The state and municipal pension ponzi schemes are beginning to pop with Ohio next on the docket
If there is anything that politicians are good at doing it is ignoring potential threats until they suddenly fall out of the sky and bring to their doorstep a slew of angry constituents. ¬†Yet before this happens these same politicians will try to kick the can of any proverbial crisis down the road until they no longer are in office to deal with it, or they can somehow spin the crisis to their benefit.
One of the biggest of these of course has to deal with state, municipal, and sometimes Federal pensions. ¬†And with the Federal Reserve utterly killing the normal vehicles that these funds use to grow their coffers, the majority of pensions in America are extraordinarily underfunded, and in some cases on the verge of insolvency.
Last week saw the advent of¬†two municipal pension funds in the state of California¬†finally draw the line, and cut pensioner’s benefits by 90%. ¬†And now on Sept. 21, the state of Ohio appears to be next in line as they have announced they will be cutting cost of living allowances (colas) for millions of their millions recipients.
The latest such example comes to us from Ohio as the¬†Dayton Daily News¬†notes that the¬†Ohio Public Employees Retirement System (OPERS) has been forced to consider COLA cuts for its 1 million pensioners in order to keep the fund solvent.
Ohio‚Äôs biggest public pension system is considering cutting the cost of living allowances for its 1-million members as a way to shore up the long-term finances of the fund.
Ohio Public Employees Retirement System trustees on Wednesday discussed options that could affect all current and future retirees, including tying the cost of living allowance to inflation and capping it and delaying the onset of the COLA for new retirees.
No decision has been made and trustees will discuss the options again in October. So far, some 72,000 members responded to an OPERS survey about possible changes. OPERS spokesman Todd Hutchins said 70 percent of retirees responding to the survey report that they prefer that the COLA be capped, rather than frozen. –¬†Zerohedge
Back in May the total amount of retirement program underfunding in the U.S. was at a¬†whopping $3.85 trillion. ¬†And contrary to the fake news of an ‘economic recovery’ in the U.S. by the central bank, states have seen massive declines in both revenues and investment returns that are necessary to facilitate a 7.5% annual return to keep these funds solvent.
The last thing a politician will ever do is cut benefit programs, even if the program they support is on the brink of collapse. ¬†And that is because ever since the late 1960’s, too many elected officials have based their campaigns on how much cash they can give to the voters, and the end result is that it almost always leads to the same death spiral like we have now in the Social Security fund, and in state and municipal pensions.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.