Some Cities Struggling to Keep Pension Promises

A few years ago, the city of Houston decided to sweeten its workers' retirement benefits. Along with their traditional pensions, city workers nearing retirement were offered special accounts, fed with money from the city pension fund. Although the accounts would pay generous returns, a study showed that the cost to the city would be modest.

What seemed a good idea then now looks ruinous. Hundreds of older workers will qualify for million-dollar payouts at retirement from these accounts. When their monthly pension checks start coming, some will actually have higher incomes than they did when they were working.

The city pension fund cannot support the payouts and has about $1.5 billion less than the benefits it owes the work force. The district attorney is looking into possible wrongdoing. City voters will go to the polls on May 15 to decide whether Houston should opt out of a Texas constitutional requirement that all pension promises be kept.

The people of Houston may not know it, but they have plenty of company. Similar pension sweeteners have backfired in Philadelphia, San Diego and Milwaukee. Prosecutors have been investigating the pension plans in each of these cities, though charges have been brought only in Milwaukee, accusing one official of misrepresenting the cost. Still these benefits plans are being promoted to other city officials across the country.



http://www.nytimes.com/2004/05/05/business/05PENS.html?hp=&adxnnl=1&adxnnlx=1083751255-qjYjhxlFHj1JV3MpxdLz/g

Virtually every pension plan in America is destined to blow up. Teacher and public employee, all the defined benefit plans still going which the congress just allowed to approach the closer to the cliff by allowing underfunding for another 2 years, and of course SS.

There is simply no way any of these are going to pay off. Forgetaboutit.


Then there is the tax incentiveized IRA's and 401K's. THe most perfect scam every devised by Wall St. and it partner the government. These have been the mother of our obsession with stocks. That is just about over too.

Back in the 1970s New York became insolvent due to the pension liability- city workers were able to retire at full pay after just ten years on the job. Plus ça change...