| Who’s Gonna’ Pay Federal And State Workers Pensions? |
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I’m sure you’ve heard that many companies have not put enough money away for their workers future pension plan payments. (A pension is a retirement plan where the employer promises to pay retirees a certain amount of income each month after they retire. Employers are required to set aside specific amount of money each year to fund future payments for retirees.) You may have read about corporations like United Airlines having dumped its pension plan obligations unto the government, when it went through bankruptcy. The Pension Benefit Guaranty Corporation (PBGC) is the government agency that takes over belly-up pension plans and makes good on some of the payments to retirees, but not all. If your employer went bust, or was found to have deliberately under funded its pension plan, the PBGC can make payments of normal retirement benefits you would have had if your company had honored its obligations. There are however limits to the PBGC payments. Many promises your employer made to you can be eliminated by the PBGC once they take over. For example, the PBGC won’t pay you above a certain maximum monthly income regardless of what you were entitled to through the original company plan. If you were a highly paid officer of a company, or a pilot with 30 years on the job, and were supposed to get a pension of $6,800 a month at age 65, you would only get $3,971 a month from the PBGC. That is 42% less than what you’re entitled to! Also, the PBGC won’t make other payments due like Health and Welfare benefits, Lump Sum death benefits nor disability payments for deaths or illnesses that occur after the plan ends. According to Standard and Poor's, about 10% of American companies have under funded pension plans...so while most are OK for now…many are not. And, this situation will get worse, as the baby boomers start retiring by the millions in the next few years. Now this corporate pension plan issue is nothing compared to the problems of under funded pension plans of federal and state employees. According to Standard and Poor's, the federal pension plan program is under funded by over 4 and a half TRILLION dollars! No, that’s not a typo. The recent report by S&P says that millions of federal workers who will be retiring in the next decade have a shortfall of over $4,500,000,000,000! (The number is so big…it’s almost impossible to get a handle on it.) But wait…there’s more! State employees pension plans are under funded by a whopping 284 billion dollars in addition to the federal pension plan deficit! Added together, the government workers’ pension plans are just shy of 5 trillion dollars. Can you imagine, $5 trillion in the hole? What does that mean to all of us, whether or not we have a pension plan coming to us? Well, given the fact that the PBGC is not backed by general tax revenues it does have some funding from money paid into it by employers, and an insurance plan set by Congress. But, when it runs short on cash, which it is very likely to do…the government will either have to raise taxes to cover the shortage, or print up the billions each year in new money. (Which, as you know as a faithful reader of this newsletter, leads to higher inflation.) And, even worse, there is NO FUNDING of any kind set aside for the 5 trillion dollar federal and state employees who have pension money coming to them! Yes, you read that right. There is exactly ZERO dollars set aside to pay all federal workers, and almost three hundred billion short for state employees.  So how is the government going to tackle this mind boggling shortage of required cash? (which, they do not add into their calculations of the budget deficits, the shortage of Social Security payments, the trillions to be owed for Medicare and Medicaid…) Well, they really have no answer except to say the government will have to “explore alternatives†to fix the problem.)  Again, you and I aren’t dummies. We KNOW the only way they can pay for this monumental mishandling of the public trust is to either raise taxes, and/or print the money in a highly inflationary manner.  Whatever they end up doing…all I can assure you is that it is not going to be good for you! If they raise taxes, and/or print money they don’t have…either option takes your real purchasing power away. This typical government bungling can take serious lifestyle options away from you. So what do you do? Well, as we always say…plan, plan and plan some more. Planning is the key!  Consistent financial planning to keep up with today's ever changing political and economic world is a must, and your best chance at bullet-proofing your finances! Taking the time to review all your financing, loans, mortgages and current financial situation NOW can pay you back a thousands times later! We might be able to save you hundreds or thousands of dollars a year on your financing! So…don't delay. Call us up for your 2006 financing review, RIGHT NOW, while this is fresh on your mind. We'll take care of the rest! (Don't forget, we know where to find you!) REMEMBER- WE WANT YOU TO CONTACT US WITH YOUR "HERE'S WHAT WE'RE THINKING ABOUT DOING QUESTIONS", NOT YOUR "GUESS WHAT WE JUST DID!" COMMENTS!                       
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Who’s Gonna’ Pay Federal And State Workers Pensions? I’m sure you’ve heard that many companies have not put enough money away for their workers future pension plan payments. (A pension is... © 2012 - Kazwell.com Powered by QuoteThis © 2008 Related Articles
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