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States Cut Public-Sector Retiree Benefits!

From a livid Associated Press:

States cutting benefits for public-sector retirees

By Geoff Mulvihill And Susan Haigh, Associated Press Writers
September 15, 2010

TRENTON, N.J. – … Since 2008, New Jersey and at least 19 other states from Wyoming to Rhode Island have rolled back pension benefits or seriously considered doing do — and not just for new hires, but for current employees and people already retired.

After telegraphing his intentions for months, [Republican Gov. Chris] Christie spelled out the details of his proposal Tuesday. They include: repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions.

"We must reverse the damage caused by fairy-tale promises that have fattened benefits and pensions to unsustainable levels," the governor said

What a crazy man.

Christie has warned that New Jersey’s pension fund will go belly up unless something is done to close the $46 billion gap between how much the state expects to bring into the system and how much it has promised to workers. Other states’ pension funds are in shaky condition, too…

Only four states — Florida, New York, Washington and Wisconsin — had fully funded pension systems as of 2008

Among the developments around the country:

In Mississippi, employees of state and local governments and school districts are now being required to put 9 percent of their pay into the state retirement system, up from 7.25 percent.

How shocking.

• Rhode Island in 2009 reduced cost-of-living increases and tightened eligibility requirements for retirement. Previously, employees could retire with 28 years of service. Now, those already employed by the state will have to meet a new standard that takes both age and years of service into account.

In Wyoming, as of Sept. 1, employees will have to start paying 1.4 percent of their salaries into a pension fund — the first time in a decade the workers have had to contribute anything.


Vermont earlier this year changed the retirement age for many current employees. They must be 65, or their age and years of service must add up to 90. Previously, retirees had to be 62 or have 30 years of service at any age.

What private company would hire older workers, with retirement based on this kind of calculation?

• Lawmakers in Colorado, South Dakota and Minnesota rolled back cost-of-living increases this year for public employees who already have retired. In Colorado, retirees had gotten 3.5 percent annual increases. They are getting no increase at all this year, and future ones will be capped at 2 percent.

Legal challenges to the cuts have been filed in all three states…

How horrible. And never mind that even Social Security has not given out any cost of living increases, either.

In some states — including South Dakota and Mississippi — public employee retirements are up by more than 20 percent, though it is not clear whether changes to pension programs there are a factor.

The retirement rush is even more dramatic in New Jersey, where by the end of July nearly 18,000 employees in the three biggest public worker pension funds had retired or declared their intent to retire this year. That is up almost 50 percent over all of last year, and several union leaders and workers considering retirement said that possible pension changes were a factor.

The exodus could end up hurting the pension funds, because retired workers will be making withdrawals, not deposits into the system

Leave it to the Associated Press to try to find the gray cloud around the silver lining.

But, in any case, it’s all Chris Christie’s fault.

This article was posted by Steve on Wednesday, September 15th, 2010. Comments are currently closed.

8 Responses to “States Cut Public-Sector Retiree Benefits!”

  1. theforgottenman says:

    I always love sweetness and light for the sarcastic take on the mainstream reporting but the first comment had me rolling today. “What a crazy man” has to be one of the best silent commentaries I’ve ever read. Short and sweet and direct. Thank you for making me laugh.

  2. proreason says:

    fyi, social security recipients, there will be no increase in jan 2011 either.

    The rule is that average cpi-w for July to September must exceed the highest previous average (not just the previous year). There is no chance 2010 will exceed 2008, so there will be no increase. This is an obscure rule that is almost impossible to find, but that’s the way it works.

    But expect Congress to do something as soon as the announcement is made in a shameless bid to buy votes. If will probably be a one-time hundred dollarish event. Unlikely even the corruptocrats would change the basic rule, so the next year will be subject to the same set of circumstances, except that next year is likely to exceed 2008 by a modest 1% or so on its own.

    Medicare premiums, of course, will go up every year as they always do.

    • AcornsRNutz says:

      “fyi, social security recipients, there will be no increase in jan 2011 either”

      Well, that makes sense, sorry to say. The system is broke, how can it keep paying? I am sorry, but all SS recipients got duped. I am also sorry it was by force. But at some point, the madoff gets caught and the money is gone. It may be shifty that the current crowd is robbing peter to pay paul, but that principle is the essence of SS in the first place.

      I may be young, but I’ve paid a fair amount of SS and I don’t get squat yet. I would be willing to eat the loss if they canned the program entirely.

  3. untrainable says:

    People are being forced to contribute to their own retirement? THE HUMANITY!!!!
    What’s next… freedom of choice… personal responsibility… french fries on the regular menu… A BALANCED BUDGET… we’re doomed.

  4. Petronius says:

    I can see the empty pot of other people’s money from my house.

  5. GetBackJack says:

    Everybody out of the pool. All the people’s money has been spent.

  6. Media_man says:

    I can only imagine what will happen when these unfunded public sector pension debts are re-stated at face value. New Jersey, California, etc. carry these on their ledgers assuming an 8% return, which is about as likely as the Philadelphia 76ers winning the NBA championship next year. The real return will be zero or if deflation hits, a negative number. If the real NPV of the pension obligation is what is required, these states are Enron redux.

    If you are paying $12k per year in school taxes for your crummy 3 bedroom ranchere in Clifton, NJ you’ll now be paying $25k or $30k. So even when you’ve paid off your mortgage you are still paying a mortgage payment each month to the local teachers union.

    Will anyone want to own a home in the future?

  7. Tater Salad says:

    Union greed will NOW rear its ugly head. California will be a “riot”, to watch and for real !

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