Bad Math and a Coming Nationwide Public Pension Crisis

When Jim Palermo was serving as a trustee of the village of La Grange, Ill., he noticed something peculiar about the local police officers and firefighters. They were not going to live as long as might be expected, at least according to pension tables. After Mr. Palermo dug into the numbers, he found that the actuary — the person who advises pension plan trustees about how much money to set aside — was using a mortality table from 1971 that showed La Grange’s roughly 100 police officers and firefighters were expected to die, on average, before reaching 75, compared with 79 under a more recent table.
The four years are significant beyond any interest in macabre statistics.


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Teamsters spend big on politics while preparing to cut pensions

The Teamsters have begun informing retirees and current workers that their pension benefits may soon be cut, the final ironic twist to a lobbying campaign that saw the union spend its own members' dollars to win the right to shrink their retirement pay.
The somber notifications began going out from the Teamsters Central States Health and Welfare Pension Fund this spring, a decision that could ultimately affect 410,000 current pension participants and a total of more than 10 million U.S. workers nationwide. Cuts could begin as early as next year.


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Chicago credit rating plummets to junk status following pension ruling

A major rating agency downgraded the city of Chicago's creditworthiness two notches to junk status, a move likely to increase the city's borrowing costs and make investors skittish as the financial world reacts to last week's Illinois Supreme Court ruling that bodes ill for city efforts to resolve its massive pension fund shortfall.
Moody's Investors Service downgraded the city's debt rating on bond issues backed by property, sales and fuel tax revenue to Ba1, one notch below investment grade, from Baa2, specifically citing last week's Supreme Court ruling on an attempt to cut state pension costs. Moody's calls the Ba1 rating "speculative," which many investors simply call "junk," meaning investments in them carry far greater risk of a loss.


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America's Clash of Generations: How Many Working People Can Support One Retiree in the Future?

We are locked in a generational war, which will get worse before it gets better. Indeed, it may not get better for a long time. No one wants to admit this, because it's ugly and unwelcome. Parents are supposed to care for their children, and children are supposed to care for their aging parents. For families, these collective obligations may work. But what makes sense for families doesn't always succeed for society as a whole. The clash of generations is intensifying.

Last week, a federal judge ruled that Detroit qualifies for municipal bankruptcy. This almost certainly means that pensions and health benefits for the city's retired workers will be trimmed.

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