Pensions: real people, real debt, real harm

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  • Wed, Jun 11, 2014 - 11:34pm



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    Pensions: real people, real debt, real harm

The reducing of pensions in Detroit is not an isolated incident.

A friend of mine posted this on Facebook. She’s a teacher. She lives in NJ, but it sounds like this might be coming to a retirement fund near you.

So you start a 401k at work. You chip in a good chunk of your salary, and your employer matches your contribution. 20 years into it, your employer decides to borrow from YOUR 401k, with a promise to repay. But he doesn’t. But then, the employer stops matching your funds. Then demands that you increase your contribution. Then borrows from it again.

Sound right to you?

That’s what I thought.

Another friend is a teacher in CA. I fear for her even getting pennies on the dollar from her pension, if anything at all.


Any other anecdotal evidence about such pension reductions out there? I mean, other than MyRA.

  • Sun, Jun 15, 2014 - 03:18pm



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    And then there’s being “let-go” a few years before retirement…

Hi Wendy-

   Yes, I am also concerned for friends of mine who are confidently counting on state and federal pensions.  Will that purchasing value really be there?

   Another disturbing thing that I am seeing is people getting "let-go" (fired) within maybe 5 years of full retirement.  If I understand it right, their employers could not legally refill those positions without opening themselves up to charges of age discrimination.  But I have heard (not sure if true) that their employers can create a new/different position that encompasses the former employee's duties, and then hire a younger/cheaper employee to fill it.  This has happened to two friends of mine recently -both good/hard workers- in very different jobs.  Needless to say this is a devastating blow to someone in their 50s, who thinks after years of hard work, that they are close to achieving retirement. 

   How this impacts their pensions -whether they have 401ks that are still intact and are "just" scrambling for current employment- I am not sure.  What I do know is that it has made me take the question of "what would you do if you lost your current income stream?" even more seriously than before.


  • Sun, Jun 15, 2014 - 09:32pm



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    Holding our breath

Me and the Mrs are holding our breaths re: our Philadelphia municipal pensions. The fund is only at 50% net present value, up from 48% two years ago because of greater than normal investing returns the last two years. That puts us in a race to become the next Detroit, though Chicago is well ahead of us. I've got too many years on to be laid off and union backing to thwart any other shenanigans like you mentioned. Fortunately, the Mrs just quit  the City and got a big raise in the new job. We're living almost as frugally as we did as newlyweds saving and investing every extra cent we can. We're trying to be able to survive in retirement in 5-6 years from now even if our pensions are cut 50% after a City bankruptcy or a huge inflation ravages our purchasing power (no COLAs in our pensions). Sure would be easier to plan and sleep at night if I had any idea what the next 20 years was going to be like.

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