Pensions are Getting the Ax
May 13, 2013 by Tim Turner | Leave a CommentEvery week we see new stories about getting the pensions AXED by their employer, the bankruptcy court, or by government. Many times this is happening to people ALREADY RETIRED that have already been receiving their pensions.
How is this possible????
Well, one way is when the Pension Benefit Guarantee Corp (PBGC) takes over the pension because the employer has gone bankrupt, or the pension has been declared bankrupt. In many cases the pension was “underfunded” because the promises made to the workers were too lucrative and impossible to pay.
The problem is compounding when the pension funds are invested in the market, and the funds suffer losses in the market. It makes it difficult if not impossible to recover those losses because they are so huge.
Many times city, county and other local governments promise specific pension benefits, only to later have new administrators change the plans in order to balance budgets. Once again, promises made that were too generous are later retracted.
We will post links to some of these stories as we find them, but just beware of relying too much on “pensions” and “social security” or you could find your retirement becoming a real nightmare.
Categories: Pensions or Defined Benefits
Tags: defined benefit, pension, pension cuts, underfunded pension
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The court says that the city of Detroit can seek bankruptcy protection, which means they should be able to restructure the Pensions of city employees.
“In a bitter defeat for public-sector unions yesterday, U.S. Bankruptcy Judge Steven W. Rhodes ruled that Detroit can treat the claims of pensioners just like any other debt. ”
See Full Forbes article:
http://www.forbes.com/sites/danielfisher/2013/12/04/detroit-bankruptcy-ruling-good-news-for-muni-bonds-insurers/
Note this means you could have your pension reduced… even if you were relying on it because basically the unions strong armed benefits that taxpayers cannot afford. And so through bankruptcy the city can go back and say “we made a mistake and can’t afford it”…. if you are retired, though, those cuts will probably hurt (unless they only cut future retiree benefits)