[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Sign-in]  [Mail]  [Setup]  [Help] 

Status: Not Logged In; Sign In

This Can Create Endless Green Energy WITHOUT Electricity

Geoengineering: Who’s Behind It and How We Stop It

Pam Bondi Ordered Prosecution of Dr. Kirk Moore After Refusing to Dismiss Case

California woman bombarded with Amazon packages for over a year

CVS ordered to pay $949 MILLION in Medicaid fraud case.

Starmer has signed up to the UNs agreement to raise taxes in the UK

Magic mushrooms may hold the secret to longevity: Psilocybin extends lifespan by 57% in groundbreaking study

Cops favorite AI tool automatically deletes evidence of when AI was used

Leftist Anti ICE Extremist OPENS FIRE On Cops, $50,000 REWARD For Shooter

With great power comes no accountability.

Auto loan debt hits $1.63T. 20% of buyers now pay $1,000+ monthly. Texas delinquency hits 7.92%.

Quotable Quotes from the Chosenites

Tokara Islands NOW crashing into the Ocean ! Mysterious Swarm continues with OVER 1700 Quakes !

Why Austria Is Suddenly Declaring War on Immigration

Rep. Greene Wants To Remove $500 Million in Military Aid for Nuclear-Armed Israel From NDAA

Netanyahu Lays Groundwork for Additional Strikes on Iran: 'We Didn't Deal With The Enriched Uranium'

Sweden Cracks Down On OnlyFans - Will U.S. Follow Suit?

Joe Rogan CALLS OUT Israel's Media CONTROL

Communist Billionaire Accused Of Funding Anti-ICE Riots Mysteriously Vanishes

6 Factors That Describe China's Current State

Trump Thteatens to Bomb Moscow and Beijing

Little Bitty

Vertiv Drops After Amazon Unveils In-House Liquid Cooling System, Marking Pivot To Liquid

17 Out-Of-Place Artifacts That Suggest High-Tech Civilizations Existed Thousands (Or Millions) Of Years Ago

Hamas Still Killing IDF Soldiers After 642 Days

Copper underpins every part of the economy. If you want to destroy the U.S. economy this is how you would do it.

Egyptian Pres. Gamal Abdel Nassers Chilling Decades-Old Prediction About Israel-Palstine Conflict.

Debt jumps $366B in one day.

Proof that Israel Has Lost the War: Sizable Portion of Military, Intelligence, Energy, and R&D facilities Destroyed

French police raid offices of Marine Le Pens far-right Rassemblement National


Business/Finance
See other Business/Finance Articles

Title: This $7 trillion pension time bomb is ticking on your retirement
Source: [None]
URL Source: [None]
Published: Sep 11, 2016
Author: J. Reeves
Post Date: 2016-09-11 07:32:22 by BTP Holdings
Keywords: None
Views: 661
Comments: 6

This $7 trillion pension time bomb is ticking on your retirement

From Teeka Tiwari, editor, The Palm Beach Letter: It was the letter Jerry Deaton had been fearing.

Deaton, a 69-year-old retired truck driver, was waiting for his pension check from the Teamsters’ Central States Pension Fund. It has 400,000 participants in 37 states.

The news was devastating. Deaton stared at the letter stating his pension would be cut in half.

Said Deaton, “It doesn’t leave you with much options. I’ll be 70 in December. Who’s going to hire a 70-year-old truck driver?”

Pensions’ $7 Trillion Time Bomb

Deaton’s story is a microcosm of America’s impending pension crisis.

While the mainstream media focuses on the looming insolvency of Social Security and Medicare, the pension system is quietly on the verge of collapse.

According to Moody’s, federal, state, and local employee pension plans have a combined $7 trillion in unfunded liabilities.

That’s 40% of U.S. gross domestic product (GDP).

The problem stems from demographics and overoptimistic return assumptions.

Take the Central States Pension Fund, for example...

In 1980, there was one retiree for every four active fund members. By 2014, the ratio was reversed... with four retirees for every active member.

Today, for every $1 the fund brings in... $3.46 goes out. At its current rate, experts estimate the fund will be bankrupt within 10 years.

The failure of plans like the Central States Pension Fund is exposing a dirty little secret about the industry... plans are overestimating their actual values. Here’s what I mean... Pension plans use something called a “discount rate” to determine the present value of their pension plans. In other words, they discount their liabilities by the expected return on their assets.

So the higher the plan’s expected return, the lower its liabilities... and the less participants have to pay into the plan now. But if the plan’s expected return is lower, then participants will have to pay more into the plan to get the same return.

It works something like this...

Let’s say you started a retirement account and wanted to accrue $100,000 in 30 years... and your expected rate of return was 7.5%. In this case, you’d need to put away $11,400 today to get $100,000 in 30 years.

But let’s say your expected rate of return drops to 4.5%. You would need to invest $26,700 today to get the same $100,000 at the end of 30 years. That’s a 134% payment increase.

And that’s the crisis that pension participants are facing today.

The Central States Pension Fund, like most pensions, uses an optimistic expected return of 7.5%. Thirty years ago, a 7.5% return would be a realistic assumption... but that’s not the case today with interest rates at historic lows.

Key takeaway: Pension funds in America are severely underfunded. And it’s only going to get worse as interest rates stay persistently low.

Saved for Now... But Time is Running Out

Fortunately for Jerry Deaton, the taxpayers intervened on behalf of his pension fund. But this is a temporary fix.

In the 2014 U.S. budget, President Obama signed a bill (known as “CRomnibus”) that allows trustees of multi-employer plans to apply to the Treasury Department to cut benefits for current retirees.

The Central States Pension Fund was the first to apply for a benefit cut under the new law. It proposed cuts of 22% to 70% for some pensioners.

But in a surprising move, the Treasury Department rejected the plan. Said mediator Kenneth Feinberg, “We do not believe that the plan as submitted will reasonably avoid insolvency.”

In other words, the Treasury Department didn’t think the cuts would be enough to save this pension from going bankrupt.

So retirees like Deaton are still collecting their full pension checks... but it may not last for much longer.

[In the past, troubled funds like the Central States Pension Fund would have been able to turn to the Pension Benefit Guaranty Corporation (PBGC).

The PBGC is a federal agency created to insure pension benefits. But the PBGC is itself in financial straits. Its funding deficit soared by 550% in 2015 alone.

That means the implosion of just one pension like the Central States Pension Fund would wipe out the PBGC.]

The Pension Crisis is Just Getting Started

The Central States Pension Fund’s application for relief—and subsequent rejection by the Treasury Department—is a sign of things to come.

And when the Treasury Department does approve a pension cutback, it could open the floodgates for more pension plans to apply for relief.

Until then, we’ll likely see a number of moves by pension plans to stave off the inevitable insolvencies. For example...

> Oregon has reduced cost-of-living adjustment (COLA) increases in a bid to reduce overall payments from its state pension plan.

> The Illinois Teachers’ Retirement System voted to lower its assumed rate of return on investments from 7.5% to 7%... which means plan participants have to contribute more.

> And the city of Jacksonville, Florida, has proposed reducing the final pay participants receive based on their years served. Today, participants receive 60% of their pay after 20 years and 80% after 30 years. The city wants to reduce that to 40% and 75%, respectively.

These are just a few “revisions” pension plans have up their sleeves.

How You Can Protect Yourself From the Pension Plan Collapse

Unlike the past, you might not be able to count on your pension to secure your golden years.

But there are a few steps you can take today to begin protecting yourself.

> Keep a close eye on news about your pension plan. By following the news, you’ll be able to find out if your pension is in trouble.

> Start a supplemental savings plan. If you have the means, start saving outside of your pension.

> Look for ways to generate income outside of traditional retirement assets.

On Tuesday night, I’ll join PBRG’s team of leading retirement experts to address this threat to your retirement. We’re all going to share our best income-producing ideas for retirees across the country.

We’re calling it the Retirement Rescue Roundtable, and it could help you fill your calendar with monthly, weekly, and daily checks... while staving off what Mark calls “Retirement Hell.”

During this special 90-minute event, you’ll discover exactly how our unique retirement “Plan B” works... why we’re unveiling it right now (the timing is critical)... and how you could use it to turn every $50,000 into $1 million or more during retirement. Register for your free spot today.

research.palmbeachgroup.com/X750S923


Poster Comment:

If Social Security goes belly up, we've all got trouble.

Post Comment   Private Reply   Ignore Thread  


TopPage UpFull ThreadPage DownBottom/Latest

#1. To: BTP Holdings (#0)

We’re all going to share our best income-producing ideas for retirees across the country.

Income producing rental real estate properties is my best suggestion.

Inheriting a few hundred million is a great idea, but arranging for that is tricky.

“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken

Lod  posted on  2016-09-11   9:50:28 ET  Reply   Trace   Private Reply  


#2. To: Lod (#1)

There is but one alternative to delay the financial meltdown of this country.

Cynicom  posted on  2016-09-11   10:10:31 ET  Reply   Trace   Private Reply  


#3. To: BTP Holdings (#0)

It's no big deal. If pensions and social security collapses, tens of millions of retirees and other old koots like me will go hungry and starve but we have no value anyway.

DWornock  posted on  2016-09-11   11:39:31 ET  Reply   Trace   Private Reply  


#4. To: DWornock (#3)

old koots like me will go hungry and starve but we have no value anyway.

Do you remember the movie "Soylent Green"? Next thing they will be breeding us like cattle. LOL

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2016-09-11   17:27:46 ET  Reply   Trace   Private Reply  


#5. To: BTP Holdings (#4)

Next thing they will be breeding us like cattle.

At least controlling our breeding, our lives, and treating us no better than cattle for their benefit.

DWornock  posted on  2016-09-14   11:35:24 ET  Reply   Trace   Private Reply  


#6. To: DWornock (#5)

treating us no better than cattle for their benefit.

Did you ever see the movie, "Soylent Green"? ;)

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2016-09-14   18:31:51 ET  Reply   Trace   Private Reply  


TopPage UpFull ThreadPage DownBottom/Latest


[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Sign-in]  [Mail]  [Setup]  [Help]