> Jochem wrote: > Why is that point here? What is the magical number that decides that it is > going to happen *now*? >
Because up until now the money withdrawn from pensions was less than the money in the monthly pension payout. Many local gov'ts now have crossed the point where the money available to pay out as a monthly pension benefit is less than the monthly money owed to the retired. That means they're having to move money from other sources to augment the pension checks. Practically this means that a city will, say, forego hiring a police officer and instead use the money to pay out pension benefits. > Would they get a federal bailout when they don't have bankrupcy protection? > It's not bankruptcy protection, it's laws that guarantee pension payout. For example, on the private level, the federal gov't created the PBGC to guarantee that even if a company with a defined benefit went bankrupt, the pensioners wouldn't be totally out of luck. As a side note, no companies have created new defined benefit plans since about 1971 due to the liability concerns. The industries with those "legacy costs" started them post WWII which is why you see them in the industrial companies like steel, auto, and the airlines. > Taxes of course. But I don't see local and state governments being bailed out I believe the Federal Gov't is the ultimate guarantor of the defined benefit which would mean that if a city cannot pay, the feds have to. This is the case with other things like student loans: ultimately it's the federal gov't that is responsible for the loan should the student be unable to pay it off. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Flash for programmers - Flash MX Pro http://www.houseoffusion.com/banners/view.cfm?bannerid=56 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:157705 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
