Saturday, January 14, 2017

Got gold? War on Pensions is officially on as Treasury Department allows unprecedented cuts to benefits

2016 was known as the year for the War on Cash, where India, Venezuela, and even the European Union eliminated currency denominations in the hopes of forcing all their citizens into a cashless system run by the banks.

And despite the fact that here in the U.S. a scheme to ban and eliminate the $100 bill was pushed by two ivory tower economists using the guise of fighting the 'War on Terror', to date all dollar denominated currencies are still considered around the world to be legal tender.

Yet the problem in the U.S., and in many other parts of the world as well, is not money laundering, or citizens using physical cash for illegal means, but instead it is the massive amount of debt that sovereign governments, states, municipalities, and even central banks have that they can no longer afford to service, and which threatens to collapse the entire financial system at both the micro and macro levels.

Attempts to service this debt, and the refusal to allow failed assets and institutions to go bankrupt, has led central banks to destroy the very instruments that savers, retirees, and government pension funds relied upon to pay for promises made to workers in both the public and private sectors.  And as we saw cracks begin last year in the two largest pension funds in the U.S. (Calpers and Central States), 2017 appears here early on to be the year where a War on Pensions will be ratcheted up to maximum levels.

Image: Anatomy of a Failed Liberal State
On Dec. 16, the U.S. Treasury approved the proposal of Cleveland-based Ironworkers #17 Pension Fund to cut the benefits of its 2,000 members by an average of 20%. This is the first time the Treasury has allowed a private pension plan to cut benefits of its members. The Local’s members and retirees will vote on it Jan. 20. If approved, cuts could start Feb. 1. 
Five more pension plans are waiting for the Treasury Department’s decision to reduce pension benefits, Jonnelle Marte reports in the Jan. 5 Washington Post. The cuts proposed would affect tens of thousands of employees and retirees who earned pensions, such as bricklayers, furniture workers and autoworkers. - Larouchepub
The unprecedented move by the U.S. Treasury Department follows the drama Americans saw during the final months of 2016 where first responders from the City of Dallas raided their pension fund when it became known that it was underfunded by a good 40-70%, and where workers and retirees feared there would be no money left to pay out promised benefits.

Yet in addition to the Ironworkers Pension Fund out of Cleveland, OH, several other funds are planning severe cuts to their recipients in the coming weeks, which could begin a chain reaction of cuts around the country for those who paid into their retirements expecting them to be there during their golden years.

Central States Teamsters

Calpers

On top of this, there are already talks in Congress regarding the cutting of pay, jobs, and pension benefits for Federal employees now that the Republicans have seized control over all branches of government.
Federal employees can expect attempts to cut their pay, benefits and rights in the new Congress, as the unified Republican government looks to finally deliver on many failed efforts from previous years. 
The 115th Congress wasted no time pursuing legislation with high impacts on the federal workforce; the first bill approved by the House would require the Veterans Affairs Department to permanently note all reprimands and admonishments on employee records, and a resolution setting the rules for the House this session will allow lawmakers to eliminate federal employees’ jobs and reduce their pay through the appropriations process. 
One likely early target for congressional Republicans, according to multiple sources familiar with their plans, is federal workers’ defined benefit pensions. Lawmakers are expected to address the reform first through the budget reconciliation process, which would allow Congress to institute the cuts without any Democratic support. The budget resolution will likely instruct the House Oversight and Government Reform committee to identify a certain amount of savings, a request committee members can fulfill by proposing significant cuts to federal employees’ retirement benefits. - Govexec
For years states, municipalities, and corporations promised extraordinary benefits that could only work if economic conditions were at their optimum.  But the moment growth and interest rates began to decline, so too did the financial vehicles capable of sustaining large returns to pension funds that needed 5-8% annual increases.  And after eight years of zero interest rates and less than 3% growth, the bugle is sounding to pay the piper, and the ones who will lose are the ones who rely upon it the most.

Got gold?

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