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signs of the times
The NY Times
September 4, 2006
Costly Promises
Cost of Pensions Adds to Factory Town’s Troubles
By DANNY HAKIM
LOCKPORT, N.Y. — For two and a half years, Michael Tucker was mayor of this small city by day and an autoworker by night.
Then in May, he became one of the nearly 50,000 workers at General Motors or its former Delphi parts division to take buyouts, lured by the $33,000-a-year pension his company offered. That pension, and a smaller one he expects to collect from the state after his years as mayor, makes him a little unusual in a nation where more and more workers are not covered by such plans.
But now, as mayor of Lockport, Mr. Tucker, 49, is seeing the budget of this city north of Buffalo consumed by the kind of pension and retiree health care costs that helped push Delphi into bankruptcy. So he is preparing to do what his former employers, G.M. and Delphi, have already begun to do: ask the city’s five unions for concessions, including limiting wage increases and cutting benefits, when labor contracts expire next year....
and from an earlier article on 8/8/06:
But by one estimate, state and local governments owe their current and future retirees roughly $375 billion more than they have committed to their pension funds.
And that may well understate the gap: Barclays Global Investments has calculated that if America’s state pension plans were required to use the same methods as corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been set aside to pay those benefits.
comment:
watch your state and local taxes! and then the effect of those taxes on consumption.
September 4, 2006
Then in May, he became one of the nearly 50,000 workers at General Motors or its former Delphi parts division to take buyouts, lured by the $33,000-a-year pension his company offered. That pension, and a smaller one he expects to collect from the state after his years as mayor, makes him a little unusual in a nation where more and more workers are not covered by such plans.
But now, as mayor of Lockport, Mr. Tucker, 49, is seeing the budget of this city north of Buffalo consumed by the kind of pension and retiree health care costs that helped push Delphi into bankruptcy. So he is preparing to do what his former employers, G.M. and Delphi, have already begun to do: ask the city’s five unions for concessions, including limiting wage increases and cutting benefits, when labor contracts expire next year....
and from an earlier article on 8/8/06:
But by one estimate, state and local governments owe their current and future retirees roughly $375 billion more than they have committed to their pension funds.
And that may well understate the gap: Barclays Global Investments has calculated that if America’s state pension plans were required to use the same methods as corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been set aside to pay those benefits.
comment:
watch your state and local taxes! and then the effect of those taxes on consumption.
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