What actions will the EFM take?

[Danny]

Here's more:

privatize D-DOT.

Hunt down delniquent Detroiters who didn't pay city taxes on time and put foreclosure notices on their front door.

[lilpup]

Hunt down delniquent Detroiters who didn't pay city taxes on time and put foreclosure notices on their front door.

A tax amnesty might not be a bad idea to bring in some $$$. Pay any unpaid taxes owed within a certain time with penalties and interest being waived.

[Novine]

"What difference does that make? If there is a law that says I must pay you one million dollars, and I only have three thousand dollars, you don't get your one million dollars."

The point is that everything else is going to get cut before the pensions go unpaid. Look at Pontiac. The EFM is raising taxes to pay pension costs even as he's slashing and selling off everything else in the city.

http://www.theoaklandpress.com/artic...7515419586.txt

[corktownyuppie]

"What difference does that make? If there is a law that says I must pay you one million dollars, and I only have three thousand dollars, you don't get your one million dollars."

The point is that everything else is going to get cut before the pensions go unpaid. Look at Pontiac. The EFM is raising taxes to pay pension costs even as he's slashing and selling off everything else in the city.

http://www.theoaklandpress.com/artic...7515419586.txt

Well the good news is that if they stop pension benefits for new hires or anyone with less than 10 years of tenure, then the pension liabilities will eventually decrease as pensioners die out. The pension was on of the greatest inventions, we just: [[1) failed to fund it fully and [[2) grossly underestimated how long people were going to live.

[Novine]

"Well the good news is that if they stop pension benefits for new hires or anyone with less than 10 years of tenure, then the pension liabilities will eventually decrease as pensioners die out. "

True. In about 30 years. Until then, you have to keep paying into a system that doesn't have any new members coming in and contributing to the cost. Which is why switching from a pension plan to a 401-k style plan actually ends up costing you more money over the short and medium term than sticking with the pension plan.

[corktownyuppie]

"Well the good news is that if they stop pension benefits for new hires or anyone with less than 10 years of tenure, then the pension liabilities will eventually decrease as pensioners die out. "

True. In about 30 years. Until then, you have to keep paying into a system that doesn't have any new members coming in and contributing to the cost. Which is why switching from a pension plan to a 401-k style plan actually ends up costing you more money over the short and medium term than sticking with the pension plan.

I'm not following. Pension isn't like social security, where the new employees contribute to cover for the benefit of the older employees. My understanding was that it's a pay-as-you-go plan, with companies contributing to your pension fund when you start in order for the money to be there when you're retired.

So with those assumptions -- which may be false, I'm not sure -- switching from a defined benefit to a defined contribution plan saves you money immediately since you are no longer contributing to the newer employees' pensions. Of course, to be fair, the companies should pass on that savings directly to the employee in the form of a raise. But even with that, since all our pensions are underfunded anyway, the moment you stop making promises to future recipients, the sooner you stop the bleeding from getting worse.

[corktownyuppie]

I'm not following. Pension isn't like social security, where the new employees contribute to cover for the benefit of the older employees. My understanding was that it's a pay-as-you-go plan, with companies contributing to your pension fund when you start in order for the money to be there when you're retired.

So with those assumptions -- which may be false, I'm not sure -- switching from a defined benefit to a defined contribution plan saves you money immediately since you are no longer contributing to the newer employees' pensions. Of course, to be fair, the companies should pass on that savings directly to the employee in the form of a raise. But even with that, since all our pensions are underfunded anyway, the moment you stop making promises to future recipients, the sooner you stop the bleeding from getting worse.

I stand corrected, Novine. I was confusing the meaning of "Pay-as-you-go"...

"The City has a long standing practice of paying OPEB liabilities as they become due from current revenues. [[Pay-as-you-go or Pay-go)"

City of Detroit, Enterprise Funds Deficit Elimination Plan, July 22, 2011

OPEB = Other Post Employment Benefits

In other words, at some time there was a decision to fund Detroit employee pension benefits in the same way that Social Security is funded, based on current revenues with no cash reserves.


A reserve fund should have been established to hold cash to pay for future pension benefits.

.

[Kevgoblue]

So with those assumptions -- which may be false, I'm not sure -- switching from a defined benefit to a defined contribution plan saves you money immediately since you are no longer contributing to the newer employees' pensions. Of course, to be fair, the companies should pass on that savings directly to the employee in the form of a raise. But even with that, since all our pensions are underfunded anyway, the moment you stop making promises to future recipients, the sooner you stop the bleeding from getting worse.

Something I find interesting is the fact that regardless of which population you're referring to, the young ones are always the only ones asked to sacrifice. The older generations had much greater opportunities to earn money. Yet and still the only ones being asked to sacrifice are the younger generation. Whether it be this conversation about Detroit, or a private company killing pensions for new hires, or the federal government only willing to change social security / medicare for future recipiants.
Shared sacrifice anyone?