Another reason to hold some of your (retirement) money in PMs you hold

[jim4silver]

Check this out. Says pensioners could lose 90% of their benefits. I bet those workers who put in a good 20 to 30+ years won't be too happy. Paper promises sometimes aren't kept. And from what I am reading there is nothing these pensioners can do except be pi$$ed about it.

When any entity (human, corporate or governmental) fails to control spending, debt and such, it always ends in disaster. It is just a matter of how long it will take. Govs can stretch it out longer than humans or corporations, but even they cannot escape reality.

I would not be surprised to see more cities do this if Detroit successfully pulls it off.

Muni Retirees Face 90% Loss Under Detroit's Pending "Free-Fall" Bankruptcy | Zero Hedge

Just my opinion.


Jim

 

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[TreasurePirate69]

That's why diversification is so key. Putting all of your money into any one thing is a recipe for disaster. I have a neighbor that worked 50 years at a local company and had all of his retirement tied up in stock and options with that company. I'm talking several million dollars. He retired and shortly thereafter the company declared bankruptcy. It completely wiped out his retirement savings. He's lucky his wife worked for many years or else he would potentially be out on the street. Very sad stuff indeed.

 

[TreasurePirate69]

By the way, I think that long term we need to do away with all new pensions. It's just not a workable system anymore. A pension is a long term debt obligation that no city/government agency should ever enter into. It sucks that these people were promised something and that promise is now going to be broken. Perhaps if the government quit making such promises the people wouldn't end up being let down all the time. Us non-government employees don't get pensions. We are forced to fend for ourselves. So why shouldn't government employees have to do the same?

 

[lastleg]

I usually agree with TP69 but what you wish for is a fool's errand. How many govt employees do you know that
would give up their pensions without a fight? Maybe your senator? Or your congressman? Get real. I guess you
want to stop SS payment too. That would satisfy the fat cats in the GOP just fine. They could go on a nation-
building spree.

 

[TreasurePirate69]

Lastleg, I agree that it would be a hard row to hoe. But keep in mind that it doesn't have to be black and white. This would need to occur gradually over a very long period. The politicians would likely be the very last people to give in if they ever gave in at all. But that doesn't mean that cities and states couldn't still benefit by reducing the number of pensions that they offer.

My father in law benefits from a pension he earned when working at GM. But current GM employees no longer get a pension. What happened? You'd best believe the GM employees put up quite a fight to keep the pension system going. But it was no use. Necessity caused the pension to go away. GM is not unique. Most big companies of old had pensions. Virtually none still do. Part of it is that employees are recognizing that your pension might not be there when you need it and sometimes it is better to be in charge of your own destiny.

Case in point: Detroit. If Detroit defaults on the pensions and people lose what ends up being their main retirement income, do you think other civil employees in other cities are going to be safe? Once the pension "house of cards" starts to fall it will be much easier to convice civil servants that pensions are not safe and that perhaps it is time to start going with a different plan. No doubt there will still be a major fight and most employees will rightfully not want to give up such a good benefit. But the seed of distrust will have been sewn which will make changing the system easier.

Will it ever come to pass? I don't know. But the bottom line is that a pension is just another unnecesary liability and cities and states need to try and reduce such liabilities if they ever intend to remain solvent. All of this is just my opinion.