    Thanks, George W Peron!

  20. Look, you libertards need to get over the idea of allowing peole to manage their own retirement accounts. The government knows way better than peons how to manage money. That’s why they have huge cash reserves and budget surpluses as far as the eye can see…they have Top Men.

  21. Because what we need to do is ultimately give the government *all* our money. Fuck, why bother paying me?! All i’m going to do is *make choices*… probably bad ones! Might as well get it over with and just dump it in the money hole… I’m going to be subsidizing *everyone else* anyway! Might as well blow it all and live off of other people’s dosh since the Gov is takin it all anyway…

  22. Proof again that when the left’s “big ideas” fail, their solution is “bigger-er ideas”.

    And we think that if we ever get a true single-payer system and it collapses that the left will finally see the error of their ways and return to sanity. No, they’ll turn single-payer into double single-payer, then triple single-payer… There’s no bottom to that well.

  23. IIRC the idea of raiding pension/retirement accounts in order to continue leveraging the welfare state originated out of the Boston Fed in the early 1990s. Anyone with an actuarial table could see what was ahead even then.

    The problem is relatively simple: People without money cannot afford those things they are deemed to have a “right” to have — housing, medical care, retirement etc. The only way for government to supply those things is to take money (or wealth) from those who do have it — wherever they might have it.

    We will only hear more about “excess” retirement savings in the future.

  24. The New School must be where economics goes to take acid. A professor there was calling for the nationalization of all 401k plans a few years ago.

    1. A professor there was calling for the nationalization of all 401k plans a few years ago.

      And do what with them? Throw the funds into the room where they stockpile all the shoes and gold teeth?

    2. Same professor.

  25. Are you thinking what we’re thinking?

  26. Well definitely this idea is very practical. Indeed, preparing for our pension will directly benefit us in the near future. Besides this is all for our own good and security. But we all know that everybody is not prepare for it. Retirement is a big issue here. People have different views about it, men and women’s point of view of early retirement and quality insurance may differ. Although the differences are not great, “Retirement Revealed,” a brand new report from the ING Retirement Research Institute, concludes that guys are more ready to retire than females. A cash advance might be something you need when you do not have enough cash in retirement.

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