The Past is the Past, today is the Future. Really Guys and Gals, one of us out there has the brain power to come up with a plan to save the plan. Put it on paper and discuss it and cuss it and sent it in. Move Congress to at least address it in a real political fashion. You just never know what will come to us next. Just be ready for the cuts again. Then again you may need the money you set aside when the fund fails. God speed.
ESP I am sending this suggestion to you because of the legwork you have already done on this issue. You are currently plugged in and could contact the appropriate people if you think that the plan I am proposing has any merit. The CSPF is currently under review by the General Accounting Office (GAO). They are looking into the fund's management that was directed by the Federal Government to be placed into the hands of Wall Street investment firms. Goldman Sachs and Northern Trust in particular. I have seen estimates that the fund lost over 11 billion dollars under their oversight during the financial collapse of 2008. Coincidentally, this is the same amount that Mr. Nyhan says the fund currently needs to be stabilized. Please note that the following suggestions only apply to the CSPF and its unique position of being placed under federal oversight. It would not address MEPRA and other funds that are in financial trouble.
1. The CSPF is in financial trouble and some action is necessary to stabilize the fund.
2. The Federal Government Has played a unique role by placing CSPF under oversight and allowing the funds to be managed by Wall Street investment firms.
3. The Federal Government has bailed out these financial institutions under the TARP program.
4. Each current retiree will be guaranteed 110% of the PBGC minimum, currently $12,780 per year. Any retiree that is earning less than this amount will not be affected by this plan. Their payments would remain at the level they are currently receiving. This should address the retiree who falls under the 75 - 80 years old and over. Most do not currently reach the $12,780 yearly threshold.
5. Any amount a current retiree receives over the $!2,780 amount would be subject to a cut. For example if a monthly benefit of $3000 was being paid, it would accumulate to a yearly benefit of $36,000. Subtracting the $12,780 guarantee would leave $23,320 available to be cut.
6. A straight across the board percentage cut would be applied to the remaining balance. The numbers would need to be worked out to make sure that the fund stays viable. For the sake of this example we will use 30%. The amount of the cut of the $23,320 would be app. $7000. Deduct this from $36,000 And the new yearly benefit would be $29,000. This would then amount to a monthly benefit of $2417 before taxes.
7. Future retirees, those who are still working and paying into the fund, would have their pension capped a certain amount if they have enough contributory credits. One example would be $24,000 per year or $2000 per month.
8. Current retirees doe not have the ability to earn more pension benefits. Going forward the plan would have to be phased in by age groups.62- 57 no adjustments. 57 -50 The new cap in place. And so on.This will give adequate time for those who are more than ten years away from retirement to adjust. Current retirees and those who are less than five years away do not have that luxury.
9. Part of the payments currently being made on behalf of active workers could be set aside to be placed into individual 401k accounts. This will allow them to be more actively involved in their retirement financial security.
10. There are a couple of ways that this could be paid for depending on the results of the GAO investigation. Wall Street firms that were directly involved with the fund's oversight could reimburse the fund for the 11 billion dollars that are needed. If that is not feasible the Federal Government could loan the 11 billion dollars to the fund and the bankers could repay the government at a nominal interest rate. Or the government could impose a small fee on daily internet transactions, say one tenth of one cent. The proceeds would go towards the retirement of the loan and would end once the loan had been paid in full.
These are suggested numbers. I am not an actuarial accountant. But this could be a starting point. We all know that something needs to be done. Under this plan their would be shared sacrifice. But I believe the cuts would not be so drastic that an individual who is already retired should be able to meet their daily needs. Thank you for all that you have done in regards to this matter. Good luck and God Bless!