Mayor: Pensions might bankrupt Titusville | FLORIDA TODAY | floridatoday.com

Another cry of Unfunded Pension Liability. This time from right up the road in Titusville. A really good read if you keep this particular point in mind:

“The city can get out of the problem by paying 100 percent of its annual required contribution for about 30 years…

via Mayor: Pensions might bankrupt Titusville | FLORIDA TODAY | floridatoday.com.

The City of Titusville, like most Cities that have Pension Plans, has not been contributing what their share into their own pension plans. They have been withholding monies from the system because the Market was doing so well they could get away with it. Which is fine, and legal too. But it has set up a situation where nothing is set aside for the ‘rainy day,’ and now it is raining.

And, being politicians, are trying to pass the blame to the workers.

Don’t let them treat us like an ATM Machine.

One thought on “Mayor: Pensions might bankrupt Titusville | FLORIDA TODAY | floridatoday.com”

  1. A good way to understand the absurdity of the unfunded liability fear mongering is to use a home purchase an the analogy. Say someone buys a $1,000,000 house and puts 70% down on a 30 year mortgage. So that’s $700,000 down payment with 30 years to pay off the remaining $300,000. Not so bad right? Now consider this someone makes their payments in full and on time. Good right? Now this someone has a partner who agrees to pay 9% of their income as well. Sounds even better right? Now here is the biggest thing, the down payment and the following payments are invested and the investments returns are also added to the paid amount, further reducing the unpaid balance. Now of course there are charges such as maintenance and up keep, but only about half the amount of annual payments. Sounds OK?

    Well here comes the best part, after one year of payments from both sources and in addition the net investment returns, the bank extends the mortgage for 1 year every year, so there is always a 30 year mortgage to pay off the balance. This balance can be looked at as the “unfunded liability”. The term it self is wrong because as long as there is millions in payments coming in and hundreds of millions invested with an expectation of a return, most definitely is a plan for “funding”.
    To project a liability 30 years out cumulative without taking into account the cumulative payments and investment returns is simply wrong and most likely a number set up to serve an agenda. Whether it would be political, social, or financial.
    I hope this helps and please share with as many people as possible because there are a lot of so called experts who have no clue how the defined benefit pension model works, and choose to harp on buzz words they learned from other so called experts and media sources.

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