2025 Social Security COLA Projection of 2.66% Now Revised To 3.4%

[StarSong]

The issue is that 2nd leg (Pension) is very extremely rare. Not many employers offer them today. This may be true about pensions back in the 90's which were attractive. I wouldn't be surprised that pension system is going away albeit quietly.

The only thing we have total control is savings.

That was my point - sorry if I wasn't clear. I'll rephrase: given that DH & I had no pensions, we knew we'd be responsible for having sufficient retirement funds to cover 2/3 of our retirement costs, with SS providing the other 1/3.

Other than federal, state or local public employees, including teachers, cops, firefighters, armed forces, and so forth, among people I know who are my age or younger, not one has had a pension. However, my kids are offered 401ks with matching funds, and all participate fully in those plans.

 

[OneEyedDiva]

The issue is that 2nd leg (Pension) is very extremely rare. Not many employers offer them today. This may be true about pensions back in the 90's which were attractive. I wouldn't be surprised that pension system is going away albeit quietly.

The only thing we have total control is savings.

I'm blessed that I worked for the State of N.J. and get a pension. I think the State probably still has a pension plan, but our pension fund is in big financial trouble and has been for quite a while. I imagine other government agencies still offer pensions. But you're right...pensions have mostly gone the way of the dinosaur, especially once 401Ks caught on.

 

[StillLearning]

I'm blessed that I worked for the State of N.J. and get a pension. I think the State probably still has a pension plan, but our pension fund is in big financial trouble and has been for quite a while. I imagine other government agencies do too. But you're right...pensions have mostly gone the way of the dinosaur, especially once 401Ks caught on.

I receive a pension from the county and it’s in trouble and has been for a while also. Cost of living has gone up 1% each year for the last 9 years. But I’m glad I have it and will make it work.

 

[dilettante]

I'm blessed that I worked for the State of N.J. and get a pension. I think the State probably still has a pension plan, but our pension fund is in big financial trouble and has been for quite a while.

Ours is in pretty good shape, assets close to parity with its liabilities.

However our Governor and Legislature keep trying to raid the funds to spend them on campaign promises that have no funding. As it is we're still under a pension income tax that was imposed to fund tax breaks for corporations.

 

[OneEyedDiva]

Ours is in pretty good shape, assets close to parity with its liabilities.

However our Governor and Legislature keep trying to raid the funds to spend them on campaign promises that have no funding. As it is we're still under a pension income tax that was imposed to fund tax breaks for corporations.

One of the problems with out fund is that like with yours, funds were used for purposes they shouldn't have been plus some of our governors did not fund the plan like they were supposed to. So our current governor promised to fulfill the funding obligations. Here is the sad and scary condition of our fund as of June 2022.
https://www.nj.com/politics/2022/10/nj-public-worker-pension-fund-lost-nearly-10b-during-rough-fiscal-year.html#:~:text=New%20Jersey%E2%80%99s%20public%20worker%20pension%20fund%20lost%20about,%2486%20billion%2C%20its%20lowest%20level%20since%20February%202021.

@StillLearning I'm glad you are also receiving a pension and making it work. We were getting nice COLAs until Chris Christie stopped that when he became governor. I didn't like it but I think it was necessary because our fund was so far in the hole...and it got worse, as shown in the above article.

 

[Brookswood]

Skipping fully funded pension contributions is an old political trick and basically amounts to deficit spending. At some point is had to be made up. Years ago I considered moving to the state of Kentucky. Then I found it the state pension plan is badly underfunded. (Only funded about 42% of future liabilities. That may have changed.) At some point that has to be made up. I didn’t want to be taxed to make up the difference from past years when I was not living there. No offense meant if you are from Kentucky.

 

[Username]

Unlike private sector pensions (e.g., corporation-sponsored), public sector employee pensions do not need to comply with the accounting and actuarial rigor of the Employee Retirement Income and Security Act of 1974 as amended (ERISA). Prior to ERISA of 1974, the pension of most private sector corporations was based on the long-term viability of the company that sponsored the pension, and if that company went belly-up, the pension went belly-up with it. During the 1960s, several large private companies such as Studebaker went bankrupt and their retirees and near-retirees suffered because there wasn't money to cover the pensions. One thing Congress did was pass ERISA in 1974 to enforce much better accounting for the present value of future pension obligations based on actuarial science (a branch of mathematics), much better transparency, vesting rights, etc. Congress originally planned to have those regulations apply to all pensions including public sector pensions (federal, state, municipal, special district), but various powerful public sector employee unions effectively lobbied to exempt public sector employee pensions from such a rigorous requirement. Why? In retrospect the answer is obvious. Those same unions typically negotiate with a handful of elected representatives and their designees during each negotiation cycle, and in exchange for campaign contributions and endorsements (or the threat of withholding them), politicians "just said yes" to future pension increases -- after all, taxpayers didn't have to pay into the pension system for them just now, and the problem wouldn't arise until well into the future when they themselves were already long gone. Unlike private sector ERISA-compliant pension plans, the public sector plans could always manipulate assumed asset appreciation rates which in turn dramatically reduced the implied shortfall in existence today. So there is an inherent conflict when public employee unions lobby & elect politicians who in turn set the pay and pension of those same unions.

 

[Username]

And a bit more on the Studebaker case history I mentioned in my post above:

During the 1950s and early 1960s, several major industrial corporations bet the farm by making pacts with their primary labor unions. Studebaker was one such company. These corporations didn't have the financial strength to innovate & compete while simultaneously paying the ever-higher demands of their primary labor unions. In Studebaker's case, its primary union (UAW) couldn't just let its union members @ Studebaker earn far, far less than UAW workers at the more financially sound GM, Ford, Chrysler & AMC (AMC was the next weakest, of course).

So, in Studebaker's case, the UAW union bosses and Studebaker Corporation's executives struck a bargain. They would leave current wages lower in exchange for a generous increase in future pension benefits. This way, the UAW could sell the contract to its rank-and-file who were jealous of the paychecks of their brethren at the other auto companies.

Executives at Studebaker & the UAW know that this was a "Hail Mary."

They knew if the UAW forced the higher wages found at the other car companies that Studebaker would go out of business almost right away. Only by giving the corporation another shot at a product cycle would union workers and the company have a shot at survival. Hence the bargain.

We all know what happened next. The products didn't succeed, and the company failed. Its pension plan was woefully underfunded. Pensioners suffered. Real people were hurt badly - retirees, almost-retirees, rank-and-file workers who were decades from retirement, shareholders including elderly widows, etc. It wasn't just Studebaker -- many other industrial corporations suffered the same fate, and their union workers suffered.

HOWEVER, public sector union executives took note of the strategy, and copied it. In decades past, many public sector union executives struck bargains with then-elected officials to raise pensions in the far future in exchange for labor peace today, campaign contributions, and election endorsements. Well, the far future is now here.

 

[OneEyedDiva]

Unlike private sector pensions (e.g., corporation-sponsored), public sector employee pensions do not need to comply with the accounting and actuarial rigor of the Employee Retirement Income and Security Act of 1974 as amended (ERISA). Prior to ERISA of 1974, the pension of most private sector corporations was based on the long-term viability of the company that sponsored the pension, and if that company went belly-up, the pension went belly-up with it. During the 1960s, several large private companies such as Studebaker went bankrupt and their retirees and near-retirees suffered because there wasn't money to cover the pensions. One thing Congress did was pass ERISA in 1974 to enforce much better accounting for the present value of future pension obligations based on actuarial science (a branch of mathematics), much better transparency, vesting rights, etc. Congress originally planned to have those regulations apply to all pensions including public sector pensions (federal, state, municipal, special district), but various powerful public sector employee unions effectively lobbied to exempt public sector employee pensions from such a rigorous requirement. Why? In retrospect the answer is obvious. Those same unions typically negotiate with a handful of elected representatives and their designees during each negotiation cycle, and in exchange for campaign contributions and endorsements (or the threat of withholding them), politicians "just said yes" to future pension increases -- after all, taxpayers didn't have to pay into the pension system for them just now, and the problem wouldn't arise until well into the future when they themselves were already long gone. Unlike private sector ERISA-compliant pension plans, the public sector plans could always manipulate assumed asset appreciation rates which in turn dramatically reduced the implied shortfall in existence today. So there is an inherent conflict when public employee unions lobby & elect politicians who in turn set the pay and pension of those same unions.

I wonder if the Studebaker and other private corporation pensioners were covered by the Pension Benefit Guarantee Corp, established in 1974, that covered private pensions.

 

[Aunt Bea]

it might be worth checking PBGC to see if there is an unclaimed benefit from a failed pension fund.

Find unclaimed retirement benefits | Pension Benefit Guaranty Corporation